The only big companies that succeed will be those that obsolete their own products before somebody else does.

-BILL GATES

PRODUCT LIFE CYCLE (PLC)

• The product life cycle is an important concept in marketing that provides insights into a product’s competitive dynamics.

• To say that a product has a life cycle is to assert four things:

1. Products have a limited life.2. Product sales pass through distinct stages, each

posing different challenges to the seller.

3. Profits rise and fall at different stages of the product life cycle.

4.Products require different marketing, financial, manufacturing, purchasing and personnel strategies in each stage of their life cycle.

• INTRODUCTION: A period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction.

• GROWTH: A period of rapid market acceptance and substantial profit improvement.

• MATURITY: A period of a slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased marketing outlays to defend the product against competition.

• DECLINE: The period when sales show a downward drift and profits erode.

Product Categories

• Have the longest life cycles. Many product categories stay in the mature stage for an indefinite duration, since they are highly population related. Some major product categories-cigars, newspapers-seem to have entered the decline stage of the PLC. Meanwhile some others-facsimile machines, cellular telephones-are clearly in the growth stage.

• The PLC concept can be used to analyze a product category (liquor), a product form (white liquor), a product (vodka), or a brand (Smirnoff).

Product Forms

• Exhibit the standard PLC histories more faithfully than do product categories. Thus manual typewriters passed through the stages of introduction, growth, maturity, and decline; their successors-electric typewriters and word processors-similarly passed through these stages

Product

• Follow either the standard PLC or one of several variant shapes.

Branded Products

• Can have a short or long PLC. Although many new brands die an early death some brand names-such as Coca-Cola, Kao, and Yamaha-often have a very long PLC and are used to name and launch new products.

• There are three special categories of product life cycles that should be distinguished-those pertaining to styles, fashions, and fads.

STYLE

• Is a basic and distinctive mode of expression appearing in a field of human endeavor. For example styles appear in clothing (formal, casual, funky); and art (realistic, surrealistic, abstract). Once a style is invented, it can last for generations, going in and out of vogue. A style exhibits a cycle showing several periods of renewed interest.

Fashion

• Is a currently accepted or popular style in a given field. For example, jeans are a fashion in today’s popular music. Fashions tend to grow slowly, remain popular for a while, and decline slowly. The length of a fashion cycle is hard to predict.

Fads

• Are fashions that come quickly into the public eye, are adopted with great zeal, peak early, and decline very fast. Their acceptance cycle is short, and they tend to attract only a limited following.

Marketing Strategies Throughout the PLC

Introduction Stage• Rapid-skimming Strategy involves launching the

new product at a high price and a high promotion level.

• Slow-skimming Strategy involves launching the new product at a high price and low promotion.

• Rapid-penetration Strategy involves launching the new product at a low price and high promotion.

• Slow-penetration Strategy involves launching the new product at a low price and low level of promotion.

Growth Stage• It improves product quality and adds new product features

and improved styling.• It adds new models and flanker products (i.e., products of

different sizes, flavors, and so forth that protect the main product).

• It enters new market segments.• It increases its distribution coverage and enters new

distribution channels.• It shifts from product awareness advertising to product-

preference advertising.• It lowers prices to attract the next layer of price-sensitive

buyers.

Mature Stage• Market Modification. The company might try to

expand the market for its mature brand by increasing the number of users and/or the usage rate.

-convert non-users-enter new market segments-win competitors’ customers-more frequent use-more usage per occasion-new and more varied uses

• Product Modification. Managers also try to stimulate sales by improving the product’s quality, features, or style.

-quality improvement-feature improvement-style improvement

• Marketing-Mix Modification-prices-distribution-advertising-sales promotion-personal selling-services

Decline Stage• Increase its investment (to dominate or strengthen its

competitive position).• Maintain its investment level until the uncertainties about

the industry are resolved.• Decrease its investment level selectively, by sloughing off

unprofitable customer groups, while simultaneously strengthening its investment in lucrative niches.

• Harvest (or “milk”) its investment to recover cash quickly.• Divest the business quickly by disposing of its assets as

advantageously as possible.