Saturday, 9 March 2013


The product life cycle is defined as the period that starts with the initial product design (research and development) and ends with the withdrawal of the product from the marketplace. It is characterized by specific stages, including research, development, introduction, maturity, decline, and finally obsolescence as the product is removed from the market (discontinued). Each stage is often linked with changes in the flows of raw materials, parts and distribution to markets as production (input costs) is adjusted to face increasing competition. 

A product's life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product. If a curve is drawn showing product revenue over time, it may take one of many different shapes, an example of which is shown below: 

— Source: Hofstra University, New York 

The life cycle concept may apply to a brand or to a category of product. Its duration may be as short as a few months for a new item or a century or more for product categories such as the gasoline-powered automobile. 

Product development (we will explain these terms deeper in the future) is the incubation stage of the product life cycle. There are no sales and the firm prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities. 


  1. Introduction. This stage mainly concerns the development of a new product, from the time is was initially conceptualized to the point it is introduced on the market. The great majority of ideas do not reach the promotion stage. The corporation having an innovative idea first will often have a period of monopoly until competitors start to copy and/or improve the product (unless a patent is involved as it is the case in industries such as pharmaceuticals). Generally, associated freight flows take place within developed countries and/or close to markets where to product is likely to be adopted. 
  2. Growth. If the new product is successful (many are not), sales will start to grow and new competitors will enter the market (by replicating the product or developing new features on their own), slowly eroding the market share of the innovative firm. The product starts to be exported to other markets and substantial efforts are made to improve its distribution since competition mainly takes place more on the innovative capabilities of the product than on its price. This phase tends to be associated by high levels of profits and a fast diffusion of the product. 
  3. Maturity. At this stage, the product has been standardized, is widely available on the market and its distribution is well established. Competition increasingly takes place over cost and a growing share of the production is moved to low cost locations, particularly for labor intensive parts. Associated freight flows are consequently modified to include a greater transnational dimension. 
  4. Decline. As the product is becoming obsolete, production essentially takes place in low costs locations. Production and distribution economies are actively sought as profit margins decline. Eventually, the product will be retired, an event that marks the end of its life cycle. 

Limitations of the Product Life Cycle

The term "life cycle" implies a well-defined life cycle as observed in living organisms, but products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially. Consequently, the life cycle concept is not well-suited for the forecasting of product sales. Furthermore, critics have argued that the product life cycle may become self-fulfilling. For example, if sales peak and then decline, managers may conclude that the product is in the decline phase and therefore cut the advertising budget, thus precipitating a further decline. 

Nonetheless, the product life cycle concept helps marketing managers to plan alternate marketing strategies to address the challenges that their products are likely to face. It also is useful for monitoring sales results over time and comparing them to those of products having a similar life cycle. 

The product life cycle stages explain the growth and decline of revenues and profits associated with a product or service. Many companies in addition to marketing and sales managers have product managers who are responsible for specific products or services. The company has to develop appropriate strategies and tactics in each of these product life cycle stages in order to improve its market position and profitability which is called product life cycle management. Product life cycle management deals with different challenges at each stage and approaches the market with different strategies and tactics in each of these stages. 

— Source: NetMBA 

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