Product Life Cycle | Definition, Features, Stages, Types, Importance & Strategies

What is Product Life Cycle ?

All the products have a particular duration of life, similar to human beings. As human has different stages of life (like birth, growth, aging, and death),. product also passes through several definite stages, which can be easily identified by marketers. Right from the time of concept generation, during product development, and up to the time of product launch, the product is said to be in its pre-initial stage. The life of the product starts with its introduction into the market. It then experiences a rapid expansion in its market. This stage is followed by steady growth of the product resulting in its maturity. Subsequently, there comes a stage, when the market for the product decays and finally its life ends.

The concept of product life cycle (PLC) is used by marketers to design a series of strategies for dealing with each and every stage, the product passes through. For a product, market conditions change with the change of its position in the PLC, therefore, it must be managed through effective strategies.

Definition of Product Life Cycle

Product life cycle can be defined as :

"the change in sales volume of a specific product offered by an organization, over the expected life of the product".

According to William J. Stanton :

"From its birth to death, a product exists in different stages and in different competitive environments. Its adjustment to these environments determines to great degree just successful its life will be".

According to Arch Patton :

"The life-cycle of a product has many points of similarity with the human life-cycle; the product is born, grows lustily, attains dynamic maturity then enters its declining year".

According to Phillip Kotler :

"The product life-cycle is an attempt to recognize distinct stage in the sales history of the product".

Features of Product Life Cycle

The pattern of demand associated with a product for a certain time period is known as its life cycle. The characteristics of PLC are discussed below :

Every product not necessarily undergoes each and every stage. Most of the products even fail to go beyond the introduction stage.
Each product spends some time in a particular stage of PLC. This time period may vary from one product to another.
There are some products with very small span of life and they complete entire cycle in very less. number of days.
If the product is re-positioned, it may get a new product life cycle. Repositioning refers to altering the image of the product or perceived utility of the product.
In a product life cycle, a product goes through different stages starting with introduction and followed by growth, maturity, decline and then ultimately deletion of the product. Products pass through all these stages at varying speed.
The patterns in which revenues and profits are earned from the product are predictable depending upon the stage in the life cycle of the product. Generally, a product earns profit during its growth stage, then it becomes constant during maturity stage, and finally starts coming down as the cycle progresses to the stage of deletion.
The per unit profits earned by a product also vary from one stage to another in its life cycle.
Different risk factors and opportunities arise in different stages of the product life cycle, which in turn requires different strategies for dealing with them.
Emphasis is paid on different functional areas during different stages, e.g., development stage requires the attention of R&D whereas the decline stage stresses upon how to control costs.
The product life cycle may be widened by exploring new utilities of the product or by discovering new consumers or by convincing the existing consumers to increase their usage.

Importance of Product Life Cycle

According to the terminologies of marketing, the stages of PLC are introduction, growth, maturity, and decline. These stages reflect the changing patterns of sales and market share of a product over a period of time. It has been suggested through the idea of product life cycle that all the products, regardless of their success in market, ultimately fades away because of changing taste of the consumers as well as technological staleness. Relevance of product life cycle are as follows :

1) Planning :

One of the important benefits of PLC is that it supports the planning process of the business organization. It helps the organization while planning long-term marketing strategies, especially in case of stable markets and economies. Organizations realizing that the demand of the product usually do not remain the same helps them to make arrangements for the anticipated fall in their product's sale. It gives a better idea regarding allocation of funds for marketing purpose, keeping in consideration the current product life cycle phase of the product. As the organization fully understands that irrespective of how successful a product is, it may require a substitute at some or the other point; it may call for making a plan for developing and innovating the product.

2) Proactive Approach :

It helps the organization to plan out practical strategies for increasing sales and gains during every phase, instead of just. waiting and watching for the decline of the product.

For example, in case the organization is able to make out that the product has started experiencing downfall; its endeavor can be on removing the unprofitable delivery channels for bringing down the expenditure as the sales and revenue are constantly decreasing.

