Understanding the 5 Stages of the Product Life Cycle in Marketing

Product Life Cycle

Product also has various stages of life as human beings. From the time a product is introduced, till it is withdrawn from the market, it goes through 5 stages. Analysis of these stages for the purpose of repositioning the product in the market is called Product Life Cycle management. 

A Product life cycle is the length of time from when a product is introduced to the market until it’s taken off shelves.  Most product life cycle curves are portrayed as bell shaped.

Role or function of product life cycle (PLC)

It helps in marketing & sale decisions, from pricing & promotion to expansion or cost cutting. The product life cycle is the length of time that a product is available to customers.

A product has a life cycle is to assert four things:

1. Products have a limited life
2. Product sales pass through distinct stages, each posing different challenges, opportunities and problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Product require different marketing, financial, manufacturing and human resource strategies in each life cycle stage.

The following are the stages in a product life cycle.

1. Introduction Stage
2. The Growth Stage
3. The Maturity Stage
4. The Saturation Stage
5. The Decline Stage

Life Cycle Stages - The above stages can be shown in the following graph

1. Introduction Stages

In this stage, a new product is introduced on a large scale for the first time. Market reacts slowly to the introduction. A period of sales growth as the market. Profits are non-existent because of heavy expenses of product introduction. In other words, consumers take time to accept the new product. Initially, the company may suffer losses, sales improve gradually. Most of the products fail in this stage itself. 

Following are the characteristics of this stage:

• Consumers do not have the knowledge of the product
• Consumers may or may not be strongly in need of the new product.
• If there is a need for the product, the company gets readymade demand. Otherwise, it increases slowly.
• Sales are minimum
• The competition is less, in fact the company, which introduces new product is called as a Market Pioneer.
• The cost of it is very high because the company spends money heavily on Research & Development, Sales, Promotion, etc.

Marketing Strategies during the Introduction Stage 

A company has to prepare the policies very carefully in the stages because it has a great impact on the image of a new product. Even a minor mistake results in the premature death of a product. 

The following are the strategies that the company may adopt in this stage:

1. It may spend heavily on promotion & fix high price. This meets two objectives. Firstly, heavy promotion creates large demand & high price, brings immediate profits. This strategy also helps to create brand preference in the minds of the consumer. It is normally followed when there is a great need for the product, when the product belongs to the richer class & when products are consumer specialties.
2. This second strategy is to fix high price but to spend less on promotion. This is preferred when the product has limited market, in which people have knowledge about the product & the competition is completely absent.
3. Another strategy is to charge low price & spend heavily on promotion. This is preferable when consumers are sensitive to the price & market is wide enough. This strategy brings good returns in the long run.
4. The company may charge low price & spends less on promotion. This is preferable when the consumers are informed about the product, market is very large & there is no competition for the time being.

In the introduction stage, the competitors are very cautious. They do not enter the market immediately. They study the strategies of a company & watch the reaction of the consumers. This helps them to find out the defects of the company’s strategy.

2. Growth Stage

A period of rapid market acceptance and substantial profit improvement that’s is why it is called the market acceptance stage. 

Following are its features

1. Consumers & traders accept the product
2. Sales & profit increase
3. More competitions enter the market
4. The focus of competition is on the brand rather than the product
5. Competitors may introduce new features to the product
6. Distribution network increase
7. The price will be reduced marginally.

Marketing Strategies in the Growth Stage

1. The company tries to impress upon the consumers that its brand is superior
2. It may introduce new models or improve the quality
3. It may enter new market & sell its products with new distribution channels
4. To attract more buyers, it may reduce the price.

3. Maturity Stage

At this stage market saturated with the product, competition is now higher than at other stages and profit margins start to shrink. At some point the rate of scale growth will slow and the product will enter a stage of relative maturity. This stage normally lasts longer than the previous stage and poses big challenges to marketing management. The sales slowdown creates overcapacity in the industry which leads to intensifies competition. They increase advertising & trade and consumer promotion. They increase R&D budgets to develop product improvement & line extensions.

Simple terminology, this stage indicates the capacity to face the competition, sales increases at a decreasing rate. Competition becomes severe. It is reflected in various ways such as offering discounts, modifying products etc. Marketing Strategies during Maturity Period/Stage: In this stage, the manufactures have to take responsibility to promote his product. This strategy aims at creating brand loyalty.

4. Saturation Stage

This is the stage when the sales reach the peak point. Competition intensifies further & profit begins to decline. Small competitors may withdraw from the market because of their incapability to face the competition. 

Marketing Strategies 

This is the stage where the marketing manager must try to reposition his product. Most of the strategies in this stage are offensive in nature. Each manufacture tries to cut down his competitor’s market share by aggressive promotion policy. The objective of marketing in this stage is to retain the present sales level.

5. Decline Stage

For all products, sales invariably declines as new products enter the market. In this stage, there is a sharp decline in the profits, cost increases & market share comes down. Most of the manufactures withdraw from the market. Some may reduce production & concentrate only on a limited market. 

Marketing Strategies

This stage offers one of the greatest challenges to the marketing manager. He has to decide whether or not to continue with the product. The main task of marketing manager is to revitalize the demand instead of discontinuing the product immediately. It is better to withdraw gradually. Those channels of distribution, which are costly & unproductive maybe removed. In the meantime, the weak points of the marketing mix maybe identified & altered as required.

Reasons for the Failure of New Product:

• Poor marketing research
• Not using the up-to-date technology
• High price or too costly products
• Poor design
• Inefficient marketing
• Non-cooperation from the middlemen
• Improper promotional techniques
• Improper timing of introduction of the new product.

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