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    Product Life Cycle

    Uploaded by

    kenleighlee99

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    © All Rights Reserved
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    Product Life Cycle

    Uploaded by

    kenleighlee99
    15 views13 pages

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    © © All Rights Reserved

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    15 views13 pages

    Product Life Cycle

    Uploaded by

    kenleighlee99

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    You are on page 1of 13

    Product Life Cycle

    What is Product
    Life Cycle?
    Product Life Cycle
    • The Product Life Cycle (PLC) defines the stages that a
    product moves through in the marketplace as it enters,
    becomes established, and exits the marketplace. In other
    words, the product life cycle describes the stages that a
    product is likely to experience. It is a useful tool for managers
    to help them analyze and develop strategies for their
    products as they enter and exit each stage.

    3
    Product Life Cycle
    Stages in the Product Life Cycle
    • The four stages in the product life
    cycle are:
    1.Introduction
    2.Growth
    3.Maturity
    4.Decline

    5
    Stages in the Product Life Cycle
    1.Introduction
    When a product first launches, sales will typically be low and
    grow slowly. In this stage, company profit is small (if any) as the
    product is new and untested. The introduction stage requires
    significant marketing efforts, as customers may be unwilling or
    unlikely to test the product. There are no benefits from
    economies of scale, as production capacity is not maximized.

    6
    Stages in the Product Life Cycle
    1.Introduction
    The underlying goal in the introduction stage is to gain
    widespread product recognition and stimulate trials of the
    product by consumers. Marketing efforts should be focused on
    the customer base of innovators – those most likely to buy a
    new product.

    7
    Stages in the Product Life Cycle
    1.Introduction
    There are two price-setting strategies in the introduction stage:
    • Price skimming: Charging an initially high price and gradually
    reducing (“skimming”) the price as the market grows.
    • Price penetration: Establishing a low price to quickly enter the
    marketplace and capture market share, before increasing prices
    relative to market growth.

    8
    Stages in the Product Life Cycle
    2. Growth
    If the product continues to thrive and meet market needs, the
    product will enter the growth stage. In the growth stage, sales
    revenue usually grows exponentially from the take-off point.
    Economies of scale are realized as sales revenues increase faster
    than costs and production reaches capacity.

    9
    Stages in the Product Life Cycle
    2. Growth
    Competition in the growth stage is often fierce, as competitors
    introduce similar products. In the growth stage, the market
    grows, competition intensifies, sales rise, and the number of
    customers increases.

    10
    Stages in the Product Life Cycle
    3. Maturity
    Eventually, the market grows to capacity, and sales growth of the
    product declines. In this stage, price undercutting and increased
    promotional efforts are common as companies try to capture
    customers from competitors. Due to fierce competition, weaker
    competitors will eventually exit the marketplace – the shake-out.
    The strongest players in the market remain to saturate and
    dominate the stable market.

    11
    Stages in the Product Life Cycle
    4. Decline
    In the decline stage, sales of the product start to fall and
    profitability decreases. This is primarily due to the market entry of
    other innovative or substitute products that satisfy customer
    needs better than the current product.

    12
    Thank you

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