CONCEPT OF PLC

 The product life cycle (PLC) is the course of a product’s sales and profits over its
lifetime.

 Product life-cycle management (PLM) is the succession of strategies by business

management as a product goes through its life-cycle. The conditions in which a
product is sold (advertising, saturation) changes over time and must be managed
as it moves through its succession of stages.

 The goals of product life cycle management (PLM) are to reduce time to market,
improve product quality, reduce prototyping costs, identify potential sales
opportunities and revenue contributions, and reduce environmental impacts at
end-of-life. To create successful new products the company must understand its
customers, markets and competitors. Product Lifecycle Management (PLM)
integrates people, data, processes and business systems. It provides product
information for companies and their extended supply chain enterprise. PLM
solutions help organizations overcome the increased complexity and engineering
challenges of developing new products for the global competitive markets
PRODUCT LIFE CYCLE STAGES
 There are five distinct product life cycle stages:

 Product Development. When the company finds and develops a new product
idea, product development starts. During product development, sales are zero,
and the company’s investment costs increase.
 Introduction. Sales slowly grow as the product is introduced in the market.
Profits are still non-existent, because the heavy expenses of the product
introduction overweigh sales.
 Growth. The growth stage is a period of rapid market acceptance and increasing
profits.
 Maturity. In the maturity stage, sales growth slows down because the product
has achieved acceptance by most potential buyers. Profits level off or decline
because marketing outlays need to be increased to defend the product against
competition.
 Decline. Finally, sales fall off and profits drop.
Identifying the stage of a product is an art more than a science, but it's possible to
find patterns in some of the general product features at each stage. Identifying
product stages when the product is in transition is very difficult.

Stages
Identifying
Introduction Growth Maturity Decline
features
Sales Low High High Low

High (lower
Investment
Very high than intro Low Low
cost
stage)

Low or no
Competition High Very high Very High
competition

Profit Low High High Low

 Stages of PLC:
 1. Introduction Stage:
 In the first stage, the product is introduced in the market and its acceptance
is obtained. As the product is not known to all consumers and they take time
to shift from the existing products, sales volume and profit margins are low.
Competition is very low, distribution is limited and price is relatively high.
 Heavy expenditure is incurred on advertising and sales promotion to gain
quick acceptance and create primary demand. Growth rate of sales is very
slow and costs are high due to limited production and technological problems.
Often a product incurs loss during this stage due to high start up costs and low
sales turnover.
 The following strategies may be adopted to introduce a product
successfully:

 (а) ‘Money back’ guarantee may be offered to encourage the people to try
the product.
 (b) Attractive gift as an ‘introductory offer’ may be offered to customers,
 (c) Attractive discount to dealers.
 (d) Some unique feature built into the product.
 2. Growth Stage:
 As the product gains acceptance, demand and sales grow rapidly. Competition
increases and prices fall. Economies of scale occur as production and
distribution are widened. Attempt is made to improve the market share by
deeper penetration into the existing market or entry into new markets. The
promotional expenditure remains high because of increasing competition and
due to the need for effective distribution. Profits are high on account of large
scale production and rapid sales turnover.
 During the growth stage, following strategies may be adopted:
 (a) New versions of the product may be introduced to satisfy the
requirements of different types of customers.
 (b) Brand image of the product is created through advertising and publicity.
 (c) The price of the product is made competitive.
 (d) Customer service is enhanced.
 (e) Distribution channels, to make the product easily available wherever
required.
 3. Maturity Stage:
 During this stage prices and profits fall due to high competitive pressures.
Growth rate becomes stable and weak firms are forced to leave the industry.
Heavy expenditure is incurred on promotion to create brand loyalty. Firms try
to modify and improve the product, to develop new uses to the product and
to attract new customers in order to increase sales.
 In order to prolong the maturity stage, a firm may adopt the following
strategies:
 (a) The product is differentiated from the rival products.
 (b) Brand image of the product may be emphasized.
 (c) New markets may be developed.
 (d) New uses of the product are developed.
 (e) Reusable packaging is introduced.
 4. Decline Stage:
 Market peaks and levels off during saturation. Few new customers buy the
product and repeat orders disappear. Prices decline further due to stiff
competition and firms fight for retaining market share or replacement sales.
Sales and profits inevitably fall unless substantial improvements in the
products or reduction in costs are made.
 The product is gradually displaced by some new products due to changes in
buying behaviour of customers. Promotion expenditure is drastically reduced.
The decline may be rapid and the product may soon disappear from the
market. However, decline may be slow when new uses of the product are
created.
 In order to avoid sharp decline is sales, a firm may adopt the following
strategies:
 (a) New features may be added in the product.
 (b) The packaging may be made more attractive.
 (c) Selective distribution may be adopted to reduce costs.
 Extension of Product life cycle

An extension strategy is a practice used to increase the market share for a

given product or service and thus keep it in the maturity phase of the
marketing product lifecycle rather than going into decline.
Extension strategies include rebranding, price discounting and seeking new
markets.

