The Product Life Cycle (PLC) is a vital concept in marketing and business management that evaluates a product’s journey from its development to its withdrawal from the market. It helps businesses understand how their products perform over time, informing strategic decision-making related to pricing, promotion, expansion, or cost-cutting.
The PLC consists of four primary stages: introduction, growth, maturity, and decline. Some experts also include a fifth stage, development, which occurs before a product is introduced to the market.
In this stage, a product is launched into the market after undergoing research, development, and feasibility analysis. Companies often incur higher marketing costs during this phase to create awareness and attract early adopters. The sales volume is typically low, and profits may be minimal or negative.
As the product gains acceptance among consumers, its sales volume increases rapidly, leading to higher revenues and profits. During this stage, companies may invest in expanding production capacity, improving product quality, and entering new market segments. Competition may also intensify as other businesses try to capitalize on the growing demand.
In this stage, the product reaches its peak sales and market saturation. Sales growth slows down, and competition becomes fiercer, leading to price wars and increased promotional activities. Companies may focus on maintaining market share, enhancing customer loyalty, and reducing production costs to maintain profitability.
Eventually, the product experiences a decline in sales due to factors such as market saturation, changing consumer preferences, technological advancements, or increased competition. Companies may decide to discontinue the product, sell off the division, or revamp the product to re-enter the growth stage.
Examples of products at different stages of the PLC include:
- Videocassettes, which have been phased out and are no longer available on the market.
- DVDs, currently in the decline stage as digital streaming services gain popularity.
- Flat-screen smart TVs, in the mature phase with stable sales and widespread adoption.
Understanding the Product Life Cycle stages helps businesses make informed decisions about resource allocation, marketing strategies, and product development. Successful products, such as Apple’s iPhones or Starbucks’ coffee, often undergo minor updates and redesigns to maintain their position in the mature stage for as long as possible, keeping them differentiated and appealing to consumers.