PLC

• product life cycle

  sets out typical stages that sales of product may go through over time
• PLC stages

  1. development, 2. introduction, 3. growth, 4. maturity. 5. decline
• development

  *products is developed by the R&D department

  *market research conducted

  *negative cash (high costs, no sales)

  *investment into developing, testing and trialing products

  *high failure rate
• introduction (launch)

  *product launched (put onto market)

  *heavy promotion of products to build sales/reputation

  *price skimming (start high due to promotional costs and then reduce) or penetration pricing (prices start low to encourage sales)

  *negative cash (sales may not cover high costs)

  *need to get distributors
• growth

  *sales are growing fast

  *product becomes better known and distribution increases (more outlets)

  *product often improved or developed
• maturity

  *sales reach peak and growth slows

  *profitability increases

  *at saturation (when market is full and has reached maximum growth), sales may begin to drop

  *not many new customers

  *competition becomes fierce - sales may suffer
• decline

  *sales fall rapidly and profits decrease (lack of demand)

  *if sales carry on falling, product is withdrawn or sold to another business (divestment)

  *use extension strategies
• extension strategies

  methods that try to prolong life by changing marketing mix
• examples of extension strategies

  *product development - improve, reformulate, redesign product (eg packaging, special editions)

  *market development - new markets, new uses for existing products

  *change distribution

  *change pricing

  *change promotion