Banking Marketing Aptitude Product Life Cycle (PLC) Product Life Cycle

Product Life Cycle

Introduction 

After a new product/service has been developed and introduced in the market, the different stages through which it passes over time is known as the product/service life cycle. Generally, there are four stages in a product service life cycle namely, launch, growth, maturity, and decline. These four stages are discussed in detail below. Product life cycle (PLC) indicates the sales history of a product over time with its introduction in the market till it dies or ceases to exist as it is no longer relevant.    

Introduction:

This is the first stage in the product life cycle wherein a product or service is introduced in the market. The main aim of marketers at this stage is to increase product/service awareness among customers. An organization can adopt any strategy in the market like skimming or penetration, depending on the size of its operations. Organizations may not earn profits at this stage as they have to cover the costs incurred.

Growth: The brand awareness created in the earlier stage helps an organization to earn revenues and reap profits at this stage. The markets continue to grow as more and more customers buy the service. Further organizations invest in promotional activities with the aid of profits. Thus, marketers strive to increase their market share and also maximize their profit margins.

Maturity: Due to high competition and limit growth in this stage, companies try to maintain their market share. Marketers try to modify their services to tap any potential for growth. They also try to increase the quality and efficiency of their services to maintain customer loyalty. They should be discreet in deciding their marketing expenses and in allocating their finances.

Decline: This is the final stage in the life cycle of a product/service and is characterized by reduction in demand and consequently a decrease in revenues and profit margins. The introduction of new services in the market or changes in customer preferences reduces demand. The best option for marketers is to discontinue the service if they cannot afford to modify o reposition it.

Factors affecting Product Life Cycle:

(i)         Rate of technical change.

(ii)         Rate of market acceptance.

(iii)        Competition entry

(iv)        Economic forces

(v)        Personal strategy

(vi)        Protection by patent

A Good PLC displays the following feature:-

(i)         Introduction stage is very short.

(ii)         R & D costs are very low.

(iii)        Maturity period is very long.

(iv)        Technology is relatively stable.

(v)        Customers' tastes and preferences change very slowly.           

(vi)        Customers have an interest in the product. They adopt it early and give it favorable "Word of Mouth".