The Product life cycle

If you are in marketing, then you must be aware of the product life cycle concept. It is the fundamental concept while making a marketing strategy around your product. Let’s discuss thoroughly what is PLC. How it can help you design your product aspect of the marketing mix. We all know that a company’s market plan surrounds four elements product, price, place, and promotion.

Meaning of the product life cycle

The product life cycle is the major part of the company’s product aspect. Which describes a product life in four stages. Similarly to human life, an item has a life period and it goes through four phases. As a human being age with the passes of time from newborn to adult to old. Products also witness similar kinds of life phases. They are launched, made popular, and finally lose their charm and go off the shelves. Ultimately, it comes to the following points.

1 Product life cycle or PLC compares the product with humans.

2     It says there are four stages typically a product goes.

3     Product may have immature death like humans.

4     Each phase is characterized by a different phenomenon.

5    The end of one period is the beginning of another. There is a very thin line and sometimes not at all.

Stages of product life cycle

The product life cycle

In its journey, an item may typically go through 4 distinct periods or phases. These are introduction, growth, maturity, and decline respectively. However, most of the time companies may extend their product age by adding modifications to it. This is called the development stage and we discuss it among other things as well. A marketer must keep in mind that each stage demands different tactics and tools to deal with completion. To survive in the market, it is necessary to understand the peculiarity of each step. Let’s understand in a detailed way

Introduction:

The very first period in product life is the introduction. One can think of it as a product that is born and ready to start its journey in the market. Before introducing it in the market a company plans screening and innovation of the product. This entire process is known as New product development which is internal

As per the Harvard business school report, around 95% of new product offerings don’t get to the next stage. We can fathom how less is the chance of offering a successful product to market are. Here as a marketer, you have to create awareness of your offerings.

Now because of the product in the market. It does not mean it will sell automatically. Your target audience may not be aware that there exists a product which can satisfy their want. Or, it may happen that they are not aware of such need. As a result, the introduction stage involves heavy spending on advertisement.

The second main feature of the introduction stage is low competition. Ultimately, you can set the price without pressure from rivals. Most of the companies implement a skimming price policy and earn heavy profits between the introduction and growth stages. The two most important factors which determine your price here will be the cost structure of the product and the potential willingness of customers to pay.

Finally, at the introduction level, sales are very low and following an upward gradual slope. It means your revenue will be low at this stage. As the product moves out from induction to develop its sales start gaining momentum.

Key points:

1      No competition allows you to drive the market

2     Heavy expenditure on promotion and advertisement

3     Low sales at the beginning however it may increase depending on your promotional efforts.

Growth:

As the product moves out of introduction it starts entering the growth period of its life. The growth period is as vital for products as it is in human life. Human growth determines how well he or she going to perform in the later period of life. Likewise, for products, it paves the way for being a profitable element to any organization.

At this level, many people are aware that a product is available which can satisfy their want. So, they start purchasing it. Sales are picking up so the company should start paying attention to efficient distribution channels. It helps in keeping inventories full and continuous supply to customers.

Capacity utilization of manufacturing hub to starts picking the pace, as products are sold at exponential rate here. Undergrowth stage, products do not face stiff competition yet. However, rivals start considering developing their own variations. Consequently, one can try to reap all the profits market can offer during such high times.

Although product sales are getting high on the chart. It does not reflect any significant decline in the advertisement. One must focus on expanding the product reach via customized campaigns for a different set of audiences. Regarding sales, this period means the company is towards break-even point.

Key points:

1   Revenue start picking up as sales curves start moving up

2    Strain on manufacturing increases and expansion is needed

3    Efficient and good distribution networks are a must to keep pace with rising demand

4     Cut in advertisement and promotional expenses but not to great extent.

Maturity:

Competition is becoming stiff in the market as many same types of products are rolled out in the market. Remember your maturity stage means the growth stage for your competitors. Rivals can offer products at a very low cost and efforts involved. They just have to copy your efforts. Consequently, they are offering products at low prices.

In the first half of the maturity period, although. Your competitors make goods at a low cost. Still, you leverage economies of scale and can earn adequate profits. But it becomes less feasible as other companies in the same industry get economies of scale in the later period.

