1. Product Life Cycle
Prof Jayashree Vispute

2. Product Life Cycles
• Product Life Cycle – shows the
stages that products go through
from development to withdrawal
from the market

3. • Product Portfolio – the range
of products a company has in
development or available for
consumers at any one time
• Managing product portfolio
is important for cash flow

4. 10- 4
• The Typical Product Life Cycle (PLC)
Has Five Stages
– Product Development, Introduction, Growth,
Maturity, Decline
– Not all products follow this cycle:
• Fads
• Styles
• Fashions
Product Life-Cycle Strategies

5. 10- 5
Figure 10-2:
Sales and Profits
Over A Product’s Life

6. Product Life Cycle
length
• style - comes, goes, comes back
• fashion - come, goes away slowly
• fad - comes and goes way quickly

7. 10- 7
Figure 10-3:
Styles, Fashions, and Fads

8. The Product Life Cycle Concept is
Based on Four Premises
Products have a
limited life.
Product sales pass through
distinct stages, each with
different marketing
implications.
Profits from a product
vary at different stages
in the life cycle.
Products require different
strategies at different
life cycle stages.

9. The Diffusion Process
Innovators
(2.5%)
Early Adopters
(13.5%)
Early Majority
(34%)
Late Majority
(34%)
Laggards
(16%)
Laggards
Late
Majority
Early
Majority
Early AdoptersInnovators
"The Chasm"
Technology Adoption Process

10. Customer Profile
Each stage attracts a distinct customer profile

11. PLC Length and Shape
Sales Sales Sales
TimeTime Time
Style Fashio
n
Fad

12. PLC Marketing Strategies
Stage Objective Marketing Strategy
Introduction Awareness & trial Communicate benefits
Growth Usage of firm’s brand Specific brand communication,
lower prices, expand distribution
Maturity Maintain market share Sales promotion, drop price,
Extend life cycle expand distribution, new uses
& new versions of product
Decline Decide what to do Maintain, harvest, or divest
with product

13. Limitations of the PLC
1. The life cycle concept applies best to product
forms rather than to classes of products or specific
brands.
2. The life cycle concept may lead marketers to think
that a product has a predetermined life, which may
produce problems in interpreting sales and profits.
3. It is only a descriptive way of looking at the
behavior of a product and the life cycle can not
predict the behavior of a product.

14. The Product Life Cycle
• PLC can be applied to:
– product categories
• have longest life cycles;indefinite maturity stage
• examples: cigars, newspapers, cell phones, bottled water
– product forms
• example: manual, electric, electronic typewriter
– products
– branded products

15. The Product Life Cycle
• PLC Shapes
– Growth-slump-maturity pattern
– Cycle-recycle pattern
– Scalloped pattern
• Style-Fashion-Fad Life Cycles
– Style - distinctive mode of expression
– Fashion - currently accepted or popular style
– Fad - quick-peak, quick-decline fashions

16. Product Life Cycle
• Product Life Cycle (PLC):
o Each product may have a different life cycle
o PLC determines revenue earned
o Contributes to strategic marketing planning
o May help the firm to identify when
a product needs support, redesign,
reinvigorating, withdrawal, etc.
o May help in new product development
planning
o May help in forecasting and managing cash
flow

17. Product Life Cycle
• The Development Stage:
• Initial Ideas – possibly large number
• May come from any of the following –
o Market research – identifies gaps in the market
o Monitoring competitors
o Planned research and development (R&D)
o Luck or intuition – stumble across ideas?
o Creative thinking – inventions, hunches?
o Futures thinking – what will people be
using/wanting/needing 5,10,20 years hence?

18. Product Life Cycle
• Product Development: Stages
o New ideas/possible inventions
o Market analysis – is it wanted? Can it be
produced at a profit? Who is it likely
to be aimed at?
o Product Development and refinement
o Test Marketing – possibly local/regional
o Analysis of test marketing results and
amendment of product/production process
o Preparations for launch – publicity,
marketing campaign

19. Product Life Cycle
• Introduction/Launch:
o Advertising and promotion campaigns
o Target campaign at specific audience?
o Monitor initial sales
o Maximise publicity
o High cost/low sales
o Length of time – type of product

20. Product Life Cycle
• Growth:
o Increased consumer awareness
o Sales rise
o Revenues increase
o Costs - fixed costs/variable costs,
profits may be made
o Monitor market – competitors
reaction?

