Q. Described the distinct stages in PLC?
Ans.: A product passes throughout distinct stages during its life and it is called product life cycle. The PLC is usually presented as a sales curve spanning the product's course from introduction to leave. The PLC concept says that each stage in the cycle is characterized by classic marketer behavior and each stage leads to a distinctive marketing strategy.
A product passes through 4 stages they are following:-
- Introduction
- Growth
- Maturity
- Decline
(a) Introduction Stage: The product is in initial stage. At this stage, there cannot be a ready market for the product. Sales are low. Earnings seem a remote possibility, demand has to be made and developed and consumers must prompted to try out the product. 1 of the critical decisions to be taken in this stage is the pricing strategy to be adopted market skimming or market penetration. Skimming strategy involved high cost, taking profit of early entry & the novelty of the product.
Penetration costing involves low prices with a view to having good market coverage. It also concentrates at keeping the competition out.
(b) Growth Stage: At the time of the growth stage of market, demand for the product increases and size of market grows. The sales and profits also grow up. But by the time the marketer settles down with his product, competitors can enter the scene with same or slightly improved versions. The marketer has to stay ahead of his competitor and it has to reconsider his costing strategy. He follows competition oriented costing, because the entire market is being shared among several firms. Marketing & distribution efficiency becomes decisive factor at this state.
(c) Maturity Stage : In the maturity stage, the demand tends to reach a saturation point and there is sufficient supply from competitive sources. Price competition becomes intense and exploits the brand loyalty. The marketer try out product and packaging modification, and promotional. Deals and make special offers to new market segments so that his sales volume does not get smaller. Long term & short term marketing plans are implemented to gainfully prolong the maturity stage.
(d) Decline Stage: At decline stage, sales start to fall. The demand for the product gets smaller, probably due to new and functionally higher products, becoming accessible in the market. The cost and margins get depressed, total sales and profits diminish. But some firms at this stage can try to link up the sales of these products with some other premium products they have developed and so try to stretch the life of the decline product.
Therefore, PLC concept helps and it is used as a tool in formulating and implementing marketing strategy.
- It facilitates pre planning the product launch.
- Facilitates investment decisions on products
- Facilitates prolonging of the profitable phase
- Facilitates option of the right time to exit
- Facilitates option of appropriate entry strategy Provides useful clues for managing customers