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Like all living beings, products
are also observed to have
a length of life and pass through different stages of life
like birth, growth, maturity and death. One might ask if products eat
too, yes they do so in terms of money spent on their development
and launching process. Jokes apart, Product Life Cycle (PLC) as
a concept is really important for managers since the development
of marketing. PLC highlights that sooner or later, all products die
and if the company wants to maintain its sales revenues, it must
replace the dying products with newer ones. PLC is used as a forecasting tool
by the marketing managers regarding the demand of the product in
future so as to strategize production and marketing plans related to
that product.
In the recent past, products were carefully crafted and
analyzed through various life cycle stages after launch. Marketing strategies
were formulated depending upon the stage of product life cycle.
The marketing budget used to be based on PLC. PLC has always been
a guiding tool to the marketing managers. It has been a
strong pervasive tool in managing product line. PLC helps in product
portfolio management. Further, it is a simple concept in comparison to
other tools of product management, like BCG Matrix.
The concept of PLC is very simple and says that every product that
enters the market will have to leave the market. Though it is
not possible to accurately forecast the time length a product may stay
in the market. With commercialization, a product enters into the market and
is treated to be in its introductory phase. During the
introductory phase, promotional expenses are heavy and sales slowly pick
up. There is possibility of changes in the product on the basis
of feedback from customers. It takes time to make the product
available to customers on a large scale. Once the sales picks up, the
product starts paying off and marks the start of the growth stage. Expenses
can be extended on modification of the product as now
promotional expenses take a back seat. Newer versions, models of the
product can be introduced during this stage like what Maruti Suzuki has
been doing. Objective of this stage is to create product awareness
and establish the product in the market. Once the sales reach to
the maximum attainable volume, the marketer needs to focus on
some variant of the product or may be a new product. It is the stage
where distribution network is strong. A strong distribution network
helps in selling almost all products of the same company, for
example garments of Jockey. The objective at the stage of growth is
to maximize market share. With the success of the product, it is
obvious that competitors enter the market and as and when
competition intensifies, the market share of the existing product decreases.
Now the product enters the maturity stage of PLC. At this stage, it
is obvious to look for new market segments, try
product differentiation or even look for newer products. The focus is
to maximize profits and also to retain market share. Once there
is stagnancy experienced in sales, focus is on replacing the
product with a better or other product. This is the stage of decline, which
is followed by either revival of the product or its respectful
burial. Decline can be sharp or slow, depending on the usage of
the product. The objective at this stage is to minimize the
expenditure related to product activities. But PLC cannot be treated as
a universally applicable concept. Some products may not exhibit
all stages or the duration may vary. Moreover, it is difficult to
forecast the duration of PLC in many cases. |
