Product Life Cycle Theory

Product Life Cycle Theory

The product life cycle (PLC) is a series of steps or stages that all products go through starting with product development and ending with decline. As seen in the image, sales and profits are on the vertical axis, while time is on the horizontal axis. The PLC consists of five stages:

• Product development consists of the time between products being conceptualized and launched. Product development stages consist of A,B,C.
• The introduction phase consists of the period between product launch and that point in time where growth starts to increase at a decreasing rate.
  • Pricing: The firm may follow one of two pricing strategies during the introduction phase.
    • Skimming, a higher price, is used to generate more immediate short term revenue and to more quickly recover initial investments.
    • Penetration pricing, a lower price model than skimming, is used build market share and loyalty in anticp
• The growth phase extends from the time that sales start to increase at a decreasing rate to an ill-defined point in time before sales peak.
• The maturity phase extends over a that period when a sales are at their maximum.
• The decline phase means that product sales have started to fall and will continue to fall.

Decline