Figure shows the impact of the extension strategies on the product life cycle.
 PRODUCT LIFE CYCLE - EXTENSION STRATEGIES
 If the firm decides to continue selling the product as it reaches saturation or enters
the decline phase, it is likely to extend the life of the product by changing aspects of
the marketing mix to rejuvenate the offer. This can be illustrated by looking at the
sales during the time period of the product. A branded good can enjoy continuous
growth, such as Microsoft, because the product is being constantly improved and
advertised, and maintains a strong brand loyalty. Strategies will include:
 Repackaging and new sizes: the appearance of the product can be crucial gaining a
customer's attention and developing interest
 Repositioning
 Additional features
 Lower prices to maintain interest or liquidate surplus stock
 New advertising campaigns
 Altering the channel of distribution, such as online shops
 Finding new markets - this may be locally, nationally or internationally.
 Encourage people to use product more
 Tips for extending your Product Life Cycle-
1. Keep Refining Your Offers to Maximize Profitability- Pricing Adjustments
 Advertising and Promotion
 Increasing Penetration with Customer Base
 Finding New Customer Segments
2. Update Products to Keep and Escalate Customer Relationships
3. Constantly Innovate and Improve Your Products and Services
4. Explore New Markets and Niches
5. Consider Continuity Programs or Other Recurring Revenue Programs to
Extend the Life Cycle
PLC as a guideline for
Marketing Strategy
 Introduction Growth Maturity Decline

Product Offer a basic Offer product Diversify brands Phase out weak
product extensions, and models items
service, warranty

Price Use cost price Price to Price to match or Cut price

penetrate market beat competitors

Distribution Build selective Build intensive Build more Go selective:

distribution distribution intensive phase out
distribution unprofitable
outlets
Advertising Build product Build awareness Brand differences Reduce to level
awareness among through internet and benefits needed to retain
early adopters in the mass most loyal
and innovators market customers
Sales Promotion Use heavy sales Reduce to take Brand switching Reduce to
promotion advantage of minimal level
heavy consumer
demand
New Product Development
 New product development (NPD) is the process of bringing a new product to
the marketplace. Your business may need to engage in this process due to
changes in consumer preferences, increasing competition and advances in
technology or to capitalize on a new opportunity.
 Innovative businesses thrive by understanding what their market wants,
making smart product improvements, and developing new products that meet
and exceed their customers' expectations.
 'New products' can be:
 Products that your business has never made or sold before but have been
taken to market by others
 Product innovations created and brought to the market for the first time.
They may be completely original products, or existing products that you have
modified and improved.
 Term ‘new product’ has been defined as under:
 1. A product that is offered for the first time to particular groups of buyers is
a new product.
 2. A new product is one, which differs significantly from the products
available in the market in forms of qualities, features, or both.
 3. A product that is perceived by the consumers as a new can be said as a
new product. It must be new for consumers.
Types of New Products

 A new product is one, which is perceived as a new by consumers. If we consider

this definition, we may find various types of new products. Allen and Hamilton
have identified six categories of a new products.
1. New to the World:
It is really innovative, is entered for the first time in the world. The product was not
previously available in the World. For example, pills to cure the incurable diseases
like aids, diabetes etc., or completely pollution free vehicle may be a new product.
2. New Product Line:
In an established market, when a new product line is introduced, it is a new
product. For example, introduction of car in the market by Bajaj Auto Limited can
be a new product.
3. Addition to the Existing Product Line:
When some models or styles are added in the existing product line, it can be a new
product. As per example, CBZ and PASSION models introduced by Hero Honda in its
two-wheeler product line were new products.
4. Improvement in Existing Product:
In this case, new features, qualities, or services are added in the existing
product.
5. Repositioning:
Repositioning consists of introducing the existing product in a new segment or a
territory.

6. Cost reduction:
Selling a high-priced product at a lower price or at a concessional rate becomes a
new product. For those who could not afford the product in the past, now they
can use the same product as a new.
 Essentials or Requirements for Successful Development of New Products:
Based upon possible causes leading to new product failures, following factors
(also called essentials, precautions or requirements) must be considered:
 1. Adequate market demand
 2. Market trends and economic conditions
 3. Compatibility with the present production and marketing structure
 4. Availability of funds
 5. Competitiveness
 6. Managerial experience and ability
 7. Suitability with objective, image, and goodwill of company
 8. Time period
 9. Legal and social aspects
 10. Internal integration and cooperation.
Characteristics of successful product
development

 Passion for Innovation

 Wise Program Management
 Immersive or long Relationships
New Product Development Process and Organisation
 New Product Strategy – Innovators have clearly defined their goals and
objectives for the new product.
 Idea Generation – Collective brainstorming through internal and external
sources.
 Screening – Condense the number of brainstormed ideas.
 Concept Testing – Structure an idea into a detailed concept.
 Business Analysis – Understand the cost and profits of the new product and
determining if they meet company objectives.
 Product Development – Developing the product.
 Market Testing – Marketing mix is tested through a trial run of the product.
 Commercialization – Introducing the product to the public.
 ASSIGNMENT-I
1. Define Product and product focused organisation with
examples.
2. PLC can be used as a “Forecasting Model”. Explain.
3. Describe the Product life cycle of any FMCG product.

 SUBMISSION DATE: 16TH Sept, 2019 i.e., Monday