a. When the marketer understands that a product is not going to get revived through re-launch, the marketing manager plans for a new product that can succeed the existing product when the product ceases to be alive. … For some it can be decades and for others it can be less than a year. Not all the products mature. – It is a “generalised model of sales and profit trends for a product class or category over a period of time”. Similarly, when a product is newly introduced in the market, it should one day meet its own end. Products make profits for shorter periods. Heavy investment without return results into losses. What Does Product Life Cycle Mean? The product is officially launched into the market. Sales would pick up gradually as prospective buyers learn of the product through advertising and other selling techniques. Promotion – Promotional activity which was enhanced/expanded at growth stage now brought under rationalisation, i.e., maintaining only the most needed one. Wassen, B. Carty, M. Chevelier, D.J. Product Life Cycle assists in the postponement of the desirable life phase of a product, e.g., maturity stage. There is no use starting off with a very high price exploiting a gap and eventually cutting down the price after feeling the heat of competition. ‘Run- out’ Strategy cut down all cost to bare minimum to add the profits for remaining short period. On the contrary, if the competitors cannot enter into a market so easily, the lifecycle of products in such market can be fairly long. In the first phase, the sales growth rate starts to decline. This period requires greater investment. If the enterprises have risk bearing capacity, they can keep their product alive in the market for a long period as they can face the challenges of the market very effectively. Although there is no intense competition, the product sells at a high price, and it also incurs high costs. The following checklist indicates some of the detailed information necessary to identify turning points in the PLC: a. Stanton: i. The features of saturation exist everywhere in all components. The rate of improvement in efficiency is high at the beginning but slows down after a period when the production levels go up. Thus, a marketer should adopt the following strategies before introducing a product in the market: (i) A basic product or service should be offered. A product, when it is new, advances through an arrangement of stages from incubation to development, maturity, as well as decline. PLC is not to be used as a weapon to destroy products that have still lot of steam left. In order to achieve its objective, following strategies should be adopted by any product manager at growth stage of a product: (i) Apart from the basic product its extensions should be introduced. b. Consumption achieves constant rate, presence of replacement sales, hard work to get a tiny market share with higher costs, rapid fall in price thus making the profit margin thinner and thinner, intensified competition strategies and costs etc. This use of those trends helps him in understanding the life cycle of his product. Privacy Policy 9. ii. Every attempt is made to increase in sales quantity. Significance 6. The PLC of a product is also compared to ‘Aging Process’ which has definite phases such as Product development, Introduction, Growth, Maturity (Saturation) and Decline. Chocolate market, wide range, biscuit product, kid bicycle etc., experience the wide range products in the same line. The sales of a product might have declined because of poor advertising or entry of competitive products backed up by high promotional effort. With the help of this study the marketing manager can make necessary arrangements to make the product available according to the demand. Thus, the concept of product life-cycle facilitates integrated marketing policies relating to product, price, promotion and distribution. Another factor is that differing products would possess different PLC “shapes”. Factors Affecting 9. Hence a shift of customers begins. This is the stage during which the sales volume increases followed by profits. Maturity. Hence the producer has to bring changes in the product. While existing companies often fund research and development from revenue generated by current products, in startup businesses, this st… The product life cycle model helps you: Forecast the expected path of the sales a product gets over the course of its life. We can take the example of Maggi. c. Size of pack – Modification in packing size, content. The short-term incentives are given to the public in the form of gifts, vouchers, discounts, rebates with the intent to boost temporary sales. Fig.1.39 shows comparison of innovation of diffusion of five products where Facebook, Gmail, Skype and Twitter show slow learning and a similar product – WhatsApp, that is user-friendly shows a high learning curve. They vary from product to product and depend solely on the efforts of the marketing manager. At every stage in the life of a product, a company should have an appropriate plan in place so that it does not get impacted by market forces negatively. Introduction . Importance of the study of Product Life Cycle can be explained as under: Product life cycle is an important tool for sales forecasting. Product will eventually reach the decline stage unless the marketing manager re-launches it again to avoid the decline. Maturity After the Introduction and Growth stages, a product passes into the Maturity stage. v. Proper attention on stocks, supply, channel selection. Thus sales were declining and profits started reducing. ii. The marketing manager needs to plan the exit of the product also, as he can let the product be there and if possible try and milk the product dry (earn maximum possible profit by stopping expenses). This is the third stage of PLC. Without making big investments on research and development, a company can never hope to survive and flourish in a competitive arena. These styles come and go and some styles repeat themselves after a period of time. Q8.What do you mean by the term product Life Cycle (PLC) Explain the stages of PLC. In the early sixties, all trousers used to be loose and had bottom sizes of twenty inches. Growth is uncertain in products as infant mortality rate amongst the products is very high. The mounting costs declining sales and profits are to be well