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The Product Life Cycle ( PLC ) is an important concept in marketing that provides insights into a products competitive dynamics.
Profits Time Product Development Losses/ Investments ($) Introduction Growth Maturity Decline
--Changes in the consumer needs and preferences --Advancing Technology --Competition, Government Policies etc. --Changes in number of potential buyers
Stages in PLC :
Introduction, Growth, Maturity, And Decline.
Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty
Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models
Declining sales Low cost per customer Declining profits Reduce expenditure and nourish the brand Phase out weak items
Cut price
Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers
Competitive
Comparative
Pioneering
Pricing, Distribution & Product characteristics also tend to change with change in stage of Product life Cycle.
Product Life Cycle can be extended in various ways depending on the product. A branded good can enjoy continuous growth, such as Microsoft, because the product is being constantly improved & advertised, & maintains a strong brand loyalty
EXTENSION STRATEGIES extend the life of the product before it goes into decline. Marketers use various techniques to improve sales.
ADVERTISING- Try to gain a new audience or remind the current audience. PRICE REDUCTIONMore attractive to customers. ADDING VALUE- Add new features to the current product. EXPLORE NEW MARKETS- Try selling in different countries. NEW PACKAGING- Brightening up old packaging, or subtle changes.
In case of Pharmaceutical products, a product can be repositioned in a different segment of the market, where the products formulation can be altered, without changing brand name, & then a different section of customers can be targeted. PLC can also be extended by finding out newer uses for the product. These uses can extend the Growth stage further before going into the Maturity stage.