1. Product Life Cycle
Marketing Management

2. Product Life Cycle:
Implications for Business Strategy
Stage of the product life cycle
Introduction Growth Maturity Decline
Sales revenue
Total industry
sales revenue
or profit
Total industry profit
+
0
–

3. Introduction Stage of the
PLC
Sales
Sales Low sales
Low sales
Costs
Costs High cost per customer
High cost per customer
Profits
Profits Negative
Negative
Marketing Objectives Create product awareness
Create product awareness
Marketing Objectives
and trial
and trial
Product
Product Offer a basic product
Offer a basic product
Price
Price Use cost-plus
Use cost-plus
Distribution
Distribution Build selective distribution
Build selective distribution
Advertising
Advertising Build product awareness among
Build product awareness among
early adopters and dealers
early adopters and dealers

4. Growth Stage of the PLC
Sales
Sales Rapidly rising sales
Rapidly rising sales
Costs
Costs Average cost per customer
Average cost per customer
Profits
Profits Rising profits
Rising profits
Marketing Objectives
Marketing Objectives Maximize market share
Maximize market share
Product
Product Offer product extensions,
Offer product extensions,
service, warranty
service, warranty
Price
Price Price to penetrate market
Price to penetrate market
Distribution
Distribution Build intensive distribution
Build intensive distribution
Advertising
Advertising Build awareness and interest in
Build awareness and interest in
the mass market
the mass market

5. Maturity Stage of the PLC
Sales
Sales Peak sales
Peak sales
Costs
Costs Low cost per customer
Low cost per customer
Profits
Profits High profits
High profits
Marketing Objectives
Marketing Objectives Maximize profit while defending
Maximize profit while defending
market share
market share
Product
Product Diversify brand and models
Diversify brand and models
Price
Price Price to match or best
Price to match or best
competitors
competitors
Distribution
Distribution Build more intensive distribution
Build more intensive distribution
Advertising
Advertising Stress brand differences and
Stress brand differences and
benefits
benefits

6. Decline Stage of the PLC
Sales
Sales Declining sales
Declining sales
Costs
Costs Low cost per customer
Low cost per customer
Profits
Profits Declining profits
Declining profits
Marketing Objectives
Marketing Objectives Reduce expenditure and milk the
Reduce expenditure and milk the
brand
brand
Product
Product Phase out weak items
Phase out weak items
Price
Price Cut price
Cut price
Distribution
Distribution Go selective: phase out
Go selective: phase out
unprofitable outlets
unprofitable outlets
Advertising
Advertising Reduce to level needed to retain
Reduce to level needed to retain
hard-core loyal customers
hard-core loyal customers

7. PLC- Important Observations
 Individual brands may not follow this pattern
– Sometimes a product may crash and not get to the maturity stage
 Product Life Cycle - length of time at each stage - varies
– depends on the products
– can be a few months in each stage
– or it can be years
 Generally speaking, due to the
– Competitive Environment
– Technological Environment
– The PLC is getting shorter

8. Extending Product Life Cycle
 Market Modification:
– Increase Frequency of use by Present Customers
– Add New Users
– Find New Users
 Product Modification:
– Change Product Quality or Packaging

9. Intro Stage
 Competitive Situation
– Monopoly or Monopolistic Competition
- your company has no competition because you originated the
product first and are the first to get customers
 Product:
– One or a few number of people selling the product
 Place:
– Try to find good channels to get exposure
- maybe offer exclusive distribution rights
 Promotion:
– AIDA begins
- informative type ads
 Price:
– skimming or
penetration pricing

10. Growth Stage
 Competitive Situation
– Monopolistic Competition or Oligopoly
- once the market grows, other vendors will want to get involved so you
will lose your monopoly position
 Product:
– There are several companies selling so there is competition to make
the "best" product -many companies at this stage will add variations,
color changes, and new FABs to the product to make it more
competitive
- companies in the lead will also work to develop brand familiarity
 Promotion:
– Competitive ads
 Price:
– "meet the competition" pricing or price cutting

11. Maturity/ Decline Stage
 Competitive Situation
– Monopolistic Competition or Oligolpoly or Pure Competition
- more and more vendors get involved as more
companies learn to make the product and people try to "cash in" on
the original idea
- because there are so many vendors, the supply/demand situation
will cause the price to drop and eventually the price will be so low,
nobody will want to make the product anymore because it will be
unprofitable
 Product:
– Several companies make the product
- it will become a battle of the brands
 Promotion:
– Discount price oriented ads
 Price:
– Some companies drop out if they cannot afford to compete at a
lower price