Product Life Cycle (PLC) and The Four Phases

There are four phases that a new product progresses through are Introduction, Growth, Maturity and Decline. PLC is associated with the changes in the marketing situation and thus impacting the marketing situation.

The product revenue and profits can be plotted as a function of the PLC phases as shown below:

source: Wikipedia

I) Introduction

The product has just been introduced in the market and therefore, the marketing communications seek to build the product awareness and to educate the potential consumers about the product. The salient features are:

1. There is little or no competition
2. Pricing may be low to gain the market share
3. Distribution is selective until the consumers show acceptance
4. Promotion is aimed at innovators and early adopters
5. The business typically loses money at this stage
6. Example: Dunzo

II) Growth

The product has been accepted by the market and the consumers have become habitual of the product. The sales volume grow steadily in this stage and the company continuously seeks to increase the market share.

1. There is an increasing trend in the sales volume
2. More and more organic users join the club
3. Pricing is either maintained or increased as the firm enjoys increasing demand with less number of competitors
4. The company may or may not choose to add the improvements but the product quality is maintained
5. More distribution channels are added
6. Promotion is now aimed at a broader audience
7. Example: Instagram

III) Maturity

The sales volume reach its pinnacle and the growth diminishes. The main objective at this stage is to defend the market share while maximizing the profit.

1. The field becomes more competitive and new and innovative competitors enter the market
2. New features are built to differentiate the product from that of the competitors
3. Pricing may be decreased to increase the volume
4. Distribution becomes more intensive and incentives may be offered to encourage usage
5. Product emphasizes differentiation
6. Example: Twitter

IV) Decline

The company reaches its saturation point and the sales begin to diminish due to a negative rate of growth.

1. The product is deemed irrelevant in the market and is phased out of the market
2. It may continue to be offered to a loyal niche segment
3. Example: Yahoo

[TIP: Hop over to Google Trends and correlate the product’s search trend with the life cycle phase]

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