The term Product Life Cycle (PLC) refers to the time period of a product being introduced to consumers into the market until it’s removed from the scene.
Five stages in PLC:
Development- At this stage, costs are assembled with no parallel revenue. Some products require years and large capital investment to develop and then test their value. Since risk is high, outside funding sources are limited.
Introduction- This stage is about growing a market for the product and building product awareness. At this stage marketing costs are high, as it’s necessary to reach out to the target audience, also intellectual property rights protection is obtained. Product pricing may be high to recover costs linked to the development stage and funding for this stage is typically through investors.
Growth- The product has been accepted by customers, and companies are seeking to increase market share. For innovative products, there is little competition at this stage, so pricing can remain at a higher level, both product demand and profits increase, and marketing is aimed at a wide audience. Funding for this stage is generally still through lenders or through increasing sales revenue.
Maturity- Sales will stabilize, competition increases, so product features may need to improve to maintain market share while unit sales are at their highest at this stage, prices tend to reduce to be competitive. Production costs also tend to reduce because of more efficiency in the manufacturing procedure. Companies usually do not need additional funding at this stage.
Decline- This is associated with decreasing revenue due to market saturation, high competition, and changing customer needs. Companies may choose to discontinue the product, sell the manufacturing rights to another business. This is the stage where the packaging will often announce “new and improved.”