→ Product life cycle (PLC) → shows the stages a product passes through from its launch until it is withdrawn from the market
→ The four main stages are → introduction → growth → maturity → decline
Introduction Stage
→ Product is launched into the market for the first time
→ Sales are usually low because customers are not yet familiar with the product
→ Promotional expenditure is often high → business needs to create awareness and encourage trial
→ Distribution may initially be limited while the business establishes the product
→ Example:
→ A new electric scooter brand launches its first model → significant advertising is required to make consumers aware of the product
→ Analysis:
→ high promotion costs + low initial sales → low or negative profit → business may need strong financial resources to survive this stage
→ Evaluation:
→ A successful launch can create strong future growth → but inaccurate market research or weak promotion may cause the product to fail before reaching the growth stage
Growth Stage
→ Sales increase rapidly as more customers become aware of and purchase the product
→ Revenue and profit are likely to increase
→ Competitors may enter the market after seeing the product’s potential
→ The business may increase production and distribution to meet rising demand
→ Example:
→ Demand for a successful fitness-tracking smartwatch increases → the manufacturer expands production and sells through more retailers
→ Analysis:
→ increasing sales → higher revenue → economies of scale → lower average costs → potentially higher profit
→ Evaluation:
→ Growth can provide major opportunities → but increasing competition may reduce market share and force the business to spend more on promotion or product development
Maturity Stage
→ Sales reach their highest level or begin to grow very slowly
→ Most potential customers may already own the product
→ Competition is usually intense
→ Businesses focus on protecting market share and maintaining customer loyalty
→ Example:
→ A well-established soft drink brand may have millions of existing customers → but faces intense competition from other brands
→ Analysis:
→ market becomes saturated → sales growth slows → businesses must differentiate products or encourage repeat purchases → to protect revenue
→ Evaluation:
→ A strong brand can extend the maturity stage for many years → but if customer preferences change significantly, maintaining demand may become increasingly expensive
Decline Stage
→ Sales and market share fall over time
→ Customer preferences may change
→ New technology or substitute products may make the product less attractive
→ The business may experience falling revenue and profits
→ Example:
→ Sales of DVD players declined significantly as consumers moved towards streaming services
→ Analysis:
→ falling demand → lower sales → reduced revenue → lower profitability → business must decide whether to withdraw or extend the product’s life
→ Evaluation:
→ Decline does not always mean immediate withdrawal → a business may find a smaller profitable market or successfully reposition the product
Extension Strategies
→ Extension strategies → actions taken by a business to extend the maturity stage and delay the decline of a product
→ The main objective → increase sales and revenue for longer → without developing an entirely new product
Changing the Product
→ Add new features or improve quality
→ Change design, packaging or appearance
→ Introduce new versions or sizes
→ Example:
→ A smartphone manufacturer introduces improved cameras, battery life and software → encouraging existing customers to upgrade
→ Analysis:
→ product improvements → renewed customer interest → increased demand → higher sales → product life extended
→ Evaluation:
→ effective when customers value the improvements → but development costs may be high and customers may not consider the changes significant enough
Finding New Markets
→ Sell the existing product to a new group of customers
→ Enter new geographical markets
→ Target a different demographic group
→ Example:
→ A food company originally selling mainly to adults develops marketing campaigns aimed at younger consumers
→ Analysis:
→ new customers → larger target market → increased demand → higher sales → slower decline
→ Evaluation:
→ new markets provide growth opportunities → but cultural differences, competition and different customer preferences may increase risk
Finding New Uses for the Product
→ Encourage customers to use an existing product in different ways
→ New uses can create additional demand
→ Example:
→ Baking soda can be marketed not only as a cooking ingredient but also as a cleaning product
→ Analysis:
→ additional uses → wider customer appeal → increased frequency of purchase → higher sales
→ Evaluation:
→ relatively low-cost strategy → but new uses must be credible and accepted by customers
Changing the Promotion
→ Use new advertising campaigns
→ Introduce new promotional methods
→ Change the brand image or message
→ Use social media and influencers to reach new customers
→ Example:
→ A mature clothing brand changes its advertising to appeal to younger consumers → helping refresh its image
→ Analysis:
→ new promotional message → renewed awareness → increased customer interest → higher demand
→ Evaluation:
→ promotion can be effective in refreshing an established brand → but high promotional expenditure may reduce the additional profit generated
Changing the Price
→ Reduce price to attract price-sensitive customers
→ Introduce discounts or special offers
→ Use different pricing strategies for different market segments
→ Example:
→ A mature streaming service offers a lower-priced subscription → attracting customers who previously considered it too expensive
→ Analysis:
→ lower price → increased demand → higher sales volume → potentially greater total revenue
→ Evaluation:
→ lower prices may increase sales → but profit per unit falls → so the strategy is only successful if the increase in sales volume is sufficient
Why Businesses Use Extension Strategies
→ Avoid the costs and risks of developing an entirely new product
→ Continue generating revenue from an established product
→ Make better use of existing production facilities
→ Maintain customer loyalty and brand awareness
→ Delay the decline stage → giving the business more time to develop replacement products
→ Analysis:
→ successful extension strategy → longer product life → continued sales revenue → improved return on the original investment → potentially higher overall profit
→ Evaluation:
→ effectiveness depends on the product, market conditions and customer preferences → an extension strategy may only delay decline rather than prevent it permanently
Evaluation
→ The best extension strategy depends on why the product is entering decline
→ If decline is caused by changing customer tastes → product redesign or repositioning may be effective
→ If decline is caused by high prices → price reductions may increase demand
→ If the domestic market is saturated → entering new geographical markets may be more appropriate
→ However → extension strategies involve additional costs and may reduce profit margins
→ Businesses should compare the cost of extending the product’s life with the additional revenue and profit expected before making the decision
→ Therefore → extension strategies are most valuable when they can increase sales and profitability without requiring excessive additional investment.