Product Life-Cycle Strategies

After launching the new product, management desires the product to enjoy a long and happy life. Though it does not expect the product to sell permanently, the company desires to earn a decent profit to cover all the attempt and risk that went into launching it. Management is conscious that each product will have a life cycle, even though the exact shape and length is not known advance. Given figure shows a typical product life cycle (PLC), the course that a product's profits and sales take over its lifetime. The product life cycle has five distinct stages:

a) Product development starts when the company search and develops a new-product idea. At the time of product development, sales are zero & the company's investment costs mount.

b)  Introduction is a period of slow sales growth since the product is introduced in the market. Profits are non-existent in this particular stage because the reason of the heavy expenses of product introduction.

c)  Growth is a period of quick market acceptance and rising profits.

d)  In sales growth maturity is a period of slow down because the product has gained acceptance by mostly potential buyers. Profits level get off or decline because of enlarged marketing outlays to protect the product against competition.

e)  Decline is the period while sales fall off and profits drop.

Not all products follow this product life cycle. Some of the products are introduced and die rapidly; others stay in the mature stage for a long, long time. Some of enter in the decline stage and are then cycled back into the growth stage via strong promotion or repositioning.