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Product life cycle



The easiest way to explain the Product Life Cycle (short PLC) is the PLC curve.













If we look at the drawing we see five stages, development, introduction, growth, maturity, and decline. An additional stage is the relaunch. The relaunch stage is not used for every product.

Now an explanation of the five main stages.





Development



Development is the period from the invention to the product ready for mass production.

The costs are usually very high in this stage. There is mostly no advertisement for a product in development but there is the possibility to do so. The effects of advertising a product before entering the market are negative in form of removing the surprise effect and alerting the competitors.





Introduction



The sales in this stage are slowly rising. The company starts with advertising the product. The price is in a high level in order to recoup the costs of development quickly. At this stage the early adaptors buy the product. Promotion is aimed at building brand awareness. In most of the cases negative profits are made in this period.





Growth



The revenues increase very fast. Now there is increased advertising to build a brand preference.

Retailers are getting interested in carrying the product. For resellers there are only minimal discounts given. In this stage the development costs are recouped. If the demand is high the price should be set in an upper level so that there is a high profit. If there is a low demand the prices are set in a lower level to capture additional costumers.





Maturity



This is the stage where the limit of sales is reached. Companies try to remain in this stage as long as possible.

There is a low advertising because the costumers know the brand. To stretch this period additional features and skills are added. The price is set in an average to high level.







Decline



In the stage of decline the sales decline. This means the market is saturated, the product is technologically obsolete or the costumers' taste has changed. In this stage mostly all marketing activity is stopped.

Production is stopped too and inventory is sold out. Usually the brand name is kept to use the advantage for the next time inventing a new product so the advertising costs are not as high as by the first product.



Relaunch



There is the possibility to relaunch a product. If the relaunch is used the sales will rise up a little for a short period. For a relaunch you need a new invention added to an already existing product.

 
 

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