Product Life Cycle

What it does:
Analyzes the profitability of a product at different stages of its life cycle.

Its other names:
PLC

Where it comes from:
The article "Stage of the Product Life Cycle" by C.R. Anderson and C. P. Zeithaml, Academy of Management Journal, 1984; also covered in many marketing textbooks.

Summary:
Present and future profit from a product can be maximized by deciding where it stands in its Life Cycle:

1. Introduction -- A product is developed and comes to market.
2. Growth -- Consumers learn about it and more people buy it. It becomes more competitive through modification, price adjustments, wider distribution and other initiatives.
3. Maturity -- The product generates profits with less "tinkering." But problems can arise, such as the arrival of competing products in the marketplace. The product maybe modified or marketed in a new way to keep profits strong.
4. Decline -- Sales decrease because of market saturation, obsolescence or other factors.
Placing a product on this timeline suggests strategies for keeping its profitability high. Example: If profits sag during the Maturity stage, the manufacturer might offer discounted pricing or wider distribution.

What else you need to know:
Don't be tricked into dismissing older products that seem to have reached the Decline stage. With new thinking, profits still come from "old dogs," often at less cost than developing new offerings.