Stages of Product Life Cycle
1) Product Development Stage:
This is first stage of PLC. It begins when the company develops new product idea. The Research and Development department (R & D) develops the product concept into a physical product, hopping that it will satisfy the customer and will excite consumers. Then the product is tested under laboratory to make sure that the product performs safely and effectively. No doubt product being newly developed and given physical form, there is no sale of product and simultaneously the cost on R & D increases. In other words there is no profit or earning in this stage. So there is no marketing strategy.
2) Introduction stage:
The introduction stage begins when a new product is launched for the first time in the market. There is no sale or low-sale of product depends upon the nature of product. Naturally promotional expenses will be substantial in order to make the product popular among the customers. Due to heavy promotional expenses, the profit margin will be less. Therefore at time of designing policies marketers use to adopt the following strategies for introductory stage: The firm will concentrate on one product only Adequate funds will be allocated to research and development The firm may adopt skimming pricing strategy or penetration pricing strategy depending upon the nature of the product. The firm may adopt concentrated or mass distribution strategy depending on the area of market to be covered.
3) Growth stage:
It is the second stage in product life. During this stage product is known to customer and demand for the product is increased. Along with this, the cost of production and promotional expenses will fall down gradually. As a result the firms get good profit through marketing of the product. However due to market demand and profit incentive, new firms will enter in the market with modified product. Therefore at this juncture marketer decides the following strategies:
Product improvement strategy will be adopted to cover large market. The firm may adopt penetration pricing strategy. Aggressive sales promotion techniques will be used to improve sales. Modified distribution channels will be accepted to cover large area etc.
4) Maturity stage:
During this stage, firm being well established in the market, sales of the firm remain more or less stagnant. The competitors are more with identical products. Its overall results are there is reduction in firm‘s profit. Because of intense competition, entering into new markets becomes difficult. Therefore the firm always thinks to introduce new product and new marketing mix. Along with this the firms use to study the competitors startles to compete and adjust the production and marketing activities to counteract the same. Generally marketer adopts the following strategies: The firm may adopt production modification to improve upon the existing product. The firm will continue penetration pricing strategy. The firm may stress on promotion expenses and undertake more promotional work. The firm may try to concentrate on specific market segment etc.
5) Decline stage:
This is last stage of product, in its life. Here product has law demand as rivals are coming up with new modified products in the market. Firm‘s sales might have declined noticeably.
Here marketer may reposition the product or modify the product or even take a decision to drop the product from the product mix. Special efforts are necessary at this stage, failing which the firm will have to go out of market within a short period. The marketer implements the following way to deal with the situation- Replace existing product with an improved product. Loss making brand will be withdrawn from the market There will be reduction in price of the product Goods may be sold to selective segment. The firm may become economical on expenses.