Product Live Cycle
Monday, October 13, 2008 14:42
Product Live Cycle (PLC) refers to a sequence of stages, through which a new product progresses from introduction to growth, maturity, and decline. All kinds of products have their own life cycles, which go through the following four stages:
1. Market introduction stage
Though there is little or even no competition in the market, the sales volume is low.
In order to create more demand and promote customers to try the new things, the cost in this stage is still very high
2. Growth stage
At the second stage of market development, the costs reduced due to economies of scale and the sales volume increases significantly, which leads to more profits.
Public awareness has already been created and competition begins to increase with a few new players in establishing market. Prices are being lowered to maximize the market share.
3. Mature stage
As the products or the brand image has already been well established in market and there is no need for further publicity, the costs at this stage are very low.
The sales volumes of the products just reach the peaks, but as a result of the increase in competitive offerings, the product prices tend to drop due to the proliferation of competing products and the industrial profits go down. Brand differentiation and feature diversification are very important at this stage.
4. Saturation and decline stage
In the final stage of PLC, the costs become counter-optimal and the sales volume decline or stabilize. The profitability diminishes. It becomes more of a challenge of production or distribution efficiency than increased sales
The conditions, in which a product is sold, change over time. These conditions must be managed as the products moves through its succession of stages. Product Life Cycle Management is the succession of strategies used by management as a product goes through its product life cycle.
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