balanced and managed. Spreading the products to newer market segments. This keeps on happening and we get a cycle-recycle type of PLC. When consumers are unable to understand the technology of the product or if the product is not user-friendly, it takes longer time for diffusion of innovation and so the growth of sales is much lower. Evaluating the Product Life Cycle Model. Definition: The Product Life Cycle means the sequence of stages that every product progresses through until it reaches the stage where it is finally abandoned or discontinued from the market. A software development life cycle (SDLC) model is a conceptual framework describing all activities in a software development project from planning to maintenance. While all living organizations have fixed period of growth, products either grow instantly or very slowly. There are various methods that help understand the PLC stage of any product. a. It also reveals the effect of their policies and strategies upon sales and profit of the enterprise. Growth – In the Growth Stage, both sales and profits will begin to rise. Add to the product – features with recent expectations and practices. According to Joel Dean, “The length of the product life-cycle is governed by the rate of technical change, the rate of market acceptance and the cease of competitive entry.”. Until the consumers show the acceptance for the product, the firm distributes its product through a selective distribution channel. Luck, D.T. i. But, unfortunately, this may happen if marketers are wedded to its philosophy. Cycles range from its initial development to its eventual release, and include updated versions of the released version to help improve software or fix software bugs still present in the software. The end product of growth is maturity, sales increase at a declining rate i.e., total sales show an upward trend but marginal sales would decline. This is why it’s called the product life cycle. Knowing this fact, management always tries to improve its existing product or to develop a new product. Promotional activities are boosted further to maintain the same tempo of marketing. As a consequence, the reduction in costs due to the learning curve is much lower than that due to the broader based experience curve. Once the product is successfully developed, it is ready to be introduced in the selected market segment. Here the competition is not so stiff and, therefore, the firm keeps a moderate price of its product and enjoys the increasing demand. Are new products being created in this industry or others which may meet consumer needs more effectively? c. Are prices and profit margins being cut? have come up and started crunching the market share. They vary from product to product and depend solely on the efforts of the marketing manager. Hero cycles has introduced not less than 20 ranges in the same product. The product life cycle can be divided into several stages characterized by the revenue generated by the product or range of products, such as a brand. Similarly, aggregate product decline can be postponed for generations in the absence of major technological breakthrough (e.g. After the Introduction and Growth stages, a product passes into the Maturity stage. The entrepreneur can find new uses of the product for the expansion of market during growth stage and for extending the maturity stage. Maturity is a stage where the product has constant sales and shows a steady rate of growth equal to the natural rate of growth of the market. Every product has a life cycle and time spent at each stage differs from product to product. Hence, the following features appear at the introductory-stage: The pick-up period for sales is very lengthy due to customer’s hesitation, the difficulties associated with shifting from the existing product brands, lack of proper supply to all segments, dealers’ hesitation to keep and suggest for an alternative product, expansion problems of management, even low confidence of management also pushes down the sales. The management may try to fix the low price (unless high skimming price strategy is in practice) but the high costs, technological problems, low sales/returns etc., force them to fix high product price. Normal Price – The ability to charge higher prices reduces gradually. When you look at the classic product life cycle curve, the Decline stage is very clearly demonstrated by the fall in both sales and profits. It also succeeded in the second revival in 1981. At one time the Rubik cube was a fad and was the highest selling product in various forms. Q8.What do you mean by the term product Life Cycle (PLC) Explain the stages of PLC. Content Guidelines 2. Your email address will not be published. (v) Heavy sales promotions should be done to encourage trials. Capacity additions, therefore, need to be kept under limits, without going overboard at any point. 3. You can sell second round to the existing customers circle. Instead of taking corrective measures, if marketers erroneously think that the product is to be placed on the stretcher and withdraws the promotional budget and stops investing in R & D that would actually worsen the situation. The PLC will greatly help the management in drawing future plans of the firm. Depending on the PLC stage a product is passing through, a marketing manager can decide the level of media requirements and promotions. Account Disable 12. The first phase of the product life cycle is the development or introduction phase. It is an essential tool for analyzing the prospective success or potential of a new product through research and development. Now the Rubik cube is available but it has lost its craze. Report a Violation 11. and Robenson J.F. (iv) The management can adopt latest technological changes to improve the product quality, features and design. The firm can prepare an effective product plan by knowing the PLC of a product. The Product Life Cycle. Abandon the product, Last step to stop it. It is because the customers who have accepted the new products today can accept another product tomorrow and the existing products will soon stand out of the market. (vi) Build awareness and interest in the market by advertising. Creation of new uses by expansion of the market. i. Products can have rebirth in a way of re-launch of the product by adding/replacing some of the features to make it attractive to the changing tastes of the consumers. Kollate, R.D. If the organization is not in a position to take advantage of the high production rate to increase the sales volumes, by increasing the promotions/reduction in profits, the organization can use this high learning curve to improve the quality of the product by adding more features at the same cost of production and then use it as differentiation and specialization to create product price premium to increase profitability. Hence, there cannot be any sales. Once the product is re-launched, it comes again into a new PLC and starts growing, maturing etc. (iv) Market Modification – A company might try to expand the market for its mature brand by working with two factors that make up sales volume viz., Number of brand users and Usage rate per user. Through several probing’s one should even be in a position to predict when competitors are likely to enter the scene, in what possible areas they will imitate the product, and what will be the extent of cost advantages the competitors will have due to ‘copying’ and what pricing strategies they may follow to undercut the pioneer. The marketer should make appropriate planning before marketing the product. Every product has a life cycle and time spent at each stage differs from product to product. 3. This process is associated with several models, each including a variety of tasks and activities. Life cycle of a product is called Product Life Cycle (PLC). Profits will be low as part of the investment is to be recouped in addition to heavy expenditure on selling and distribution. vi. It is said that out of thousands of products being launched by various organizations, only one or two survive and grow. Various marketing thinkers C.R. Both can be increased by –. Four stages exist to the product life cycle after a product is introduced to the market. It stays longer than other stages and poses big challenges to the marketers. Every firm makes sale projections during introduction, growth and maturity stages of the product life-cycle. What is the current level of ownership compared to potential? v. Competitive and comparative advantages should flow to the buyers specially to potential buyers who divert from competitor’s products. The gap between production and sales expands as demand comes with difficulty in marketing the product. E.g. Controlled promotional expenses – The ratio between the promotional costs and sales value speaks the normal rate. The life cycle can be very short, as pertains to a product that is for an event, such as a Christmas toy, or very long such as a watch or a car. Smallest mobiles, colour screens in every pocket etc. It can probably be said that a given product (or products collectively within an industry) may hold a unique PLC shape, and the typical PLC model can only be used as a rough guide for marketing management. This situation is called high learning curve of the PLC (actually it is during the growth period of PLC when the high learning curve is present). iii. When the PLC is predictable, the entrepreneur can take in advance before the decline stage, by adopting product modification, pricing strategies, distinctive style, quality change, etc. 1. (v) Product Modification – Managers also try to stimulate sales by modifying the product’s characteristics through quality improvement, feature improvement or style improvement. product lifecycle (in marketing): The product lifecycle, in a marketing context, is all the stages of a product's life span that are related to its promotion and sales. During the maturity stage, sales will peak as the product reaches market saturation, and … Fashion can repeat itself over and over again. The major objective of the company should be to reduce expenditure and milk the brand. During each stage of the PLC, different types of promotions need to be planned. (b) The characteristics of competition and unit profits tend to follow as postulated above, i.e. The company a… Every product passes through four stages in its life namely, introduction, growth, maturity and decline. A product life cycle is the amount of time a product goes from being introduced into the market until it's taken off the shelves. ii. ii. Decline – At the final stage of Decline, profit margins touch a low level, competition becomes severe and customers start using newer or better substitutes. For example, in India, the market acceptance is very slow, and therefore, here life span of the products is very long. What is the definition of product life cycle?The product life cycle includes the following four stages: At the introduction stage, the product is relatively unknown, the sales are growing at a low rate, and the profits are limited. Most of the population has tried the product and future sales are governed by replacement demand. Sometimes a fad, after losing its peak may follow a standard life cycle. Blackwell have contributed heavily for the identification of stages involved in launching of a product and various phases of product life cycle. profits peak during the rapid growth phase and problems of competition and excess capacity become more acute as the cycle advances. (vi) Marketing program Modification – A marketer can think in terms of modifying his marketing program features like price, distribution, advertising, sales promotion, personal selling and services for better acceptability of the product. Marginal reduction in price to attract non-users, to maintain users. There are no more distribution channels to tab as all the existing channels have been used. It is the role of the sales and marketing team to develop an effective marketing message through the appropriate channels to attract potential c ustomers.At this early stage of the product life cycle, the product may well be pre-revenue and/or pre-user. Irregularity 14. Consumers are fickle minded and do not remain wedded to any trend, fashion or fad for a long time, so companies have to realize that they cannot hope to grow at exponential rates, resting on past laurels. PLC helps a company to proactively manage its product portfolio instead of letting market forces shape it. (ii) Modifying the product by introducing new tastes like “Maggi Capsicum”, “Maggi Dumdar” and “Tomato Maggi”. As a result of it, the lifecycle of products in our country is higher than that of the developed countries. This is a fact of existence of a product. Phases: Development, Introduction, Growth, Maturity, Saturation and Decline, Product Life Cycle – 8 Major Types: Normal or Standard, Style, Fashion, Fad, Growth Slump, Cycle-Recycle PLC Curve, Scalloped PLC, Learning Curves & PLC, Product Life Cycle – 4 Important Stages: Introduction, Growth, Maturity and Decline, Factors Affecting Product Life Cycle: Rate of Technical Change, Market Acceptance, Ease of Competitive Entry and a Few Others, : New Products to Succeed Current Product, Image Changeovers for Current Product and a Few Others. The two revivals are the best examples of successful management of the PLC of a brand. Smaller businesses have a good reputation for innovation. Management with anticipated demand (demand forecasting) enters the product to obtain effective demand. At the growth stage, there is a rapid growth in sales, a high increase in the profits, and a high intensity of competition. Experience Curve 15. ‘Product failure’ is the common feature at introduction stage. In cell phones, the current style is touch screen till such time that another style replaces it. What is the definition of product life cycle? Since the customer base is widespread, the broader promotional tool is required and hence the advertising is likely to be more effective. At the introduction stage, the product has just come out in the market; it has very few competitors and very few customers also. Each product or goods has a life cycle like human beings, plants and animals. This will help in taking sound marketing decisions at different stages of the product life cycle. (iii) Launching contests like “Me and My Maggi” where people tell their stories, and their photographs and stories are published on the Maggi pack. There are 4 different product life cycle stages which are known as Introduction, growth, maturity and Decline. Life cycle of one product can be over in few months, and of another product may last for many years. Consumer who experiences a new style often keeps on purchasing the product. On the negative side, critics point out the difficulty in making predictions re­garding the life cycle patterns for different products with a certain amount of accuracy and certainty. Producers struggle hard to match cost of marketing with thin marginal returns. (ii) Mass marketing should be done in order to penetrate deeper into the market. New Products to Succeed Current Product: 2. a. Philip Kotler – “The product life cycle portrays distinct stages in the sales history of product. The high learning of customers is achieved through high volume of promotions (the product information/message is repetitively bombarded on the customers) to improve the purchase efficiency of the customers for the product. The time-frame after the last production date depends on the product and relates to the expected product lifetime from a customer's point of view. The concept enables the marketer in planning the entry of a new product in a chosen market. d. Adoption of the latest technological changes, fashion changes, market acceptance, etc. An adage ‘Nothing is Permanent’ is commonly applicable to all.When a product is newly introduced in the market, it should one day meet its own end. Very normal rates are charged and exceptional price differentiation is followed for product difference. Strategies Adopted for Product on the Basis of PLC Concept: It is the second stage of PLC, wherein a product’s sale increases rapidly, cost per customer to the company (in terms of advertising and sales promotion) reduces and profit earnings increase. The life cycle of a product is associated with marketing and management decisions within businesses, and all products go through five primary stages: development, introduction, growth, maturity, and decline. Creative marketing is followed by manufacturer on pushing the product to every corner. These can lead to over capacity increased price-cutting and profit erosion. When the product is deleted, funds cease flowing altogether. The third of the product life cycle stages can be quite a challenging time for manufacturers. Though the product is considered to have a normal lifecycle it has different characteristics from lifecycle stages of living organisms. v. Furthermore, some products do not (or to date, at the least, have not) experience a decline. Plagiarism Prevention 5. Important factors affecting the product life-cycle are as under: Rate of technical change affects the product life-cycle. The rate of growth depends on various factors like external marketing environment, marketing strategy adopted by the organization, the amount of money spent on promotions, the efforts of the sales team etc. Enterprises having strong economic and managerial forces, can keep their products standing in the market and the lifecycle of their product will be longer that of the lifecycle of the products of those enterprises having weak economic and managerial base. If estimates can be made of competitors’ experience curve effects, this should reveal which are the low-cost competitors and which are not and hence which are at risk and from whom. 4. Let us list these special characteristics below: A product can have a long or short gestation period unlike living organisms where there is a fixed gestation period. Many of these products are being sold for over 100 years and have not lost consumer loyalty due to their re-launch to suit changing tastes of consumers. Some life spans are short for example, like a variety of bees only live for 4 to 5 weeks. It is difficult for marketing management to gauge accurately where a product is on its PLC graph. As nothing is left in the market for expansion, the existing cost on advertisement are just maintained to support dealer’s active support. PLC assists in the postponement of the desirable life phase of a product, e.g., maturity stage. The product life cycle is the process a product goes through from when it is first introduced into the market until it declines or is removed from the market. Products as infant mortality rate amongst the products what do you mean by product life cycle very useful in the market an is! Launch it takes some time they begin to fall and gradually become.. Product available according to the tune of change in advertisements non-users, maintain! Terms of its time on the market above, i.e also affected by the product. 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