Within this time period, your promotional expenses also start seeing a decline. It happens because most of the market segment is already aware of your product features. A little bit of advertisement is only needed to provide additional information. Such information can be about how your product differs from competitors.

Sales are almost the same during this entire phase. It is just profit will start declining as this stage keeps passing. Thanks to the better utilization of manufacturing capacities and distribution channels in earlier stages. That you will be performing better than your competitors.

The product life cycle

Key points:

1      Promotional outlay starts to decline and dives to a great extend.

2       Sales and profits demand product differentiation.

3       You may have to start adjusting prices due to prevailing competition.

4       Maturity stage is the only period where your sales touch the peak only to start falling.

Decline:

The fourth stage in PLC is referred to as the decline period. It is worth remembering that it does not apply to all products. Some companies can go for development and modification to extend its life. However, ultimately, the product will have to leave the market for new counterparts. This part can be characterized with following features.

In the final stage, the product begins performing low on sales parameters. Turnover of the product keeps falling as other better products by competitors are available at low prices. It seems obsolete.

To be in the market for some time, companies have to reduce the price of their offering. They start earning marginally. All this happens under the heavy influence of rivalry forces. Due to decreasing sales revenue falls. The decline in price makes it hard to earn good profits.

As far as promotions are concerned, they reduce to a minimum. Most of the market knows about your product so this is not a practical valid plan to use promotion as a counter tool. Products tend to lose their market shares at this duration.

Finally, it is time to leave the market. Most companies may add some features or services to offering to keep the product in the market. Nonetheless, they don’t stay there for long and eventually die away in cutthroat competition.

Key points:

1     Decline is the final stage of the product life cycle

2      All the parameter such as profit, revenue, and market share

3      All one can do is extend the period by adding features and services.

Use of the product life cycle:

As a marketer, we know how important our product is as it is the only item we offer in the market. Product is not only the core of business but also to the entire marketing concept. When we have good knowledge about PLC, we can use optimum strategies regarding price, place, promotion, and completion. Here are the different tactics one can implement as the product lives its life.

Introduction:

Companies should heavily focus on promotion and awareness efforts. Find out what are their potential customers and designs campaigns accordingly. Use relevant tools such as media, television, online presence suitable to your needs and consumers.

Their secondary concentration ought to be how they are going to use logistics, warehouses, and distribution channels. As we know in the growth stage product will start selling like hotcakes.

Regarding price, a company can charge high, feasible, and ethical prices. Setting such rates for products helps to cover innovation costs. And it is quite a good time as competitors are far away from the market.

Growth:

Check out how your existing advertisement is doing. Because, if they are not good it is right time to change them. The growth stage demands good investment in brand promotion. So check it thoroughly

Keep tabs on how well your distribution channels are arranged. Are they performing well or not?. It definitely helps as you want to keep a proper inventory of finished goods and their replacement on counters is also essential quickly

Manufacturing and inventory for raw material are needed to be properly planned. Hence you can remove inefficiencies in the production process to leverage economies of production. Your pricing policy need not be modified a lot. As other parties are planning and trying to create a replica of the product.

Maturity:

This is the phase where you have to probably make a lot of changes in your plans. The promotion aspect of the marketing mix now has to deliver a message about differentiation rather than awareness.

Change your pricing policies as per market and competitive forces. Remember if you have production and inventory economies you can still provide product at a rate lower than rivals.

When competition is high and you want to earn profit and survive by reducing the price. Then, you can reduce your cost structure. It is done through cost audits and the removal of deficiencies in the production process. You can also see if there are innovation development processes for the same product?

Decline:

All we can do here is to make the product live for extra time. As it will die in the end and say goodbye to the market. How you can do so let’s check You can add new features to the product. And promote it to the existing audience or show any unperceived feature.

Finally, it is better to move out of the market and start working on other innovative products. It will be easier for the next product to go into the market. As you can capitalize on already establish marketing and distribution campaign for awareness and distribution

In conclusion:

Product life cycle provides deeper insights as to your rivals and other 3 ps of the marketing mix. By keeping this under your marketing strategy and following it you can better manage your entire business and marketing campaigns. Keep this in view that each stage is different and needs different decisions for similar aspects.

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The product life cycle
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The product life cycle
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product life cycle plays important role in designing a marketing strategy. check how you can modify your marketing plan at each stage of the product life cycle
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