Product Life Cycle ( PLC )
A product passes through stages known as whole life cycle of
the product. Product life cycle applies to both the brand and product category
. Its time period varies from product to product . Life Cycles modern products
are becoming shorter than the mature stage products are being renovated by the
market segmentation and product differentiation .
Companies always try to maximize the benefit and income
throughout the life cycle of a product. In order to achieve the desired level
of profit, the introduction of the new product at the right time is crucial. If
the new product is attractive to consumers and tough competition out there, the
company can charge higher prices and make big profits .
Life Cycle Stages
Product life cycle has four stages :
1. Introduction stage
Two . growth stage
Three . mature stage
April . decay stage
Product Life Cycle ( PLC )
1. Introduction stage
Product is introduced in the market with the intention of building
a clear identity and strong promotion is done to get the maximum knowledge .
Before actual product offering to customers, the product passes through product
development, prototyping and testing involves market. Companies incur more
costs at this stage and also have additional costs for distribution. Moreover,
there are some customers at this stage, low turnover means . Thus, during the
company's profits introductory phase shows a negative figure due to huge cost ,
but low sales volume .
In the introduction phase , the company's goal is the
establishment of a market and product demand arises . Therefore, the impact on
the marketing mix is as follows:
product
Branding, the quality and level of intellectual property
protection is obtained encouraging consumers across the product category . The
product is under consideration , as the first impression is the last impression
.
price
High prices ( skim ) is used to make huge profits with the
intention to cover the initial cost in a short period and low price is used to
penetrate and gain market share . company's choice of pricing strategy depends
on your goals .
place
Distribution at this stage is usually selective and
scattered.
promotion
In the introduction stage , the promotion is done with the
intention of creating brand awareness. Samples / trials are incorporated , is
fruitful in attracting early adopters and potential customers. Promotion
programs are more essential at this stage. It is so important to produce the
product , and that positions the product.
Two . Growth stage
At this stage, the company's sales and profits begin
increasing competition and also begin to increase. The product becomes well
known at this stage and some repeat buyers purchasing patterns . During this
stage , companies focus on brand preference and gain market share . Is the
stage of market acceptance . However, due to competition , the company to
invest more in advertising to convince customers that the benefits may decrease
near the end of the growth stage .
Affect the 4Ps of marketing is as under:
product
Along with maintaining the quality of existing, new features
and improvements in product quality can be made. All this is done to compete
and maintain market share.
price
The price can be maintained or increased as the company has
a great demand in the low competition or can be reduced to attract more
customers .
distribution
Distribution becomes more significant with increasing demand
and product acceptability . Adding more channels for intensive distribution to
meet the increasing demand. On the other hand resellers becoming interested in
the product , so that trade discounts are also minimal .
promotion
In the growth stage , promotion increases . When the
acceptance of products increases , more efforts are made for brand preference
and loyalty.
Three . mature stage
In the mature stage , brand awareness is so strong the sale
continues to grow but at a decreasing rate compared with the past. At this
stage , there are more competitors with the same product . So companies defend
market share and extend the product life cycle , rather than making profits, By
offering promotions to encourage retail sales to give more shelf space to the
product than the competitors. At this stage , customers are faithful shop.
Decisions of the marketing mix include:
product
In the mature stage , companies add features and modify the
product in order to compete in the market and differentiate the product from
the competition. At this stage, it's the best way to gain mastery over the
competition and increase market share.
price
Due to intense competition in the mature stage , the price
is reduced in order to compete. Attracts price conscious segment and retain
customers .
distribution
The new channels are added to cope with the intense
competition and incentives offered to retailers for shelf preference over
competitors .
promotion
The promotion is done in order to create product differentiation
and loyalty. Also offer incentives to attract more customers.
April . decay stage
Decline in sales , changing trends and economic conditions
decline phase explains . In this scenario the market is saturated and sales
declines . It may also be technical obsolescence or the client's taste has
changed.
In the decline stage company has three options :
1. Keep the product , reduce cost and finding new uses for
the products .
Two . Collect the product by reducing marketing costs and
continue to offer the loyal niche product to zero profits.
Three . Let the product when no gain or a successor available.
Sold to competitors who want to keep the product.
In the decline stage , the marketing mix decisions depends
on the strategy of the company. For example , if the company wants to harvest ,
the product will remain the same and the price will drop . In case of
liquidation , the supply will be drastically reduced .
Limitations of Life Cycle (PLC )
Product Lifecycle is criticized no empirical support and is
not successful in special cases. Different products have different properties
so that their life cycle also varies. It shows that the product life cycle is
not the best tool to predict sales. Sometimes management decisions affecting
the life of the products , in this case the product life cycle is not playing
no role. Product life cycle is very fruitful for large companies and
corporations , but it is a precision tool for predicting hundred percent life
cycle and product sales in all situations .
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