Product Life Cycle (PLC)

Each product or service of every company is currently in one of the PLC stages

The use of the “PLC” concept in developing a marketing plan means that the marketer must analyze the company’s financial performance over a specific period (e.g., several years on a monthly basis) through the lens of identifying various products and services in the portfolio and evaluating each of them in terms of the PLC stage they are in.

Over time, any product or service will start selling less and less until it stops completely because its PLC stage changes

The PLC tool assumes that all of a company’s products and services have a lifespan until a better solution to the customer’s problems emerges (often based on new technology that provides better quality at a lower cost), or until a change in consumer tastes occurs, or until competition increases. All of this makes the product or service in its current form increasingly irrelevant to its past customers.

Sales and profits depend on the PLC stage

In Pre-launch, Launch, and Introduction, they follow one pattern, but in Growth, Maturity, and Decline, they are something entirely different.

As we can see from the graph, at a certain point (after a year or even a month), the same sales volume generates lower profit due to rising costs driven by competition. This indicates that the market is beginning to transition into the late phase of the PLC growth stage, which is followed by the maturity phase, characterized by an intensification of this trend.
We also can observe that, at some point, despite all efforts, not only profits but also sales begin to decline. Ultimately, this leads to a situation where, despite ongoing sales, there are no profits—only losses. Customers have found a better solution to their problems, making this service no longer relevant to them.

PLC Stage Influences the Appropriate Marketing Strategy Option

The product/service is in the Introduction PLC stage if:

• Sales begin to take off but are “slow” to pick up because it has just been launched into the market, and the company needs time and resources to find customers and distributors and convince them to buy or distribute the product/service.
• Investment costs at this stage are very high, especially during the Pre-launch phase. Expenditures on marketing are high, and at this stage, the company cannot focus on short-term or even mid-term ROMI.
• Competition in this market is low or absent (this is a single-product/service market, regardless of whether it is a completely new product or service or an addition to an existing product). The company has some time before competitors enter the market with a variant of this product/service, either by copying and creating “me-too” products or by improving upon the market pioneer’s offering. This competitive advantage, referred to as the “pioneer advantage,” is associated with attracting innovators as the first buyers.

According to Hooley et al. (2020, p76), “this is normally the stage for build strategies.” The goal is to establish the new product as a superior alternative to previous offerings.

The product/service is in the Growth PLC stage if:

• Product is readily accepted on the market (customers are no longer just innovators).
• Sales are increasing rapidly.
• Returns outstrip expenditures.
• Purchases are becoming repeated.

Competitors begin to adjust their marketing mix: they may modify or improve their existing offerings, enter the market with new products (recognizing the profit potential), or just launch advertising campaigns or price promotions to divert attention.

According to Hooley et al. (2020, p77), “defensive attacks may be required to prevent the curve from flattening”.

The product/service is in the Maturity PLC stage if:

• The rate of growth slows down significantly.
• Profits are lower than in earlier stages.
• This stage lasts a long time.

The appropriate strategies are:

• Uncover untapped niches.
• Expand the market by creating new segments and generating additional demand.
• Enter price wars.
• Exit the market, become suppliers to more successful competitors, or be acquired by them.
• Supply the bulk of the market and compete on a high-volume, low-margin basis.
• Attempt to revamp their PLCs (not always successfully) by launching new variants of their products.

The product/service is in the Decline PLC stage if:

• Sales are experiencing a slow or rapid decline.
• The next generation of products/services takes over the market.

Reference List

1. Hooley, G. et al (2020). Marketing Strategy and Competitive Positioning.  Harlow, England; New York: Pearson