The product life cycle and strategies for managing a declining product

Concept of the product life cycle

The product life cycle (PLC) describes the course of a product's sales and profits over its life. Sales typically follow a bell-shaped curve: slow at first, then rapid, then levelling off and finally falling. The concept applies best to product classes and forms (for example, landline telephones or feature phones), and it helps managers anticipate change and adjust strategy at each stage. Not every product follows the curve exactly: some fail early, some stay in maturity for decades, and fashions and fads move through it quickly.

Stages of the product life cycle

1. Introduction. The product is launched; sales grow slowly; costs of distribution and promotion are high; profits are negative or low. Aim: create awareness and trial.
2. Growth. Sales rise rapidly as more buyers adopt; competitors enter; profits increase. Aim: maximise market share by improving the product, adding models and channels.
3. Maturity. Sales growth slows and peaks; competition is intense; profits level off and start to fall. Aim: defend share and extend the stage through market, product and marketing-mix modification.
4. Decline. Sales and profits fall because of new technology, changing tastes or stronger substitutes. Aim: manage the product profitably or withdraw it.

Managing a declining product

Firms first identify weak products through regular review of sales, share, costs and profit trends. Then they choose among the following strategies:

1. Maintain. Keep the product unchanged in the hope that competitors will leave the market, leaving the remaining buyers to the firm. Useful when a loyal segment remains.
2. Rejuvenate or reposition. Find new uses, new users or a new image to return the product to growth. Example: a traditional malted drink or a heritage biscuit brand relaunched with modern packaging and health claims; vinyl records repositioned as a premium collectors' format.
3. Harvest (milk). Reduce costs, advertising, sales force, research, while keeping the product on sale, so that it continues to earn profit for as long as possible. This raises short-run profit but hastens the decline.
4. Concentrate on a niche. Withdraw from weak segments and channels and serve only the most profitable remaining buyers.
5. Drop (divest). Withdraw the product, sell it to another firm or discontinue it, freeing resources for new products. Example: electronics firms phasing out older models when new technology arrives.
6. Support customers during exit. Continue spare parts and service for a time, so that the firm's reputation is protected.

The choice depends on how fast the market is falling, the firm's strength in it, competitors' moves, and whether the product supports other products in the range.

Conclusion

The PLC shows that every product must be managed differently over its life. In decline, the firm should not drift but decide deliberately whether to maintain, rejuvenate, harvest, focus or drop the product.