1. PRODUCT LIFE
CYCLE
Mehmet KUZU

2. PRODUCT LIFE CYCLE
 Like human beings, products
also have their own life-cycle.
From birth to death human
beings pass through various
stages e.g. birth, growth,
maturity, decline and death. A
similar life-cycle is seen in the
case of products. To say that a
product has a life cycle is to
assert four things:

4. Market Pioneering Stage

5. Market Pioneering Features:
 Costs are high,
 Slow sales volumes to start,
 Little or no competition,
 Demand has to be created,
 Customers have to be prompted
to try the product,
 Makes no money at this stage

6. Market Growth Stage

7. Growth Stage Features
 Costs reduced due to economies of
scale,
 Sales volume increases significantly,
 Public awareness increases,
 Competition begins to increase with
a few new players in establishing
market,
 Increased competition leads to price
decreases.

8. Market Maturity Stage

9. Maturity Stage Features
 Costs are lowered as a result of production
volumes increasing and experience curve
effects,
 Sales volume peaks and market saturation
is reached,
 Increase in 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.

10. Market Decline Stage

11. Decline Stage Features
 costs become counter-optimal,
 sales volume decline or
stabilize,
 prices, profitability diminish,
 profit becomes more a
challenge of
production/distribution efficiency
than increased sales.

13. In Pioneering Stage
 Pricing strategy should be
adopted: Market skimming or
market penetration.

14. In Growth Stage
 The pioneer may has to change
his marketing strategies,
 Has to persuade the customer
to prefer his brand.

15. In Maturity Stage
 May try out product and
packaging modifications, and
promotional deals and make
special offers to new market
segments.

16. In Decline Stage
 Some firms may try to link up
the sale of these products with
some other premium products.
 May begin to prepare new
products.

17. PLC CONCEPT AS A TOOL IN
FORMULATING MARKETING
STRATEGY

18. Each stage of product life cycle is
an outcome of market
behaviour/repsonse.

19. The utility of PLC arises out of
following facts:
 A product has to necessarily
pass through certain strategies
during its life,
 What happens to it each stage
depends on market behaviour,
 By manipulating market
behaviour, the life cycle stages
of the product can also
manipulated.

20. PLC Concept Helps Marketing
Strategy Formulation
 Facilitates pre planning the
product launch,
 Facilitates prolonging the
profitable phase,
 Facilitates investment decisions
on products,

21. PLC Concept Helps Marketing
Strategy Formulation
 Facilitates choice of appropriate
entry strategy
 Facilitates choice of the right
time to exit
 Provides useful clues for
managing customers

22. Facilitates Pre – Planning the
Product Launch
 Elaborate pre – planning does
render the marketing man
equipped to charter the course
of product.
 It provides him valuable lead
time
 He can keep strategic options
ready in anticipation of the
range of events in the market.

23. Facilitates Prolonging the
Profitable Phase
Strategic routes for extending profitable
stage:
 Finding out new users
 Finding out new uses for the product
 Popularising more frequent use of
the product
 Making the product more distinctive
to the consumers
 Adding real and/or psychological
value to the product

24. Facilitates Investment
Decisions on Product
 This, in turn, will help
investment decisions on
products; the firm can assign
investment to the right products
and avoid committing heavy
resources on wrong products.

25. Linkage Between PLC
Concept and Entry Strategy
Different firms join the
market with their perspective
versions at different stages.
Basically four distinct entry
postures are possible for a firm
seeking entry into the market:

26. Linkage Between PLC
Concept and Entry Strategy
 As an “innovator” at the
introduction stage in the life
cycle of the product
 As an “early follower” in the
early growth stage.
 As a “segmenter” in the late
growth stage
 As a “me – too” maturity stage

27. Entry as Innovator
 Innovators should have large
resources to innovate
 They must have the capacity to
absrob the cost of product
failures
 They must also have qualified
people on the R&D and
marketing front

28. Entry as Early Follower
 They have to be good market
watcher.
 They also need invest heavily in
R&D because they essentially
copy the innovator
 They must have an organisation
capable of putting product

29. Entry as Segmenter
 They identify certain market
segments with less competition
and concentrate on them

30. Entry as me – too
 They don’t need much R&D
efforts
 But they need a strong
marketing organisation to
compare with already
established competitors

31. PLC can be a Useful Tool in
Managing Customers
 As a product moves through the
various phases of its life cycle,
the consumer also moves on
the path.

32. PLC can be a Useful Tool in
Managing Customers
 The marketing man will gain a
great deal if he knows what
actually happens to the
consumer during this process

33. PLC can be a Useful Tool in
Managing Customers
 The seller has to understand
when and how such transitions
take place in the experience
level of customers

34. PLC can be a Useful Tool in
Managing Customers
The changing expectations
through different strategy
routes:
 Strenthening company customer
relationship
 Augmenting the product
 Improving service support and
modifying the pricing
approaches

35. PLC OPERATES AT THREE
LEVELS**
 The product level
 The product sub – category
level
 The brand level
** See the book’s examples about
this title

36. Limitations of PLC
 It’s difficult to measure where
the product is on its PLC graph
 Furthermore, some products
have not experienced a decline.
E.g. Coca Cola and Pepsi

37. Limitations of PLC
 Another factor is that differing
products would possess different
PLC "shapes". A fad product would
hold a steep sloped growth stage, a
short maturity stage, and a steep
sloped decline stage. A product such
as Coca Cola and Pepsi would
experience growth, but also a
constant level of sales over a
number of decades.