Detail Overview of Product Life Cycle (PLC)

Maturity Stage

The maturity stage, the growth rate of sales will decline and the product will enter a stage where is will be mostly decaying. The maturity stage has 3 phases, and as such it has a longer period to last than the other stages because this stage is where the managers try their best to not simply let go of the product and squeeze every little profit from the product sales. The first phase is the growth in the maturity stage, then the stability phase and then finally the decline phase. There are no new distribution channels that could be tapped and so the first phase describes the decline of the rate of sales growth. In the second phase, market saturation is seen and sales roll-out on per capita basis. The product is already in the market in a great number, and most potential buyers have used the product, there is only room for more regarding the population growth and/or replacement demand.

Since at this stage the sales rate has slowed down, which leads the market into a tough competition, usually making the competitors to find niches in the market. At this stage, usually dominating the market are a few giant firms that have diversified approach regarding their product line, and for that purpose they can make more profit regardless of their profit on the new market. So, these giants increase the volume of the sales by lowering the costs as much as to cover the variable costs as fixed costs have already been recovered. Usually these are the factors that work in this stage: Price, Distribution, Advertising, Sales Promotion, Personal Selling, Services etc. But this is also a fact that managers also tend to think in accord to the environment and the situation, i-e; if more advertising is needed or more promotional activities are going to help boost the sales. Such questions are very important in this stage of a PLC.

Maturity Stage

This is the final stage for the PLC in which the sale of the product starts declining. There are a number of factors that include, shift in consumer tastes, technological advances, and/or domestic and international competition, which usually leads to overcapacity which in turn switches the competition to price cutting and profit erosion. The decline stage may be fast or slow, depending on the traditional approach towards a buyer’s need of that product. Since the sales as well as profits are declining, many firms withdraw from the market due to the risk involved. The remaining usually reduces the number of products that they produce, according to the market need which might be greater than the number produced. At this stage, according to one study, a firm has five strategies to choose from; increasing the firm’s investment in order to dominate the market, maintaining the firm’s investment till the uncertainty levels down, decreasing the investment selectively in order to drop unprofitable customer groups, harvesting the company’s investment, divesting the business quickly by disposing of its assets.

Even at the final stage, a firm has to make many decisions regarding the product, because dropping a product means that the firm is not going to carry out any further production of that product, and if the uncertainty of the market should decrease and there should be a demand for the product than the company’s investment would not have been much profitable.

Note
PLC concept is usually used as a forecasting tool; it is also very useful to determine the product and market dynamics. It is also used for planning and controlling. PLC has usually been criticized mainly on its variability in shape and duration for different products. The critics also include that the PLC is the result of marketing strategies than an inevitable course that the product sales must follow