Comprehensive Guide to the Product Life Cycle Theory

The product life cycle theory is an important theory that helps us to gauge the various stages of the maturity of a product and the corresponding industry. The product life cycle theory is used to determine the course of product innovation and diffusion that can be traced to the international value of a product. The term product life cycle theory was born in 1965, used by Theodore Levitt in an Harvard Business Review article: "Exploit the Product Life Cycle."

Product life cycle theory - what it is

The product life cycle theory is the time period between the product launch and the moment in time it is withdrawn from the market. The product life cycle theory applies to the new product in the market till the date that it becomes a dated product. The product life cycle theory states that the product life cycle or PLC is divided into four stages that mark the entry and exit of the product into the market.

Product life cycle theory: Introduction stage

When a complete market survey has been done, the company begins it's foray into applying the product life cycle theory by checking for the product demand in a particular market. The testing phase allows the product to be iterated and perfected using various promotional strategies, the first stage of the product life cycle theory takes shape. The product life cycle theory states that this is not a profit making stage rather a stage that helps the producer to find faults and correct them and if the producer should find discrepancies, the product life cycle theory states withdrawing from the market to reduce losses.

Product life cycle theory: Growth stage

In accordance with the product life cycle theory, once the seed has been planted, it needs to be nurtured to blossom. The producer should have gained a steady clientele and starts to see profits. Here, the product life cycle theory suggests brand building and strongly imprinting the brand into the customer's minds. This stage of the product life cycle theory is about speedy sales and piling up profits.

Product life cycle theory: Maturity stage

The product life cycle theory tests the survival of the product in the mean market and how the brand emerges to carve its own niche in the market among its competitors.

Product life cycle theory: Decline stage

As the name suggests, the product life cycle theory also predicts the decline of a product and the plummeting profits result in renewed efforts. The product life cycle theory suggests three outcomes: cost reduction, tapping new markets or withdrawal.