Page
The PLC
Completion requirements
View
The PLC has been described as the most quoted but least understood concept in marketing. Any strategy considering products and markets will be influenced by the PLC. Products pass through four stages: introduction, growth, maturity, and decline. Sales will vary with each phase of the life cycle.
Introduction
It takes time for sales to grow, and the introductory phase sees awareness and distribution of the product increasing. Some organisations will specialise in innovation and aim to consistently introduce new products to the market place. Common strategies include:
Skimming, where a high price level is initially set to capitalise on the product’s introduction and optimise financial benefit in the short term, or
Penetration, with pricing used to encourage use and build market share over time.
Growth
This phase sees a rapid increase in sales. Additionally, competition begins to increase, and it is likely that prices will be static, or fall, in real terms. The growth stage sees the product being offered to more market segments, increasing distribution and the development of product variations.
Maturity
Here, product sales peak and settle at a stable level. This is normally the longest phase of the PLC, with organisations experiencing some reduction in profit level. This is due to the intense competition common in mature markets. As no natural growth exists, market share is keenly contested, and marketing expenditure is increased. Marketers may try to expand their potential customer base by encouraging more use or finding new market segments.
Decline
The decline stage can be gradual or rapid. It is possible to turn-around declining products and move them back into the mature phase of the cycle. The alternative is replacement. A residual demand will exist, with current users needing parts, services, and on-going support. Often the decline phase offers a choice, re-investing (turn-around/replace) or a ‘harvesting’ strategy that involves maximising financial returns from the product and limiting expenditure.