CH 10

CHAPTER 10: PRODUCT LIFE CYCLE
Meaning
Stages in Product Life Cycle
Strategies Adopted at Different Stages of the Product Life Cycle
MEANING
The stages through which the individual products develop

over a period of time is known as product life cycle.
The product life cycle is a well-known framework in

marketing. Products typically go through four stages:
• Introduction
• Growth
• Maturity
• Decline
PRODUCT LIFE CYCLE
ASSUMPTIONS - PLC
Products have a limited life and, thus, every product has a life
cycle.
Product sales pass through distinct stages, each of which poses

different challenges, problems and opportunities to its parent
company.
Products will have different marketing, financing, manufacturing,

purchasing and human resource requirements at the various
stages of its life cycle.
PRODUCT LIFE CYCLE STAGES
PRODUCT LIFE CYCLE

STAGES Stage 1: Market Introduction
Stage 2: Growth
Stage 3: Maturity
Stage 4: Decline
STAGE 1: MARKET INTRODUCTION
Characteristics of the introduction stage are:

• High costs due to initial marketing, advertising, distribution and high
promotion expenses.
• Sales volumes are low, increasing slowly
• There may be little to no competition
• Demand must be created through promotion and awareness campaigns
• Customers must be prompted to try the product.
• Little or no profit is made owing to high costs and low sales volumes
STAGE 2: GROWTH
Characteristics of the growth stage are:

• Costs reduced due to economies of scale
• Sales volume increases significantly
• Profitability begins to rise
• Public awareness increases
• Competition begins to increase with a few new players in establishing
market
• Increased competition leads to price decreases
STAGE 3: MATURITY
During the maturity stage, the following occurs:

• Costs are lowered as a result of production volumes increasing and
experience curve effects
• Sales volume peaks and market saturation is reached
• Increase in numbers of competitors entering the market
• Prices tend to drop due to the proliferation of competing products
• Brand differentiation and feature diversification is emphasized to maintain or
increase market share
• Industrial profits go down
STAGE 4: DECLINE
Features of the decline stage include:

• A decline in sales volume as competition becomes severe, and
popularity of the product falls;
• A fall in prices and profitability (the latter ultimately moving in the
negative zone);
• A counter-optimal cost structure;
• Profit increasingly becomes a challenge of production/distribution
efficiency rather than increased sales.
STRATEGIES FOR THE
DIFFERENT STAGES OF THE
PLC
INTRODUCTION
• Product branding and quality level is established and intellectual property

protection, such as patents and trademarks are obtained.
• Pricing may be low penetration (launching the new product at a low price
and low level of promotion) to build market share rapidly or high skim pricing
(launching the new product at a high price and high level of promotion) to
recover development costs.
• Distribution is selective until consumers show acceptance of the product.
• Promotion is aimed at innovators and early adopters. Marketing
communications seeks to build product awareness and educate potential
consumers about the product.
GROWTH
• Product quality is maintained and additional features and support

services may be added.
• Pricing is maintained as the firm enjoys increasing demand with
little competition.
• Distribution channels are added as demand increases and
customers accept the product.
• Promotion is aimed at a broader audience.
MATURITY
• Product features may be enhanced to differentiate the product

from that of competitors.
• Pricing may be lower because of the new competition.
• Distribution becomes more intensive, and incentives may be
offered to encourage preference over competing products.
• Promotion emphasizes product differentiation.
DECLINE
As sales decline, the firm has several options:

• Maintain the product, possibly rejuvenating it by adding new features and
finding new uses or maintain its brand without change in the hope that
competitors will leave the industry. For example, Procter & Gamble made
good profits by remaining in the declining liquid soap business as others
withdrew.
• Harvest the product–reduce various costs (plant and equipment,
maintenance, R&D, advertising, sales force) and continue to offer it, possibly
to a loyal niche segment.
• Discontinue the product, liquidating remaining inventory or selling it to
another firm that is willing to continue the product.
CASE STUDY: LIFE CYCLNG
ONLINE FASHION
Firms such as Oli, Color Plus, a premium Indian casual wear brand, YetStyle.com, who offer a range of Asian fashion online,
and ASOS, the UK’s market leader in online fashion retailing, each have thousands of product items on their websites.
Understanding the principles underpinning the lifecycle can help these firms work out the length of each item’s sales period,
manage the stocking requirements, and plan for the introduction of new ranges. For example in the world of online fashion
the following cycle might be evident:
• Introduction – a new skirt is presented online, given lots of visibility, and is linked directly through newsletters and
social media sites and also from the homepage. Some fashion leaders adopt the new skirt, while digital influencers who
had been alerted previously to the launch, are given access to more detailed information, and, in some cases, samples.
• Growth – offline articles, online placements, and word-of-mouth help sales to grow. Stock management becomes
critical as it is essential not to disappoint customers.
• Maturity – competition becomes intense and it is necessary to remind audiences about the product online. More stock
may be required to ensure continuity of supply. For example, a dress from the previous summer collection may still be
selling well. At some point during this stage, the firm may cut the price to clear remaining stock. Sales provide an
opportunity to make space in the warehouse for new products.
• Decline – the skirt becomes unfashionable and is replaced by a new design.

CASE STUDY CONT……
Each of these specific stages of development has different characteristics, requiring differing business and
marketing approaches. This, in turn, has led to the development of software systems and applications that are
geared to manage the individual characteristics of each stage. For example, Product Lifecycle Management
(PLM) systems deal with online catalogues, design collaboration (enabling geographically dispersed employees
to work on designs.
together), style information (an item’s sales history), and various facilities designed to integrate order
tracking, invoicing, and operations activities.
• Source: www.yesstyle.com
Questions
• Discuss the various stages of product life cycle for an online fashion firm.
• How might the marketing activities change as online fashion brand moves into the mature stage?
• Discuss the various pricing strategies to be adopted at maturity stage.
• Discuss main features of three leading online fashion companies in India.What do they all have in common?
REVIEW QUESTIONS
What is Product Life Cycle (PLC)? Explain the various stages in the life cycle of a product.
Explain the concept of Product Life Cycle (PLC).Briefly discuss the characteristics along with
appropriate strategies to be used in the maturity stage of PLC.
Discuss the various strategies used by a marketers in the introduction and maturity stages of Product
Life Cycle (PLC).
Explain the stages in the Product Life Cycle (PLC) of a high-tech product like laptop.
What is Product Life Cycle (PLC)? What strategies should be adopted by a marketer to delay the
entry into the decline stage?
Explain the concept of Product Life Cycle (PLC). How is understanding of PLC useful to a marketer?
What are the characteristics of each of the stage of PLC? Give examples of two products at each of
the stages of PLC in the Indian market.
Product Life Cycle is an important tool of analysis and helps in strategy formulation. Identify the stage
of PLC for the following products of banking industry and suggest the appropriate marketing
strategies for them: (a) Nokia cell phones (b) i- phones.

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CHAPTER 10: PRODUCT LIFE CYCLE

The stages through which the individual products develop

The product life cycle is a well-known framework in

Product sales pass through distinct stages, each of which poses

Products will have different marketing, financing, manufacturing,

PRODUCT LIFE CYCLE

Characteristics of the introduction stage are:

Characteristics of the growth stage are:

During the maturity stage, the following occurs:

Features of the decline stage include:

• Product branding and quality level is established and intellectual property

• Product quality is maintained and additional features and support

• Product features may be enhanced to differentiate the product

As sales decline, the firm has several options:

• Decline – the skirt becomes unfashionable and is replaced by a new design.

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