3) Helps in Producing Products with Superior Quality and More Efficiency :

Depending on the stage of Product Life Cycle one can easily attempt to identify the reasons behind the stagnation, downfall, etc., and can make the changes accordingly to revive the product.

For example, the success of Parle Bottling for introducing their mango juice 'Frooti'. The novel idea of tetra pack was actually driver for its magical success: making it easy to drink, easy to pack, and easy to deliver; and rendering it better looks than others mango drinks in the market.

4) Helps in Forecasting :

PLC also helps the organization in forecasting, which further helps them to explore the complex market. It provides insight to the planning authorities during the process of forecasting about the future of the product on a macro level (broader level). It also helps the organization to take timely steps while implementing strategies against competitors. When the PLC model is combined with the actual sales data, it serve as a medium to understand the sales pattern in the past and can help to predict the same of the future. With the help of Product Life Cycle model, the past events can be understood with an extrapolatory and interpretive approach. This helps in effective planning and decision-making based on past events.

5) Ongoing Strategy :

A PLC model can serve as an instrument that can validate the ongoing strategy as it has the ability to show the ongoing market trends, technological advancements, and customer needs and problems. Organizations always need to be prepared for dealing with the new and old competitors present in the market; for this they need to strengthen their product's positioning in market so that they can gain competitive advantage over their rivals. This can be implemented with the help of PLC.

6) Helps in Eliminating Defeated Products :

It is a reality that each and every product fades eventually and is unable to bring back any gain; such products prove to be a burden for the organization. The PLC model helps in eliminating such products by determining the appropriate time for their elimination. Time, sales figures, and PLC stages are used as factors. for determining.

Types of Product Life Cycle

Traditional life cycle of a product is depicted in figure with the help of sales and profit curves. It should be noted that every product does not have such type of product life cycle (PLC). The period (stage) of the curve as well as the course of the curve may affect the Product Life Cycle. In figure given below, life cycle of some of the product is shown.

1) Traditional PLC Curve :

In such type of curve, the period or the stage the product is clearly seen. In other words, the curve clearly depicts the introduction, growth, maturity, and decline stages of the product.

2) Classic PLC Curve :

In classic PLC curve, firstly, the curve shows a tremendous increase in its sales and then a plateau like shape is formed which shows that the sales volume has stopped increasing due to the decrease in the number of new customers or new channels of sales.

3) Fashion Fad PLC Curve :

There are certain products whose speed of gaining and losing popularity in the market is almost same. Such products forms fashion fad PLC curves. Some of the examples of such product can be toys and garments on the theme of vodafone's zoozoos, official jerseys during Cricket World Cup, etc., in which the products suddenly gain too much popularity but it goes down with the same pace as well.

4) Extended Fashion Fad PLC Curve :

This is also similar to the above fashion fad curve; the only difference is that here the sales growth does not decline completely. Instead it becomes stable at a level comparatively lower than the initial phase of success. For example, the trend of joining yoga classes.

5) Seasonal or Fashion PLC Curve :

As the name suggests, products falling in the category of seasonal or fashion Product Life Cycle curve have a particular. season in which their sales level increases; and as soon as the season ends its sales curve also drops down. The best example for such product are school uniforms, whose demand increases during the beginning of the new session, after that it falls sturdily, and it again rises with the start of winter season.

6) Revival PLC Curve :

Such curve is associated with old-fashioned products which had completely lost its popularity but suddenly its popularity seems to have revived. For example, the Barbie dolls show a revival by launching new version of Barbie dolls in the market. Other examples can be of cigar, which showed a revival during 1990s.

The above mentioned PLC curves are examples of some of the products which can possibly be differentiated and illustrated here. There is no surety whether the products will go through all the stages of PLC. Due to the unpredictable nature of the market and products, it is very difficult to determine product life cycle in advance.

Stages of Product Life Cycle

Generally, product life cycle graph is a bell-shaped curve. This curve consists of following 4 stages of product life cycle :

1) Introduction :

Introduction stage is the stage at which product is introduced into the market. This stage is characterized by presence of slow sales growth. There is no scope of profit generation, as it takes time to balance the product launch expenses with its sales. Among the different stages of the PLC, the introduction stage is the most costly stage as it consumes a large amount of investment. Research and development, market testing, initial promotion, etc., are the areas where a huge investment is needed, particularly, in a competitive market.

