Main 4 Stages of Product Life Cycle with its Strategies

The concept of PLC is one of the popular concepts in marketing literature. This concept has been used as a tool for forecasting and also for developing a marketing strategy. In its simplest form, this model explains the market response to a new product introduced in the market for some time.

The idea of PLC is borrowed from biology, and an analogy is drawn with the life of an organism. As a living being, it progresses through the stages of product life cycle of birth, growth, maturity, decline & death. So also a product passes through similar stages during its market entry and obvious exit.

Product Life Cycle Meaning

The product life cycle concept explains the product from birth to death as a product exists in different stages and competitive environments. The idea of PLC is central to product strategy. Considering a market in this way makes it possible to design marketing strategies appropriate to the relevant stages of product life cycle. In the next section, we will learn about the stages of PLC.

Top 4 Stages of Product Life Cycle

There are four stages of PLC.

We can explain these 4 stages of product life cycle as.

1. Introduction Stage

It is the pioneering stage, wherein the product is launched in the market with a full-scale production and marketing program. The product is a new one. A new product means a product that opens up an entirely new market, replaces an existing product. It significantly broadens the market for an existing product.

Characteristics of Introduction Stage

i) Low & Slow Sales

The growth in sales volume is at a lower rate.
a) lack of knowledge on the part of the consumer.
b) Delays in making products available to the consumers due to lack of retail outlets.
c) Delay in the expansion of production capacity.
d) Consumer resistance to change from the regular consumption behavioral pattern etc.

ii) High Product Price

The prices changed at the beginning are the highest.
a) low output at this stages of product life cycle.
b) Technological problems.
c) Heavy promotional expenditure.
d) More distribution cost.

iii) Heavy Promotional Expenses

A company made heavy expenditure on advertising and sales promotion to stimulate demand.

iv) Lack of Knowledge

The consumers don’t have sufficient knowledge regarding products, and even if some know, they hesitate while buying the product.

v) Low Profits

Profits may be low because of fewer sales and heavy expenditure on product promotion and distribution. Some firms may suffer losses during the first part of all the stages of product life cycle.

vi) Narrow Product line

During the Introductory stage, the product has only one or a few models. So, the product line remains shorter. The market area is also limited.

Strategies Adopted in Introduction Stage

The Introduction stage is crucial for marketers. Because the success or failure of the product is very much determined at this stage. Thus, to ensure success, marketers should consider the following.

• Make proper advertising before the product is launched in the market.
• Shorten the period of the Introduction as far as possible.
• Product trials are the main tools.
• Heavy advertising and promotional expenses. Attractive gifts to the customer as an Introductory Offer. Try to create leadership in the market.
• Selective distribution and attractive discounts to dealers. Give proper attention to the distribution aspect.
• If the product is technical, adopt a skimming pricing policy, and if the product is simple, adopt a penetration pricing policy.

2. Market Growth Stage

Once the market has accepted the product, sales begin to rise. The product enters its second stage, i.e., the growth stage of product life cycle. In this stage, the product achieves considerable and widespread approval in the market. The Sales & profits increase at an accelerated rate. In this stage, the key factors are effective distribution, advertising and sales promotion.

Characteristics of the Growth Stage of Product Life Cycle

i) Rapid Increase in Sales

During this stage, sales start climbing faster.

• Consumers have become aware of the product and have begun to accept it.
• Distribution network has been established.
• Production facilities are up-to-date to meet the fast-moving sales.
• Heavy promotional expenditure.
• Product Improvement and increase in the number of product items in the product line.

ii) Product Improvements

In this stage, manufacturers improve the product quality and add some new features to the product.

iii) Increase in Competition

If the profit outlook appears attractive, the competition enters the market in large numbers with substitute products.

iv) Increase in Profits

In this stage, the profits of the manufacturers and retailers are rapidly increasing.

v) Reduction in Price

The product’s price is reduced due to large-scale economies and the entry of competitors. Prices are also reduced to attract customers. Thus, the price of the product becomes competitive.

vi) Strengthening the distribution Channel

The distribution channels are strengthened so that the product is easily available wherever required. Some channels are used to enter new market segments.

Strategies Adopted in the Growth Stage

For a marketer, this stage is very enjoyable and encouraging because he finds ready demand for his product. The total production is sent to the market—brand popularity increases. A marketing strategy incorporates the following.