21. Product Life Cycle
• Maturity:
o Sales reach peak
o Cost of supporting the product declines
o Ratio of revenue to cost high
o Sales growth likely to be low
o Market share may be high
o Competition likely to be greater
o Monitor market –
changes/amendments/new strategies?

22. Product Life Cycle
• Saturation:
• New entrants likely to mean market is ‘flooded’
• Necessity to develop new strategies becomes more
pressing:
o Searching out new markets:
 Linking to changing fashions
 Seeking new or exploiting market segments
 Linking to joint ventures – media/music, etc.
o Developing new uses
o Focus on adapting the product
o Re-packaging or format
o Improving the standard or quality
o Developing the product range

23. Product Life Cycle
• Decline and Withdrawal:
o Product outlives/outgrows its
usefulness/value
o Fashions change
o Technology changes
o Sales decline
o Cost of supporting starts to rise too far
o Decision to withdraw may be dependent on
availability of new products and whether
fashions/trends will come around again?

24. PLC- Strategies
Impact on marketing and the strategies to be followed

25. Introduction Stage:
The firm seeks to build product awareness & develop market for
the product.
Product-
- Branding & quality level is established & intellectual property
protection such as patents and trademarks are obtained.
Pricing-
- May be low penetration pricing to build market share rapidly or
high skim pricing to recover development costs.
Distribution-
- Is selective until customers show acceptance of the product.
Promotion-
- Is aimed at innovators & early adopters.
- Marketing communications seek to build product awareness & to
educate potential consumer about the product.

26. Growth Stage
Firm seeks to build brand preference & increase market
share.
Product-
- Quality s maintained & additional features & support
services may be added.
Pricing-
- Is maintained as the firm enjoys increasing demand with
little competition.
Distribution-
- Channels are added as demand increases & customers
accept the product.
Promotion-
- Is aimed at a broader audience.

27. Maturity Stage
Strong growth in sales diminishes, competition may appear
with similar products, primary objective at this point is to
defend market share while maximizing profit.
Product-
- Features may be enhanced to differentiate the product
from that of competitors.
Pricing-
- May be lowered because of new competition
Distribution-
- Becomes more intensive & incentives may be offered to
encourage preference over competing products.
Promotion-
- Emphasizes product differentiation.

28. Decline Stage
The product dies, sales decline. In this case firm has several
options.
Product
- Maintain the product, possibly rejuvenating it by adding
new features and finding new uses.
- Harvest the product or phase out weak product
- Reduce costs & continue to offer it, possibly to a loyal
niche segment.
Pricing
- Cut Price
Distribution
- Discontinue the inventory or selling it to another firm that
is willing to continue the product.
Promotion
- Reduce to minimal level

29. The marketing mix decisions in the decline phase
will depend on the selected strategy.
e.g. The product may be changed if it is being
rejuvenated/ left unchanged if it is being
harvested or liquidated
Similarly price may be reduced drastically If the
product is liquidated or maintained if harvested.

30. Product Life Cycles and the Boston
Matrix
Sales
Time
Development Introduction Growth Maturity Saturation Decline

31. Product Life Cycles and the Boston
Matrix
Sales
Time
Effects of Extension
Strategies

32. Product Life Cycles and the Boston
Matrix
Sales/Profits
Time
PLC and Profits
PLC
Losses
Break Even
Profits

33. The Product Life Cycle and the
Boston Matrix
Sales
Time
A
B
C
D
The product
portfolio – four
products in the
portfolio
(1)
(1) ‘A’ is at maturity
stage – cash cow.
Generates funds for
the development of
‘D’
(2)
(2) Cash from ‘B’
used to support ‘C’
through growth
stage and to launch
‘D’. ‘A’ now
possibly a dog?
(3)
(3) Cash from ‘C’
used to support
growth of ‘D’ and
possibly to finance
extension strategy
for ‘B’?
Importance of
maintaining a balance
of products in the
portfolio at different
stages of the PLC –
Boston Matrix helps
with the analysis