Product Life Cycle Stages

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A product's life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product. The life cycle concept may apply to a brand or to a category of product. Its duration may be as short as a few months for a fad item or a century or more for product categories such as the gasoline-powered automobile. Product development is the incubation stage of the product life cycle. There are no sales and the firm prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities.
The four stages of product life cycle are:
1. Introduction stage
2. Growth stage
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The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors' customers to switch, increasing usage per customer, and converting non-users into customers. Sales promotions may be offered to encourage retailers to give the product more shelf space over competing products.
During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. Marketing mix decisions may include:
• Product - Modifications are made and features are added in order to differentiate the product from competing products that may have been introduced.
• Price - Possible price reductions in response to competition while avoiding a price war.
• Distribution - New distribution channels and incentives to resellers in order to avoid losing shelf space.
• Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to get competitors' customers to switch. DECLINE STAGE
Eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintained longer. Unit costs may increase with the declining production volumes and eventually no more profit can be made.
During the decline phase, the firm generally has three options:
• Maintain the product in hopes
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