2) Growth :

This is the stage wherein the product gains quick acceptance in the market and starts generating profit. The rapid growth in sales and profit is the key feature of this growth stage. As the organization attains economy of scale in the production, it is able to generate profit from the sales of the product. This profit margin keeps on increasing as the organization maintains the economy of scale. This growth enables the organizations to invest more in promotional strategies to get the best from the growth stage.

3) Maturity :

In maturity stage, a level of maturity is reached in a product's sale as it has now been accepted by most target customers. The profit generated by the product is stabilized or may decline due to enhanced competition. In this stage, the main objective of marketers is to sustain the market share that the product has built up.

This stage is the most crucial stage in any product life cycle, and the marketers need to make wise and mature decisions regarding marketing of the product. For gaining competitive advantage, marketers may rely on product modifications or alterations in the production processes.

4) Decline :

This stage is marked by sales going down and profits decreasing drastically. Here, the product loses its position and makes a way for a new product to enter into the market. In this stage, the market share of the product starts decreasing, and that is why, it is called decline stage. This decline could be because of the market being exhausted (i.e., all the consumers who could purchase the product are already in possession of it), or due to the switching of consumers towards a different product. Being unavoidable, this stage may force the organization to withdraw its product from the market. However, organizations may still generate profit by adopting low-cost production processes and targeting cheaper markets.

Characteristics of Different Stages in Product Life Cycle
Characteristics	Introduction	Growth	Maturity	Decline
Marketing Objective	Attract innovators and opinion leaders to new product	Expand distribution and product line	Maintain differential advantage as long as possible	Cut back revive or terminate
Industry Sales	Increasing	Rapidly increasing	Stable	Decreasing
Competition	None of small	Some	Substantial	Limited
Industry Profit	Negative	Increasing	Decreasing	Decreasing
Customers	Innovators	Affluent mass market	Mass market	Laggards
Product Mix	One or two basic models	Expanding line	Full product line	Best sellers
Distribution	Depends on product	Rising number of outlets	Greatest number of outlets	Decreasing of number of outlets
Promotion	Informative	Persuasive	Competitive	Informative
Pricing	Depends on product	Greater range of prices	Full line of prices	Selected prices

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Strategies Across Stages of Product Life Cycle

Strategizing is essential for the good health of any firm. A good strategy helps in performing various actions and achieving required results which otherwise would not be possible. The PLC as a concept plays a major role in the development of a marketing strategy. Four stages are there in every Product Life Cycle, i.e., introduction, growth, maturity and decline stage. Each and every stage of the PLC dictates the market condition and its response to the product in terms of volume of sales or profit. The strategy to market a product keeps changing over its life cycle. Generally, for each stage of the Product Life Cycle, there is a corresponding set of marketing tactics. Product life cycle strategies or Marketing strategies at different stages of product life cycle are as follows :

1) Introduction Phase/Stage :

The introduction phase is the phase of launching a product into the market. In organizational terms, characteristics of this phase are huge costs of operations stemming from inefficient levels of production, extended duration of learning, resistance by the established. trade to accept a new product in the market, distributors and resellers demanding higher margins with longer credit periods, and need of extensive advertisement. Large amount of investment is needed to counteract this situation. Being new in the market, the product faces the problem of credit as well. Therefore, lot of cash is required in this stage.

According to P. Kotler, in introduction stage, the management of an organization may follow any of the following four tactics on the basis of high-low promotion and price.

