The product life cycle (PLC) is a series of phases that a product will go through in its “lifetime” in relation to the profits and sales that it will collect. It is not possible to predict a PLC 100% accurately, but management can make assumptions and informed guesses. The PLC consists of five different stages (Kotler & Armstrong, 2012):
- Product development
Although there are five different stages, not every product that is created goes through all of the five stages before the end of its lifetime. Some products enter the market quickly and then die off before they can grow, mature, and decline. My favorite example of a product that had this lifecycle was the Coca Cola C2 product line extension. Don’t remember it? That’s not surprising, since it was launched and died in the same year (2004), as a low calorie soda substitute that still had all the flavor of normal soda. In contrast, there are products that do not fit all five stages because they continue to thrive avoid the decline stage. A popular example of this type of product is Levi’s Denim. As a company that has been around for over 75 years, Levi’s has produced a product that strays from the decline stage by keeping up with the most current fashion trends and styles.
STYLE, FASHION, AND FADS
Style, fashion, and fads are three terms that may sound familiar, but I am not referring to them in a clothing sense; well, not yet I’m not. Style, fashion, and fads are three terms used to describe the life cycle trends of a product. Below are trend graphs that distinguish which is which:
As you can see style is the most unpredictable trend of the three. A style has a cycle that it runs through that show a mix of increased and decreased sales over time. The longest lasting trend, style can be related to almost any product. My favorite example is food: P.F. Changs’ combined Chinese and American Style, CPK’s California with a twist style, and BJ’s authentic brewhouse style.
As opposed to style, fashion is a more steady progression of a trend. Fashion starts out, increases steadily, plateaus, and then decreases proportionally to a decline. Now when the word fashion is thrown out there, most people think of clothing like I said earlier. Applying the fashion category trend to the fashion world itself is the easiest way for me, as I am currently starting my own fashion blog that follows fashion trends. An example of a current trend in fashion this season is chancy jewelry as well as a rough military style, with lots of camouflage patters and flack jackets. These trends arose slowly from celebrities and designers and have now trickled down to lower-end everyday fashion designers, which will soon lead to the decline of the trend.
Fads are the most unreliable trends as they have a quick rise, peak, and steep decline all in a short period of time. Fads are usually driven by consumer support and immediate brand popularity. A fad can characterize an entire product’s lifecycle or even a part of a normal product life cycle. An example of a fad that I can most identify with is the cupcake industry fad. Although companies like Sprinkle’s saw great success with the solely cupcake based bakery idea, the fad that followed was littered with copycats. Thousands of bakeries devoted to serving only cupcakes arose and quickly faded away as the fad declined and a new fad arose. The current fad in baking and food products in general, is the healthy, vegan, and gluten-free baked goods.
The first stage after a product is created and developed is the introduction stage. In the introduction stage, a product is launched and brought into the market it is a part of. Products can either move through this stage quickly or linger for a long time period. During this stage, profits and sales are extremely low due to the high expenses that are incurred in distribution and promotion are high to get consumers informed. To insure that a product can progress out of this stage, it is important that the company that has created the product chooses the correct strategy. An example of a product’s introduction stage is the period of time between Apple’s new product announcement and the release of the actual product itself. Apple uses keynotes to inform the consumers of the product and build awareness. No profits are gathered, as the product is not available for purchase until the introduction stage is almost complete.
If a product makes it through the growth stage it can progress into the growth stage. After being accepted into the market, a product can begin to gather profit and increase its sales. The early adopters of the product (the first people who buy it) will continue to purchase and encourage others to do the same, collecting a whole new audience. The growth stage is also the stage in which competition arises and companies must stay relevant so they are not overpowered. With increased sales and a steady level of expenses, companies in the growth stage increase their profits. In order to remain in the growth stage, some companies find that implementing new product features and improving the product will gain them market share as well as profits. A product that is currently in the growth stage is the mini tablet, like the iPad Mini. The product is currently gaining in popularity as well as competition with the Google Nexus 7 and the Samsung Galaxy Note 8.0. To increase the market share and sales, Apple has included the Retina Display in the newest version of the iPad Mini. The mini tablet is growing and reaching new heights.
The maturity stage is the stage where a product reaches its maximum sales as well as profits. The end of the maturity stage is characterized by a slow decline the profits and sales, as the product is beginning to become irrelevant to consumers. This stage is normally the longest and most challenging stage for marketers, as it requires decisions on the evolution of the product being analyzed. Most successful products look at the maturity stage as a point to evolve to the changing market and demands, hopefully catalyzing them back into the growth stage. These evolutions can be made possible by either modifying the product, modifying the market, or modifying the marketing mix. An example that I find most relatable of a product in the maturity stage is laptop computers. Although laptops are still relevant and gain profits for a company, their importance is starting to be lessened by the presence of tablets. Companies, like Apple, have integrated new innovations, like Retina Displays, into their laptops in order to increase interest and sales. Apple decided that modifying the product was the avenue to take to maximize the length of time that its products remain in the maturity stage.
Finally, the decline stage is the stage in which a product experiences a dramatic decrease in sales and a steady decline of profit leading to its eventual demise. Companies can remain in the decline stage for many years. Technological advancements, increased competition, and shifts in consumer tastes all lead to a product to enter the decline stage. Once in the decline stage, it is difficult for a product to reverse out of it due to the costs that are incurred in the decline stage, although not impossible. Once a product is in the decline stage, a company must decide whether to drop, maintain, or harvest the product. Dropping the product means eliminating it or selling it off. Maintaining a product means reinvigorates the product and hopefully launches it back into the growth stage, while harvesting the product means the company reduces the costs associated with the product in hopes of reversing the damage of the loss in profit. Keeping consistent with the Apple theme, I relate the decline stage to CD’s and the presence of iTunes. With the advancements in technology and consumers preference for a more easily purchased product, iTunes emerged and quickly made CD’s almost irrelevant. Although the CD market is not completely abandoned, it has decreased exponentially since iTunes and iTunes Radio allowed music lovers to easily purchase and stream music.
Below is a table that I created using information from the textbook (280) that provides strategies for companies to adopt in every phase of the PLC: