Definition Of A Product Life Cycle Marketing Essay

Published Date: 23 Mar 2015

A product is anything which is capable of satisfying customers' needs. Product includes both physical or tangible products (mobile,car, type writer, computer, bike) and intangible products or services (health care, banking, insurance).

Definition of a Product Life Cycle

define what a product life cycle is:

"It is the period of time over which an item is developed, brought to market and eventually removed from the market".

OR

"The stages through which a product develops over time is called Product Life Cycle (PLC)".

OR

"The product life cycle is MARKETING CONCEPT that describes the way the revenues from the sale of a product behave over time".

Stages of a Product Life Cycle

The product life cycle is broken down into four phases:

Introduction

Growth

Maturity

Decline

The Product Life Cycle (PLC) Curve

plc, product life cycle curve

For all products, the life cycle is drawn is the form of a mount shaped curve. The starting of the curve marks the introduction stage; the slope indicates growth stage; top of the curve signifies maturity; and the graph ends in the decline stage.

Theory of PLC: Biological Life Cycle Versus Product Life Cycle

The concept of Product Life Cycle is based on biological life cycle. For instance, when a seed is planted (introduction); it begins to pullulate (growth); it shoot out flowers and leaves (maturity); and after a defined period of time, it starts to shrink and eventually die out (decline).

Human beings also pass through the same phases of introduction, growth, maturity and decline in their lives. The same theory applies to a product. When a new product is launched in the market, it starts gaining customers; then it stabilizes and becomes mature; then after some time, it is taken over by the introduction of better and superior competitors therefore, it is withdrawn or harvested from the market.

Benefits of Using a Product Life Cycle for Revenue

MARKETING managers consider product life cycle as an important measure of sales revenues. As you can see it from the figure, the slope of the curve denotes the sales of a particular product. The more the slope then more the sales. When a product is introduced in the market, the sales are negligible.

Due to marketing & promotion efforts, the demand of product starts to rise and as a result some revenue is generated. When more and more customers begin to buy the product, the revenues of the product reaches to maximum; this stage is called maturity.

A product can stay in maturity for several weeks, months or years depending on the external and internal market conditions and resources.

Finally, when a product better in features and functions is launched by a competitor into the market, the sales starts to decline; in some cases, companies have to disengage their products or services.

Product Life Cycle Management (Marketing)/ PLCM

Product life cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its developmental life cycle. The conditions involving the promotion and sales of a product, involving market saturation and advertising vary over time and must be managed as it moves through the different stages of succession.

What is Marketing Mix?

A marketing mix is a pre-planned assortment of all those controllable elements which are involved in the planning of a product's marketing. they include the following 4P's"

Product (often substituted by Presentation)

Price

Place

Promotion

These four elements are adjusted until the correct combination is reached befitting the requirements of a product's customers, while generating optimum income.

How to Create a Product Life Cycle

First Stage

Introducing the Product : Brand Building

For the product life cycle to begin, the product must be launched in the market. This is done after target market is identified and ensured that the need for your product or service exists.

At this stage, sales will be very low because customers are not really aware about the product and its benefits.

Generating Demand: Promotion, Advertising, Marketing

The cost of advertising and initial distribution is very high as companies intend to create awareness of the product and target early adopters. The goal is to build market and generate demand.

Stage 1 Marketing Mix Implications

You need to have a fair idea of marketing mix implications for each stage.

Product

Products are very less in number

Price

Some companies keep the price to high so as to cover their costs whereas others tend to keep it low so as to attract more and more early adopters.

Distribution

Initially, the distribution is done selectively

Promotion

Creation of awareness is the only goal of the promotion

Growth

Watch how the product is establishing market and making profit in comparison to the competitors.

Maintain the focus on the promotion efforts. Notice how slowly or rapidly the product is gaining customers and generating profits.

More and more retailers will be interested in carrying your product. Remember the goal of growth phase is to increase sales and gain customer preference.

Second Stage

Stage 2 Marketing Mix Implications

Product

Improvement of the product quality.

Price

If the demand of the product is high, price is maintained at high level whereas; if you want to target additional customer segments, reduce the price.

Distribution

To intensify distribution, discounts are offered to the retailers.

Promotion

Improved the promotional efforts.

Maturity

You will observe that your product has met market saturation. Eventually, there will be a marked increase in sales and it will become a challenge for the marketing and sales team to maintain the market share as new competitors would be penetrating into the market.

Increase promotional efforts and offer more discount to the retailers in order that they give your more shelf space than competitors. The goal of maturity stage is to extend product life cycle while maintaining market share.

Third Stage

Stage 3 Marketing Mix Implications

Product

Product is differentiated from those of competitors

Price

Maximum possible reduction in prices to be made

Distribution

Retain existing distributors by offering discounts as well as searching for more channels of distribution

Promotion

Intensive promotion efforts in order to establish brand loyality

Decline

Carry out amarketing analysis or a survey to find out how customers perceive the product currently. If the interest and demand is low, think of ways to take the product back to profit making position.

Possible ways could be the creation of new target segment and making modifications in the product. The goal of decline stage is either to maintain the product or discontinue it.

Fourth Stage

Stage 4 Marketing Mix Implications

Product

Fewer products left in the product line.

Price

If the product is to be maintained, the prices are retained. In case of termination, prices are reduced to liquidate inventory.

Distribution

Channels are phased out gradually.

Promotion

Advertising expenditure reaches a minimum level

Examples of Product Life Cycle (PLC)

Set out below are some suggested examples of products that are currently at different stages of the product life-cycle:

INTRODUCTION

GROWTH

MATURITY

DECLINE

Third generation mobile phones

Portable DVD Players

Personal Computers

Typewriters

E-conferencing

Email

Faxes

Handwritten letters

All-in-one racing skin-suits

Breathable synthetic fabrics

Cotton t-shirts

Shell Suits

iris-based personal identity cards

Smart cards

Credit cards

Cheque books

Popular Cases of Product Life Cycles

Pepsi Product Life Cycle Development

Coca Cola Product Life Cycle Development

Kellog's Product Life Cycle Development

Apple Product Life Cycle Development

Nokia Product Life Cycle Development