Strategic Marketing: Planning and Control, Third Edition

(Wang) #1
The PLC
The PLC has been described as the most quoted but least understood con-
cept in marketing. Any strategy considering products and markets will be
influenced by the PLC. Organisations are advised to ensure they fully
understand the PLC for their products and industry segments.
The basic concept (Figure 8.14) can be summarised as – products pass
through four stages: introduction, growth, maturity and decline. Sales
will vary with each phase of the life cycle.

170 Strategic Marketing: Planning and Control

Sales

Time

Introduction Growth Maturity Decline

Figure 8.14
Product life cycle


Introduction


It takes time for sales to grow and the introductory phase sees awareness
and distribution of the product increasing. Some organisations will spe-
cialise in innovation and aim to consistently introduce new products to the
market place. Common strategies include: (i) Skimming, where a high price
level is initially set, in order to capitalise on the products introduction and
optimise financial benefit in the short term or (ii) Penetration, with pricing
being used to encourage use and build market share over time.

Growth
This phase sees a rapid increase in sales. Additionally, competition begins
to increase and it is likely that prices will be static, or fall, in real terms.
The growth stage sees the product being offered to more market seg-
ments, increasing distribution and the development of product variations.
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