Marketing : Product Life Cycle (PLC)

Products also have a life cycle just like humans. They also have different stages in their life as they move forward in their journey of life.

The concept of PLC is based on following assumptions:

1. Products have a limited life.
2. Product sales passes through different stages which offer different challenges, opportunities and problems.
3. Profits rise and fall at stages of PLC.
4. Products require different strategies of marketing, human resource, finance, purchase, manufacturing, etc in different stages of its life cycle.

These different stages of life of a product can be plotted on a chart named as PLC. Where X axis represents time and Y axis represents sales and profit. Sales are always greater than the realisation of profit.

Different stages of Product Life Cycle (PLC)

Basically, PLC is a tool which allows a business  to examine the stage of its product in the market through its sales and profit in particular time period. After that it can chalk out a strategy to over come the problems faced by the product in the market. Lets have a look at the different stages of product life cycle and problems and opportunities it generally faces in that stage:

1. Introduction stage: It is the stage of introduction of product in the market. The company has to make heavy investments in order to launch and run a product in the market for the first time. Sales volume are very slow and profits are generally non existent or are negative. If a company is able to sustain and overcome it, then only it reaches the next stage.

2. Growth: If the product has been accepted by the market its sale grows rapidly and the business start making profit very steeply. There is awareness in the market about the brand and product. Product starts facing competition therefore marketing expenditure increases.

3. Maturity: After the product has seen substantial growth and reached to masses it starts facing stagnation in sales and rate of growth of  sales declines. Profits may increase or come down due to competition. The business has to make expansion and promotional strategy, offer different models of the same product, find new niche markets, offer discounts, schemes, etc to sustain in the market. This is the longest stage of PLC.

4. Decline: After the fruits of maturity has been reaped product faces huge decline in sales and its declining stage of product life cycle starts. Profits start falling severely. Competition becomes cut throat and market share start declining fast. Company may focus on only profitable markets.

At this stage business may decide to make investments in fixed assets for technology up-gradation that may revive the product and manufacture totally new kind of variants. Innovation and up-gradation may be the best strategy at this stage if the company wants to continue the product or divestment or elimination of the product is the other option.

Shortcomings of product life cycle:

Although PLC is a good tool to asses a product's future prospects and strategy it is not the only life cycle of a product. A product may show other pattern of life cycle apart from this and be unpredictable. Not all the products necessarily reach the decline phase or a product may never see a decline.

Sometimes it is difficult to asses the stage of a product, it may seem to be maturity but it may come out to be decline without passing through maturity.

Life span of different stages may be very different from this. Maturity need not always be the longest stage instead introduction stage may be the longest.

If a temporary fall in profits mistakenly taken as decline and plan for its discontinuance have been started it will lead it to decline even when actually it was not.