• It improves the quality of the product.
• Add new product features.
• It shifts from product awareness advertising to product preference advertising.
• It lowers prices to attract more customers.
• It would strengthen the distribution channel.
• It resorts to strategic lowering of prices to attract more buyers.

3. Maturity Stage

Eventually, the market becomes saturated because the household demand is satisfied and distribution channels are full. The product has to face intense competition, which brings pressure on price. Though the sales of the product rise but at a lower rate. Profit margin, however, declined due to keen competition. The maturity stage is usually the longest in terms of time from all the stages of product life cycle. The maturity stage of the product life cycle is divided into three phases.

i) Growth

The sales growth rate starts to decline. There are no more distribution channels to fill.

ii)Stable

Sales flatter because of market saturation. Almost all the potential customers have tried the product. The competition is also at its peak.

iii) Decaying

The absolute level of sales starts to decline, and customers begin switching to other products and substitutes. The new efforts made to improve the product. New markets are tried.

Characteristics of the Maturity Stage of Product Life Cycle

Maturity stage is one of the main stages of product life cycle and now we will discuss some characteristics of this stage in PLC.

i) Sales Increases at the Decreasing rate

Because most of the household demand is satisfied and distribution channels are full. Although, sales continue to increase for a while, but at a decreasing date.

ii) Normal Promotional Expenses

The main theme of advertising on the stage is to popularize the product’s brand name.

iii) Uniform and lower Prices

Prices charged by the manufacturers are quite lower and uniform with the competitors.

iv) Product Modifications

Efforts for product modification and improvement in the marketing or product mix become apparent.

v) Dealer’s Support

This stage requires demand stimulation and dealer support.

vi) Profit Margin Decreases

In this stage, prices are lowered, and promotional efforts are made aggressive to face competition. It lowers the profit margin of both the manufacturers and the retailers at the maturity stages of product life cycle.

Strategies Adopted in Maturity Stages of Product Life Cycle

I. Market Modification

• Convert non-users into new users.
• Enter new market segments.
• Win competitors’ customers.
• Increased usage among present customers.

II. Product Modification

It includes the product characteristics improvements such as.

• Quality Improvement.
• Features Improvement.
• Style Improvement.

III. Marketing Mix Modification

It includes working on the value for money concept concerning modification in the following.

• Price
• Distribution
• Advertising
• Services

4. Decline Stage

The final stage of the PLC is known as the decline stage. It is the terminal stage; sooner or later. The actual sales begin to be under the impact of new product competition and changing consumer behavior’s. The sales and profits fall sharply and the promotional expenditure to be cut down drastically. It is one of the final stages of product life cycle.

Characteristics of Decline Stage

i) Rapid Decrease in Sales

As the product is quite old and new ones are available. So, there is a change in the trend. The sales, therefore, fall sharply.

ii) Further Decrease in Price

Rapid decrease in Sales creates fear. There will be Intense competition among the manufacturers to sell the stock at the earliest. It compels manufacturers to reduce the price of their products. Price becomes a competitive weapon.

iii) No Promotional Expenses

Because of Satisfaction, advertising and sales promotion efforts lost their effectiveness. Therefore, many companies reduced their advertising budget. Producers also reduced the distribution network to a minimum. Only selective promotional expenses are incurred.

iv) Suspension of Production Work

When sales decline is permanent, products ultimately disappear from the market. At this stage, firms stop production of the product.

Strategies Adopted in Decline Stage

For marketers, this stage is crucial among all the stages of product life cycle. The product which gives them their name and fame is now going toward death. A marketer changes the marketing strategies by incorporating the following.

• Improve the product in a practical sense.
• Review the marketing & production program.
• There is an emphasis on cost control techniques to generate profits. Cut all costs to a minimum level.
• Packaging may be made more attractive, and producers may introduce reusable packages to increase the sales appeal of the product.
• Research and Development efforts are increased to innovate the new product.
• Sales incentives schemes are introduced to get dealers’ support.
• Abandon the unprofitable product.
• Diversity in the business quickly means disposing of its assets as profitably as possible.
• We selectively create the firm’s investment level by dropping unprofitable consumer groups.

Conclusion

The concept of PLC is an important planning device, and the firm can achieve profits by exploring its marketing capacities and sources. In this blog, we learn about the stages of product life cycle.