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Stage 3: Growth Once your product/service has become established in the market, you can expect the number of sales to increase rapidly and marketing expenditure may now be used for brand building. This is the stage where you will benefit from high profits but this is also the stage where your profits will peak. Services over products will generally have far longer periods of growth (usually years) where products, particularly those that are new, will soon attract the attention of competitors.
Once competitors join the bandwagon, the sales will gradually slow down and force you into marketing new prices: consequently resulting in fewer profits. If you have released your own version of an existing product (making you the competitor), then the growth stage may be short depending on how long the existing product has been available in the market.
To save going back a page, below is the diagram of the Product Life Cycle:
Stage 4: Maturity The stage of maturity begins when the product/service sales peak and become stable mainly due to the introduction of competitors during the end of the growth stage (influencing the move into the maturity stage). As pricing becomes more competitive (resulting in even less profits), many businesses, commonly the smaller businesses, cannot compete and consequently withdraw their product/service from the market. Maturity does not only result from increased competition, but also by new alternative products/services in the market becoming more popular. Quite often, services in particular are withdrawn because they are no longer needed, unfavourable or out of fashion. Stage 5: Saturation The saturation stage is sometimes overlooked in many PLC models but is seen as the first sign of product/service decline. At this point, the product/service has no future for profits because there are too many competitors or the product/service is no longer popular. Stage 6: Decline The product/service moves into the decline stage when sales start to drop continuously and will be a result of the issues that moved the product through maturity and saturation (competition, low demand, unfashionable, etc). The time taken to reach this stage of the PLC will differ with different products/services: for an extreme example, Kellogg's still have a range of cereals that are as popular today as when they were first released in the early 1900s. Also note; Kellogg’s may have the number one cereal, but they have to spend a lot of money advertising that fact: there being nothing new or exciting about plain old cornflakes makes this a great example of brand marketing. In the small business world, when your products/services move into decline, it is a good idea to either improve your product or remove it completely to avoid damaging your image. Extending the PLC: Extension Strategies The most profitable period of the PLC is during the later stages of growth (stage 3) and maturity (stage 4). This is the reason why many businesses try to delay the product/service from reaching the decline stages for as long as possible. This is done by introducing PLC extension strategies during the maturity stage. Although you may have your own ideas, the more common strategies include: A move into new markets e.g. supermarkets selling clothing Introducing accessories to the product or new additions to the service e.g. introducing financial management advice in accountancy book keeping services Changing the design and functionality of the existing product e.g. the packaging design, colour range, mobile phones used for Internet access
The Problems of PLC Models Not all products/services go through every stage of the PLC and it is common to go straight from the introduction stage to decline: this may be seen as a result of poor marketing. It is often hard to tell which stage the product/service is in and consequently marketing actions could be taken, as said before, too early or too late. It is then fair to say that the model can only be used to help identify the symptoms of each stage. Every product/service will spend different lengths of time in each stage and there is no physical way of showing this on the PLC model. However, the better your financial control, the more you will be able to track individual products/services. Summary The PLC model is only part of the marketing mix and is used to determine the different stages that a product or service can be expected to go through. By using the model as guidance, effective and timely marketing will take the product/service through each stage and can be planned in advance (the marketing plan. The PLC model illustrates that profits are highest during the stages of growth and maturity and so it is good business to integrate extension strategies during this time to maintain high profit levels. Do you still think that the title is ambitious? The point that the article hopes to make is that sales growth; is inspired by a marketing process (the PLC), that is there to be done and should not be overlooked whatever the size of your business. Related Articles |
