Consumers buy unlimited products every day. Like a human being, every product has a certain life cycle. products start its journey and get older and popular but after some time become less popular and demand for new products increases when introduced in the market.
When a company launches a new product, it must be familiar with its different product life cycle stages. Due to a limited lifespan, the company must invest its resources in new product development to make sure that the product has a long and healthy life cycle.
Five Stages of Product Life Cycle (PLC)
- Product Development
It is a pre-launched and early stage of any new product and passes through rigrous research and tests. The management tries to make it according to the needs and wants of customers.
The management bears heavy costs and losses (pre-launched expenditure). The development and research expenditure become loss if the product fails.
In this stage, the product is distributed and made available for sale.
Launching a new product is a very expensive activity for any company. Due to the small market size, the sales volume is very slow. Marketers work hard to create sufficient demand for the new product in the market. Customers must be encouraging to try the product again and again.
If a company want to build market share, it may adopt low penetrating pricing strategy. If want to recover cost, implement skimming pricing strategies.
The revenue generation is very low and mainly covers research and development that means no profit at this stage.
The growth stage provides a company with strong growth in terms of sales volume and profit earned. This happens because companies achieve economies of scale that leads to cost reduction. This help the company to invest more resources in terms of advertising and promotion of the product. Due to more promotion both public awareness and probability increases.
There are valid chances that the product also faces competition by the introduction of new products in the market. if competition increases the prices may decrease.
Mostly prices remain same and the company approaches new distribution channels to fulfil increasing demand.
In the maturity stage, the product cost decreases due to learning curve and high production volume. Now the company should maintain the market share what have achieved. This is a competitive time for companies and products to strategically mobilize its resources.
Incentives should be offered to distributors to prefer the product placement over competitors. Product differentiation and diversification are important to maintain competitive advantages. New competitors introduce same products in the market that also affect the product pricing and profitability.
In product decline stage is the last stage of Product Life Cycle (PLC). The product is getting older and starts to shrink. One of the reason is the saturated market due to competitors’ product with new features and decreased need and want. This situation is unavoidable, but the company still have many options.
One option is rejuvenating the product by adding new features to attract more customers. If possible harvest the product and target the loyal customers.
Product Life Cycle Examples
We can observe different products that are passing through different life cycle stages. One can better understand from the below example of PLC.
- Development Stages in based on future products development upcoming new products
- Introduction is developing LED TVs and Screens
- Growth includes Digital Video Recorder DVR and Blu-ray
- Maturity is DVD technology
- Decline is VCR also Video cassette Recorder
Keep in mind some of the limitations of PLC technique discussing below.
Manufacturing industry must understand the concept of Product Life Cycle as it can affect both the company’s portability and sustainability. It will help the manufacturers to better understand and manage life cycle framework proactively.
This PLC framework is more applicable in the manufacturing industry than individual brand, which can face great variability.
If any changes occur in the Marketing Mix element, it can affect the life cycle span of any product. Whether pricing strategies or advertising campaigns, it can affect the product sales at each stage of the product. For example, even in the product decline stage, lowering the prices and effective advertising strategies may increase the product sales.