Lesson 02

Product Design and Development

Product Life-Cycle

Dr. Inderdeep Singh

Department of Mechanical and Industrial Engineering

1
Product Life-Cycle (PLC)
 Product Life-Cycle (PLC)
 Product life cycle (PLC) is the course that a product sales and
profits take over its lifetime

 It shows the stages that products go through from development to

decline from the market
Why PLC?
• PLC determines revenue earned

• Contributes to strategic marketing planning

• Helps the firm to identify when a product needs support, redesign,

withdrawal, etc.

• Helps in planning for the new product development

• Helps in forecasting and managing cash flow

The Phases of the PLC
• Product development
• Introduction/Launch
• Growth
• Maturity
• Decline
 Sales and Profits Over the Product’s Lifetime

Product
Development Introduction Growth Maturity Decline
Sales and Profits

Sales

Profits

Time
Phase I: Product development
• New ideas
• Market survey-is it required? Can it be produced at a profit?
• Product development and refinement
• Test Marketing
• Analysis of test marketing results
• Preparation for launch, publicity, marketing campaign
Phase II: Introduction/Launch
• Introduction of the product into the market
• It may be new product or old product to the new market
• Demand is low
• High cost/low sales
• Advertisement and promotion
• Monitor initial sales
Introduction phase
Characteristics and Objectives
Sales Low
Costs High cost per customer
Profits Negative
Marketing Objectives Create product awareness and trial
Phase III: Growth
• This period is the time to improve efficiency and product availability
as well as service

• Cost efficiency,time-to-market, pricing and discount policies are the

major factors in gaining customer confidence

• Increased consumer awareness

• Sales growth rate increases because of limited or no competition
• Revenue increases
Growth phase
Characteristics and Objectives

Sales Rapidly rising

Costs Cost per customer is average

Profits Rising

Marketing Objectives Maximize market share

Phase IV: Maturity
• This period is the period of the highest returns from the product.
• Sales reach peak
• Marketing cost of the product declines
• Ratio of revenue to cost high
• Sales growth likely to be low
• Competition likely to be greater
• Monitor market-changes/new strategies?
Maturity phase
Characteristics and Objectives
Sales Peak

Costs Low cost per customer

Profits High
Maximize profits while defending
Marketing Objectives
market share
Phase V: Decline
• Competitors enter the market with
-Better product features
-Advanced technology
-Reduced prices

• Sales starts declining

• Marketing cost of product rises
• Decision to withdraw may be dependent on availability of new
products and whether fashions/trends will come around again?
Decline phase
Characteristics and Objectives
Sales Declining

Costs Low cost per customer

Profits Declining
Reduce expenditures and milk
Marketing Objectives
the brand
Strategies based on Product Life-Cycle

• Product
-Introduction: Offer basic product
-Growth: Offer product extension, service, warranty
-Maturity: Diversify brands/models
-Decline: Phase out weak products
• Price
• Distribution
• Advertising
• Sales promotion
Thank You