Product Life Cycle: Definition, Theory & Stages

Product Life Cycle: Definition, Theory and Stages

By: http://studiousguy.com/ Definition of 'Product Life Cycle' Definition: Product life cycle (PLC) is the cycle through which every product goes through from introduction to withdrawal or eventual demise.

The Life of the Product Life Cycle

Have you ever had the opportunity to witness an object being manufactured on an assembly line? The product begins on a conveyor belt and slowly makes it way to different areas of the assembly line for processing. Ultimately, the product reaches its end and has been

properly assembled. The product life cycle, which can be defined as the entire existence of a product from its origins to its death, is very similar to this process in the fact that it begins at a certain point and goes through different areas which we will call stages. But just what happens during each of these stages? Let's take a look to get the answer to this question.

The life of most products can be divided into four key stages:  Introduction  Growth  Maturity  Decline

The Introduction Stage Most things in life need some sort of introduction, and the product life cycle is no different. During the introduction stage, a product is being introduced into the market. Typically, the characteristics of this stage include a heavy influence of advertising to raise product awareness along with less revenue being made at this time.

For example, let's say that we have a product called The Bot, which is a computerized robot that can assist with things such as household

chores and cleaning. The introduction stage of the product life cycle for The Bot will primarily consist of an organization trying to educate the public about its existence through promotional activities along with initially having high costs. Since the product is still being introduced into the market, it has not had the chance to earn sufficient revenue to offset the costs to produce it at this time.

The Growth Stage The second stage of the product life cycle is the growth stage. This stage reflects the largest increase in profits during the product's entire cycle. Using our previous example, The Bot, it is during the growth stage that an organization begins to see their hard work pay off through increased sales of the product. This increase is due in part to a successful promotional awareness campaign from the introductory stage, causing more people to know about the product. The increase in sales can also be attributed to a reduction in costs due to the economies of scale.

The Maturity Stage At some point during the product life cycle, the product enters a stage where its growth begins to level off and remain rather constant. This is the maturity stage. This stage is characterized by slower growth due to an increase in rivals and competitors entering the market. Products in this stage will first begin to encounter market saturation, which can be defined as when a product has reached its maximum level of productivity in the market. Simply stated, the product has reached its ceiling revenue-wise.

During the maturity stage with The Bot, its parent company will expect to see a reduction in sales of the product due to market saturation.

Organizations with products in the maturity stage must look to other avenues, such as unique product innovations or improvements, in order

to make up for the stagnant market. For example, The Bot could possibly look to perform chores at a faster rate or perhaps improving it to perform more duties.

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