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What is Product Life Cycle (PLC)?
Just like how a plant has a life cycle, which begins with the sowing of the seed, goes on to sprouting, shooting leaves and establishing roots, and finally shrinking and withering away, every product also has a life cycle.
The product life cycle happens in four different stages
Introduction: It is a stage when the product is totally new to the market. The stress is not on immediate profits, but on creating awareness about the product. A price skimming strategy is employed. The product has no, or very few competitors.
Growth: Competitors are attracted into the market. They begin offering similar products. Product becomes more profitable. The stress is on advertising and brand building. Market share starts stabilising.
Maturity: Â The survivors of the earlier stages tend to stay longest in this stage. Sales grow at declining rates. Producers leave the market because of poor margins. Sales promotion and price wars are rampant and find prominant part in this stage.
Decline:Â This stage marks the downturn of the market. Sales grow negatively. Many products are withdrawn from the market. Profits are ensured by cost cutting and reduced marketing spend.
All products need not go through all these stages. There are products which go from introduction to decline. The length of each stage also varies enormously. The decisions of the marketers also change the stage. For example a steep price rise can take the product from growth to decline, or a shift from decline to maturity can be experienced by a price cut.