Introduction Phase of the Product Life Cycle

i) Rapid Skimming Strategy :

For consumers with low awareness about products, the best strategy is the rapid skimming strategy of high promotion and high price. This strategy also works best when consumers who are aware about products are willing to pay any amount of money to purchase them. During the launch of a product, marketers wish to balance the costs incurred in the launch phase of the product by rapid skimming strategy. Rapid skimming strategy also works with products having large market size or when the level of competition is severe. Products belonging to the category of non durable and consumer electronics generally prefer this strategy. This is why, the pricing of consumer electronic items such as computer games, music systems, TV, etc., are initially kept high to cover the high cost of production and then subsequently decreased to sustain the market share.

ii) Slow Skimming Strategy :

The essence of this strategy is that the company has enough time to balance the expenses incurred during the product's pre-launch period. In this case, the product is launched by the company at a high price but a comparatively lesser amount of money is spent on the promotion. This leads to greater profits being made by the company as the price of the product is high but the marketing cost is low. This occurs when the level of technology used by an organization is extremely advanced and its competitors have to invest heavily to build up this technology. Moreover, as most of the firms may not have the necessary resources: to compete, competition is limited to one or a couple of large firms. Slow skimming strategy is also utilized in the case of limited market size and consumers are aware and ready to buy the product.

iii) Rapid Penetration Strategy :

A company using this strategy charges low prices and spends quite a lot on promotional activities. The rapid penetration strategy can be implemented on the same grounds and conditions of the environment as that of the rapid skimming strategy. The sole difference between rapid penetration and rapid skimming strategy is embedded within the If the long-term objectives of the company. If long-term objective of the company is to achieve share and maximization while the market is profit characterized by severe competition and other entry barriers, in this case, a firm can use this strategy.

iv) Slow Penetration Strategy :

In this strategy. a company launches a new product at a comparatively lower price, and spends lesser money on promotional activities. This lower price helps the company to capture the market while the low expenditure on promotion helps the company to earn more profits. In case of conditions like large market, low level of competition, product being familiar the market or market being price sensitive, this strategy may fruitful.

2) Growth Stage :

Having crossed the introductory phase, a product reaches the growth phase. It has to be said that the introductory phase is the most critical phase for a product, as majority of products (more than 95%) are not able to survive in this phase. Nonetheless, the lucky 5% of the products, which make it to the growth phase, encounter more intense competition here. Consumers are offered variety of product types, with different packaging and pricing due to this increased competition. Consequently, the number of customers for products increases, which extend the size of the market Trade channels now show an acceptance of the product and are willing to stock and deal with it. As more people in the trade are dealing with the product, lowering of prices is commonly noticed.

According to P. Kotler the following strategies may be used for sustenance of the market growth :

Improving the quality of the products.
Addition of new attributes to the product and an improvement in styling.
Selecting new channels of distribution.
A reduction in the prices to lure buyers.
Increasing activities related to promotion.
Entering new segments of the market.

3) Maturity Stage :

Products surviving the intense competition in the growth phase and winning the customers' approval, reach the maturity phase. This maturity phase is marked by a decrease in the growth rates of profits and sales. A price and promotion war emerges during this stage due to immense competition. The demand for the product multiplies manifold during this phase as an increasing number of customers become interested in the product. Lowering of profit level may also be seen during this phase.

To effectively manage the maturity phase, the marketing manager must focus on :

Improving the product's quality.
Increasing the usage among the present customers by exploring new and different utilities of the product.
Trying to change non-users into users of the product, Le, forming new buyers.
Devising effective promotional and advertisement programes.

4) Decline Stage :

The decline phase is the final stage in the life cycle of a product. Profits and sales continually decrease during this stage. Technological developments, changes in the tastes and preferences of consumers, development of new products with comparatively low price ranges, and new fashion trends are the major reasons behind the lowering of the sales. If the alternatives available in the market are latest in fashion and are more eye-catching, buyers will probably turn their attention towards them.

According to Stanton, for generating profits, cost control is very crucial. The different alternatives available for cost controlling and generating profits are as follows :

Ensure that the production and marketing programes are as effective as they can be.
A regular revision of all the organizational products is necessary to identify which models and sizes are selling and making profits. The ones which are lagging behind should be done away with. Often, this strategy will bring about a decline in sales, but a rise in profits.
Improve the functions of the product or rejuvenate it, in some sense.
Run out the product, i.e., reduce each of its costs to the minimum level which will cause it to earn optimum profit over its remaining limited life.
One option may be to abandon the product.

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