The Product Life Cycle

11-1

 Introduction Stage
Firm works to stimulate demand for the new
market entry
Promotional campaigns stress features
Additional promotions to intermediaries
attempt to induce them to carry the product
Although prices are typically high, financial
losses are common due to heavy
promotional and research-and-development
costs
11-2

 Growth Stage
Sales volume rises rapidly
Firm usually begins to realize substantial
profits
Success attracts competitors
Firm may need to make improvements to
the product

11-3

Additional spending on promotion and

distribution may be necessary

 Maturity Stage
Industry sales continue to grow, but
eventually reach a plateau
Many competitors have entered the
market, and profits began to decline
Differences between competing
products diminish
Available supplies exceed industry
demand for the first time
Competition intensifies and heavy
11-4
promotional outlays are common

 Decline Stage
Innovations or shifts in consumer
preferences cause an absolute decline
in industry sales
Industry profits fall -- sometimes
become losses
Firms cut prices in a bid for the
dwindling market

11-5

Manufacturers gradually drop the

declining items from their product lines

Product Life Cycle

Characteristics

Introduction

Growth

Marketing objective

Attract innovators and

opinion leader to new
product

Expand distribution and

product line

Industry sales

Increasing

Rapidly increasing

Competition

None or small

Some

Industry profits

Negative

Increasing

Customers

Innovators

Affluent mass market

Product mix

One or two basic

models

Expanding line

Distribution

Depends on product

Rising number of
outlets

Pricing

Depends on product

Greater range of prices

Promotion

Informative

Persuasive

Product Life Cycle

Characteristics

Maturity

Decline

Marketing objective

Maintain differential
advantage as long as
possible

(a) cut back,

(b) revive,
(C) terminate

Industry sales

Stable

Decreasing

Competition

Substantial

Limited

Industry profits

Decreasing

Decreasing

Customers

Mass market

Laggards

Product mix

Full product line

Best-sellers

Distribution

Greatest number of
outlets

Decreasing number of
outlets

Pricing

Full line of prices

Selected prices

Promotion

Competitive

Informative

Extending the Product Life

Cycle
Marketers usually
try to expand each

stage of the life cycle for their products

as long as possible
Product life cycles can stretch indefinitely
as a result of decisions designed to:
Increase the frequency of use by
current customers
Increase the number of users for the
product
Find new uses
Change package sizes, labels, or
product quality
11-8

Product Deletion Decisions

Product lines must sometimes be
pruned and marginal products
eliminated
This decision is typically faced during
the late maturity and early declined
stages of the product life cycle
An unprofitable item may be continued
in order to provide a complete line for
11-9
customers

Limitations of PLC
Nariman Dhalla & Sonia Yuspeh 1976
Examined over 100 product categories
like food, health, personal care
Listerene,Marlboro,Colgate,Anacin,Budw
eiser

12-10

Limitations of PLC
Difficult to gauge accurately where a product is on its PLC
graph. A rise in sales per se is not necessarily evidence of
growth. A fall in sales per se does not typify decline
Some products do not experience a decline. Coca Cola and
Pepsi are examples that have existed for many decades, but
are still popular products all over the world.
Different products would possess different PLC "shapes".
A fad product would hold a steep sloped growth stage, a
short maturity stage, and a steep sloped decline stage.
12-11