The Product Life Cycle (PLC) is a conceptual model that describes the stages a product goes through from its introduction to the market until its decline and eventual withdrawal.
Understanding the PLC helps businesses make informed decisions regarding marketing strategies, resource allocation, and product management.
The PLC is typically divided into four main stages:
1. Introduction Stage
This is when a new product is launched into the market.
Sales growth tends to be slow due to limited awareness.
Profits are nonexistent at this stage due to the high costs of product development and marketing efforts needed to build awareness.
Marketing focuses on early adopters and creating awareness of the product.
2. Growth Stage
The product starts to gain acceptance, and sales begin to increase significantly.
Profits rise rapidly as economies of scale are realized.
Competition starts to increase, leading to price adjustments and enhancements in product features.
Marketing efforts are geared towards a broader audience, emphasizing brand preference and increasing market share.
3. Maturity Stage
Sales growth slows down and stabilizes as the product reaches peak market penetration.
The market becomes saturated, and competition is intense, leading to a focus on differentiation and feature enhancements to maintain market share.
Profits may start to decline towards the end of this stage due to increased marketing costs to defend the product against competitors.
Strategies may include modifications to the product, pricing, distribution, and promotional tactics to rejuvenate interest.
4. Decline Stage
Sales and profits begin to fall due to changes in consumer preferences, technological advancements, increased competition, or market saturation.
Companies may decide to discontinue the product, sell the production rights to another company, or pivot to new markets or product versions.
Marketing strategies usually involve reducing costs and maintaining the product for the niche segment still interested or phasing it out gradually.