## Product Life Cycle (PLC)

### Definition

PLC is an S-shaped curve that exhibits the relationship of sales with respect to time for a product that passes through four successive stages: Introduction → Growth → Maturity → Decline.

> If businesses are substituted for products, the concept of PLC works just as well (applies to entire industries and businesses too).

---

### The Four Stages of PLC

Characteristic	Introduction	Growth	Maturity	Decline
Sales	Slow	High	Slow	Low
Competition	Nil	High	Very High	Low
Price	High	Low	Very Low	Very Low
Market	Limited	Expanding	Stabilising	Replaced by new product

---

### Strategic Implications

Stage	Strategic Choice
Introduction	Begin market building; high pricing strategy; focus on awareness
Growth	Expand aggressively; invest in distribution and capacity
Maturity	Defend market share; cost leadership; product improvement
Decline	Retrenchment, harvest, or exit; consider new product pipeline

---

### Advantages / Uses of the PLC Concept

1. Diagnose product portfolio — PLC is used to diagnose a portfolio of products (or businesses) to establish the stage at which each exists.

2. Appropriate strategic choice — Based on diagnosis, appropriate strategy can be selected (e.g., Expansion in Introduction/Growth stage, Retrenchment for Decline).

3. Build a balanced portfolio — A strategically balanced portfolio of businesses may be built by exercising choices based on the PLC concept.

Worked example

### Example 1

Stage Identification Example:

Smartphones with foldable screens → Introduction (slow sales, high price, limited market)
Mid-range Android smartphones → Maturity (very high competition, very low prices, stabilised market)
Feature phones (basic keypad phones) → Decline (low sales, low competition, being replaced by smartphones)
Electric Vehicles in India (2024) → Growth (high sales growth, increasing competition, expanding market)

### Example 2

Strategic Choice Exam Question: A company's product is at the Growth stage of PLC. Which of the following is the most appropriate strategy? (a) Retrenchment (b) Expansion (c) Harvest (d) Exit → Answer: (b) Expansion — the Growth stage calls for aggressive expansion to capture market share while the market is still growing rapidly.

⚠️ Common exam mistakes

Confusing 'sales growth' with 'sales level' — in Introduction, sales are slow (not zero); in Growth, sales grow rapidly; in Maturity, sales plateau (slow growth); in Decline, sales actually fall.
Stating that competition is highest in the Growth stage — competition is highest in Maturity, not Growth.
Forgetting that PLC applies to businesses and industries too, not just individual products.
Mixing up price levels — price is HIGH in Introduction (recovery of R&D costs), then falls progressively as competition intensifies.

Reference:

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →