## Product Life Cycle (PLC)
PLC is an S-shaped curve depicting the relationship between sales and time as a product (or business) passes through four successive stages.
> The concept applies equally to businesses if substituted for products — making it a powerful portfolio analysis tool.
### The Four Stages
| Stage | Sales Pattern | Competition | Price | Customer Awareness | Strategic Focus |
|---|
| 1. Introduction | Slow growth | Negligible | High | Low | Build awareness; high investment |
| 2. Growth | Rapid expansion | Increasing | Falling | Growing rapidly | Expand distribution; capture market share |
| 3. Maturity | Slowdown/plateau | Intense, stabilised | Competitive | High | Maintain share via price cuts and promotions |
| 4. Decline | Sharp downward drift | Reduced | Low | Decreasing | Retrench, harvest, diversify, or exit |
### Detailed Stage Characteristics
Introduction Stage
- Competition is almost negligible.
- Prices relatively high; markets limited.
- Sales grow slowly due to lack of customer knowledge.
Growth Stage
- Demand expands rapidly.
- Prices fall as competition enters.
- Customers become aware and show purchase interest.
- Market expands significantly.
Maturity Stage
- Competition gets tough; market stabilises.
- Profit declines due to stiff competition.
- Organisations work on maintaining stability — price matching, promotional campaigns, differentiation.
Decline Stage
- Sales and profits fall sharply.
- New products/substitutes replace the existing product.
- Strategies: diversification, retrenchment, selective harvesting.
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### Significance of PLC in Portfolio Diagnosis
1. PLC diagnoses where each product/business sits in its lifecycle within a portfolio.
2. Introduction/Growth: Expansion strategy is feasible — invest resources.
3. Maturity: Use as a cash generator to fund investment in newer businesses.
4. Decline: Apply selective harvesting, retrenchment, or discontinuation.
5. Enables building a balanced portfolio — mix of products at different stages to ensure cash flow continuity.
### Example 1
Scenario: 'Fresh Breath' Air Purifier — Identify the PLC Stage
Facts:
- Strong growth in the previous five years.
- Sales growth now only ~1% for the last two years.
- New competitors have entered the market.
- Company is considering price cuts to match rivals (price cuts had little effect on demand previously).
- Planning a promotional campaign to highlight product benefits.
Analysis:
- The slowing sales growth, intense competition, and focus on price-matching and promotions are classic maturity stage signals.
- The fact that earlier price cuts had little effect on demand (inelastic demand during growth) but the company now hopes price cuts will work (elastic demand expected — typical in maturity) further confirms maturity.
Answer: 'Fresh Breath' is in the Maturity Stage of PLC.
Strategic implication: ABC Ltd. should focus on maintaining market share through pricing alignment and differentiation campaigns rather than expecting significant new growth.
### Example 2
Scenario: 'Robust' Fitness Shake — Trace the Full PLC Journey
Facts from the case:
- CEO had idea → R&D conducted → feasibility study confirmed potential.
- Product manufactured, marketed, launched → became successful.
- Production grew; product became widely available.
- Over time, demand decreased → product became obsolete.
PLC Stage Mapping:
| Event | PLC Stage |
|---|
| R&D and feasibility study | Pre-launch (concept stage) |
| Launched with slow initial uptake → high price, limited market | Introduction |
| Product became successful, production grew, widely available | Growth |
| Demand decreased, product became obsolete | Decline |
Significance: The case illustrates that businesses must adapt strategies at each PLC stage — investing during introduction/growth, optimising during maturity, and planning exit or reinvention during decline.
### Example 3
Scenario: New Product — Identify Transition from Introduction to Growth
Facts:
- Initially: slow sales growth, limited markets, high prices.
- Over time: demand expanded rapidly, prices fell, competition increased.
Answer:
- Introduction Stage: Slow sales, limited market, high price, negligible competition — customer knowledge is low.
- Growth Stage: Rapid demand expansion, falling prices, rising competition — product gains market acceptance and customer awareness grows.
Key diagnostic test: When competition starts entering and prices begin falling, the product has transitioned from Introduction to Growth.