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PRODUCT LIFE CYCLE
Introduction & Details

Product Life Cycles
Sales
Time
Development Introduction Growth Maturity Saturation Decline

Product Life Cycles and the Boston Matrix
 Product Life Cycle (PLC):
 Each product may have a different life cycle
 PLC determines revenue earned
 Contributes to strategic marketing planning
 May help the firm to identify when
a product needs support, redesign, reinvigorating,
withdrawal, etc.
 May help in new product development planning
 May help in forecasting and managing cash flow

Product Life Cycles
 The Stages of the Product Life Cycle:
 Development
 Introduction/Launch
 Growth
 Maturity
 Saturation
 Decline
 Withdrawal

Product Life Cycles
 The Development Stage:
 Initial Ideas – possibly large number
 May come from any of the following –
 Market research – identifies gaps in the market
 Monitoring competitors
 Planned research and development (R&D)
 Luck or intuition – stumble across ideas?
 Creative thinking – inventions, hunches?
 Futures thinking – what will people be using/wanting/needing
5,10,20 years hence?

Product Life Cycles
 Product Development: Stages
 New ideas/possible inventions
 Market analysis – is it wanted? Can it be produced at a
profit? Who is it likely
to be aimed at?
 Product Development and refinement
 Test Marketing – possibly local/regional
 Analysis of test marketing results and amendment of
product/production process
 Preparations for launch – publicity, marketing campaign

Product Life Cycle
 Introduction/Launch:
 Advertising and promotion campaigns
 Target campaign at specific audience?
 Monitor initial sales
 Maximise publicity
 High cost/low sales
 Length of time – type of product

 Growth:
 Increased consumer awareness
 Sales rise
 Revenues increase
 Costs - fixed costs/variable costs, profits may
be made
 Monitor market – competitors reaction?

 Maturity:
 Sales reach peak
 Cost of supporting the product declines
 Ratio of revenue to cost high
 Sales growth likely to be low
 Market share may be high
 Competition likely to be greater
 Price elasticity of demand?
 Monitor market – changes/amendments/new
strategies?

 Saturation:
 New entrants likely to mean market is ‘flooded’
 Necessity to develop new strategies becomes more pressing:
 Searching out new markets:
 Linking to changing fashions
 Seeking new or exploiting market segments
 Linking to joint ventures – media/music, etc.
 Developing new uses
 Focus on adapting the product
 Re-packaging or format
 Improving the standard or quality
 Developing the product range

 Decline and Withdrawal:
 Product outlives/outgrows its usefulness/value
 Fashions change
 Technology changes
 Sales decline
 Cost of supporting starts to rise too far
 Decision to withdraw may be dependent on availability
of new products and whether fashions/trends will come
around again?

Introduction Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Product
Price
Low sales
High cost per customer
Negative
Create product awareness
and trial
Offer a basic product
Use cost-plus
Distribution Build selective distribution
Advertising Build product awareness among
early adopters and dealers

Growth Stage of the PLC
Sales
Costs
Profits
Product
Price
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Offer product extensions,
service, warranty
Price to penetrate market
Distribution Build intensive distribution
Advertising Build awareness and interest in
the mass market

Maturity Stage of the PLC
Sales
Costs
Profits
Product
Price
Peak sales
Low cost per customer
High profits
Maximize profit while defending
market share
Diversify brand and models
Price to match or best
competitors
Distribution Build more intensive distribution
Advertising Stress brand differences and
benefits

Decline Stage of the PLC
Sales
Costs
Profits
Product
Price
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and milk the
brand
Phase out weak items
Cut price
Distribution Go selective: phase out
unprofitable outlets
Advertising Reduce to level needed to retain
hard-core loyal customers

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PLC.ppt

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