Strategic Marketing: Planning and Control, Third Edition

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.