Like people, products go through a life cycle in that they are born, grow, age and eventually die or are replaced. Product life cycle refers to sales history of a product beginning with development ending with sales decline.


This is the pre launch phase where a company undertakes research and development as the product progresses from experimentation to the tangible product confidentiality is maintained by keeping information away from competitors.


  • Customers are innovators.
  • Sales are low
  • Profits are low.
  • Demand is low because many people do not know the product.
  • Degree of competition is low.
  • Promotion is always informative advertising to create awareness.
  • Intensive distribution is used to increase market share and exclusive distribution can also be used to maintain the brand image.
  • A company can use two new product pricing strategies.
  1. Market skimming pricing-firms sets high prices to skim off profits as quickly as possible before competitors enter the is ideal when one is targeting the innovators, early adopters, high income earners and customers with high social status.
  2. Penetration pricing-a company sets low prices so that I can build a market share quickly and attract more customers before competitors enter the market its ideal when one relies on economie of large scale, creation of barriers to entry to shy away competitors from venturing in this market, to increase the market share of the company and when the products demand is elastic.

Growth stage.

  • Customers are early adopters.
  • Demand starts rising.
  • Sales and profits also starts rising as many customers become aware of the product
  • The degree of competition increases as more competitors come in due to growth in sales.
  • Promotion shifts from informative to persuasive.
  • Sales promotion activities are also undertaken.
  • Prices may remain high for sometime but may start to fall as competitors come in.
  • Selective distribution is used.

Growth stage strategies.

  1. Increasing the frequency of use.
  2. Increasing the number of users.
  3. Finding new uses of products.
  4. Changing packaging sizes,labels or product quality.

Maturity stage.

  • Customers are the early majority and late majority.
  • Demand, sales and profits continue to increase for a while until they reach a peak after which they start to level off.
  • The degree of competition intensifies and promotion will include both persuasive and comparative advertising techniques.
  • Prices start to reduce as discounts are given inorder to maintain the sales.
  • Intensive distribution is used.

Decline stage.

  • Customers are the laggards
  • Demand, sales and profits are low because of the new products that have come in or technological changes that make a product obsolete.
  • Prices are low as huge discounts are given, degree of competition is low as many of them leave for other new products.
  • Intensive distribution is used.
  • A company may undertake the following strategies to extend the life cycle of the product.
  1. Making cosmetic changes to the product e.g. changing shape, colour or packaging.
  2. Changing the formula by adding some ingredients(perfumes) or removing others.
  3. Changing the price. Ie huge discounts, psychological pricing etc.
  4. Changing the retail outlets through which the product is distributed.
  5. Introducing new advertising campgains e.g. cocacola.

Strengths of PLC

  • Enables the company to forecast future behaviour of the product and prepare to handle such behaviour
  • Enables the company to decide on the marketing strategies to use at each stage of the PLC
  • Assists the company to decide when to launch a new product and when to discard an existing product
  • Enables the company to decide on the number of products it can maintain at each stage of the PLc
  • Guides on the promotional methodology that can be used in different product stages.
  • Assists in targeting the right type of customers.
  • Helps marketers to understand the different stages that a product goes through.

Weaknesses of PLC

  • It over-emphasizes the importance of developing new products which is a rather expensive method and cannot be pursued by smaller less financially-stable companies
  • It is not empirical as some products have an endless life
  • The four stages of the PLC are not distinct i.e. there is no clear distinction between them – a product may be at the introduction stage yet it may have characteristic of the maturity stage.
  • PLC concepts can be interfered with by marketing finding new customers for the product in new geographical territories.
  • High cost of research and development
  • Variation in customer types in different stages thus targeting is a problem
  • It is not able to maintain confidentiality especially at development stage.


New products has three forms.

  1. New to the world-this is a truly unique product that is there is no other product like that in the market.
  2. Improvement /revision to the existing products this are products that are significantly different from existing goods in that they provide improved performance.
  3. Imitative products-they are new to a particular company but not new to the sqny and not sony or addidias instead of addidas.

A company would develop a new product for the following reasons.

  1. To improve the quality of its products
  2. To meet the pressure of competition. Ie defend market share position e.g. KBL developed new products when it realized it was facing competition from castle.
  • To utilize excess capacity if the company has excess machines, capital, manpower, raw material etc.
  1. To sustain the company growth once a product has reached the maturity stage.
  2. To respond to environmental force-produce products that are environmental friendly.
  3. To respond to new technology.
  • To establish a position in a new market e.g. equity bank –equitel.
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