Chapter9 - The Product Life Cycle (PLC) Refers to the life...

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The Product Life Cycle (PLC) Refers to the life of a product idea. They can enter and leave the cycle at any stage. Decisions are made for each stage. Stages usually have varying lengths depending on the industry, nature of competition, and products involved. PLCs are getting shorter. 1. Market Introduction: Characterized by low sales. Idea is first introduced in the market. Informative promotion is needed to tell potential customers about the advantages and uses of the new product to build primary demand. Company resources are being spent, revenues are small or nonexistent. 2. Market Growth: Industry sales grow fast. Industry profits rise and then start falling. Innovator gets big profits and attracts competition. As competitors enter, monopolistic competition develops leading to down sloping demand curves. Competitor analysis is useful as an aid to appropriate strategy planning. Too much focus on current profits while ignoring long-term competitive trends is a mistake. Total industry profits reach their peak and begin to decline. 3. Market Maturity: sales level off. Competition increases. Promotion costs increase and price competition can cut into profits. Some firms drop out at this stage. Persuasive promotion becomes more important to retain customers and market share. Competition is toughest during this stage. 4. Sales Decline: new products replace older ones. Price competition is common and sales are primarily to the most loyal customers or to those who have waited to enter the market. Firms with strong brands may make profits until the end. Where a product is in its life cycle and how fast it’s moving to the next stage should affect marketing strategy planning. Planning for Life Cycle Stages
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This note was uploaded on 03/29/2012 for the course BUSINESS S 4302 taught by Professor None during the Spring '11 term at University of Houston - Downtown.

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Chapter9 - The Product Life Cycle (PLC) Refers to the life...

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