Product life cycle - Marketing Management

The product life cycle is a ubiquitous in marketing terms, but before we examine its uses and limitations in strategic market planning, we explain the concept.

The product life cycle proposes that like all life forms, products have finite lives. Hence, once a product is introduced to the market it enters a ‘life cycle’ and will eventually fade from the market.

A hypothetical product mix for Personal Products Ltd

hypothetical product mix for Personal Products Ltd

In addition, the concept proposes that during its life cycle a product will pass through a number of different stages, where each stage has characteristic phenomena that suggest specific and different marketing strategies. This notion, together with the suggested shape and stages of the ‘typical’ product life cycle.

The characteristics of each stage are:

  1. Introduction: At this stage the product or service is new to the market. The risk of failure is high and any initial sales are likely to be slow. Purchasers at this stage are likely to be innovators who are willing and able to take risks. Profit margins are likely to be small or non-existent due to the low volume of sales and high initial launch and marketing costs. Money spent during this phase should be regarded as an investment in the future.
  2. Growth: Provided the product or service meets customer needs and there is a favourable market reaction, sales begin to accelerate as news of the product permeates the market. Customers take fewer risks than initial innovator purchasers, but they welcome novelty, and begin to purchase the product. Attracted by sales growth and potential profit, new competitors enter the market, often offering variations on the original product to encourage brand loyalty or to avoid patent infringement.
  3. Maturity: Eventually the rate of sales growth will begin to slow down and then cease. A number of factors contribute to this process:

In Approaching market saturation: Quite simply, there remain fewer and fewer potential customers left still to purchase the product as it is diffused through the market. Eventually, only replacement sales are made with comparatively few new customers left to purchase for the first time.

The product life cycle concept (PLC)

product life cycle concept (PLC)

  • Customer boredom/desire for novelty: Customers are fickle when it comes to their appetite for new products. Customers who initially purchased the new product may become bored and switch to other products or brands.
  • New products/technological change: Successful new products carry within them the seeds of their own destruction. As sales and profits grow, competition is attracted to the market.
  • Often they can only gain entry and market share by developing new or improved versions of the original product. If successful, new products and changes in technology begin to supersede the original product and sales begin to slow.
  • Decline: Eventually, forces and factors which contribute to the onset of maturity will erode the market to an extent that sales begin to diminish. The rate at which this will occur, and hence length of time the old product will remain viable, varies. Sometimes decline is rapid, as in fashion markets, or when a major technological breakthrough occurs. In contrast, the rate of decline may take many years e.g. when a hard core of loyal customers refuse to switch product category or brand.

The product life cycle concept has attracted much attention and criticism as a tool of strategic market planning. As a result, the basic concept described here has been developed and refined to include, for example, the notion of different levels of life cycle, i.e. life cycle analysis for brands, product forms and product classes and the notion of variations on the classic S-shaped curve. We examine some of these refinements and their relevance to the use of the concept in strategic market planning shortly, but first we look at some of the suggested uses of the basic concept in strategic decision making.

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