The product life cycle starts from launching the product to gaining acceptance, reaching a peak, declining and disappearing from markets.
Throughout its lifetime, a product undergoes certain stages. In reality, no product can satisfy consumers’ needs and desires for an indefinite period of time. As a result, its sales and profits may fluctuate over time. The product’s lifespan can be determined by its ability to meet market demands. It continues to exist as long as its users are satisfied. The product life cycle is a popular term for studying the relationship between the product’s lifespan and demand. The product Life cycle illustrates the typical path or phases a product follows.
The product life cycle might vary depending on the product and product category. However, not all products pass through each phase, and the duration of each phase varies. Some items, for instance, never see market share increase and are removed from the market.
Phases of Product Life Cycle (PLC)
The life cycle of a product consists of four phases viz., introduction, Growth; Maturity; Saturation and Decline.
During the Introduction phase, the product is introduced to the market through a concentrated and intensive marketing effort designed to establish a distinct identity and generate maximum awareness. At this juncture, numerous trial or impulse purchases will be made.
Next, consumer interest will usher in the Growth stage, characterized by rising sales and the emergence of competitors. The Growth phase is also characterized by sustained marketing activities on the vendor’s side and repeat purchase patterns among consumers.
The product has reached the Maturity stage when competitors begin to abandon the market, sales velocity is drastically reduced, and sales volume stabilizes. At this time, the majority of consumers are repeat buyers. Continuous sales decline signifies progression into the Decline stage. The decline in sales is frequently attributed to the enduring effects of competition, unfavourable economic conditions, new fashion trends, etc.
Communication (promotion) is required to create product awareness and encourage consumers to try the product, while placement options and supply chains are required to bring the goods to customers. Due to the research and development expenditures and marketing expenses required to introduce a product, profits are often low in the introduction phase.
In this phase, the company’s sales and profits begin to increase, and competition also begins to intensify. At this juncture, the product is well-known, and some customers repeat their purchase patterns. During this phase, companies concentrate on brand preference and market share growth. It is the stage of market assimilation.
Near the conclusion of the growth stage, however, profits may decline due to a company’s increased advertising expenditures in response to competition. This is the rapid adoption of the marker stage. The company attempts to establish an efficient distribution network. Here, the majority of production and marketing issues are resolved. Attracted by rising profits, competitors enter the market. At the appropriate period, prices may be reduced to attract price-conscious customers. The company maintains and even increases, its sales and marketing efforts to educate and persuade the market and remain competitive. At the end of the growth stage, sales begin to increase at a slower rate, and consequently, profits begin to decline.
After a large number of competitors enter the market and the number of prospective new customers decreases, product sales often tend to stabilise. This denotes that a product’s life cycle has reached its maturity stage. Most consumer goods are at the mature phase of their life cycle, and most of their consumers are repeated customers as opposed to new ones. Profits decline due to intense competition until only the strongest players survive. The stage of maturity lasts longer than the preceding stages. Quaker Oats and Ivory Soap are mature products; they have been on the market for more than a century.
In the maturity stage, given the competitive environment, many items are heavily advertised to customers by stronger competitors. Promotional item techniques frequently emphasise the offering’s value and advantages, providing a competitive edge. Promotions directed at a company’s distributors may also expand during the mature stage. Companies may reduce the price of mature items in order to compete with the market.
Saturation and Decline Stage
When sales begin to decline and continue to fall, a product has reached the decline phase of its product life cycle. Changes in customer preferences, technological advancements, and substitutes that satisfy the same need can contribute to a fall in product demand during the decline phase.
How many of you do you believe have used a typewriter, a calculator, or a slide rule? Computers have replaced typewriters and calculators have replaced adding machines and slide rules. Inquire with your parents about eight-track tapes, which were popular before cassette tapes, CDs, MP3 players, and Internet radio. Some products depreciate gradually. Others experience a rapid rate of decline.
Young people’s fads and styles typically have short life cycles and “fall out of style” rapidly. (If you’ve ever borrowed clothes from your parents from the 1990s, you may be amused by how much fashion has changed.) Similarly, many students who do not own landline phones or VCR players cannot believe that people still use “outdated” equipment. Some old devices, such as payphones, vanish nearly entirely when they become obsolete.
Characteristics of Product Life Cycle
The major characteristics of the PLC concept are as follows:
(i) The product has finite lives and passes through the cycle of development, introduction, growth, maturity, decline and deletion at varying speeds.
(ii) Product cost, revenue and profit patterns tend to follow predictable courses through the PLC. Profit first appears during the growth phase and, after stabilising during the maturity phase, declines to the point of deletion.
(iii) Profit per unit varies as products move through their life cycles.
(iv) Each phase of the PLC poses different threats and opportunities that give rise to different strategic actions.
(v) Different functional emphases are required in each case, such as an R&D emphasis in the development phases and a cost emphasis in the decline phase.
(vi) Finding new uses or new users or getting the present users to increase their consumption may extend the life of the product.