Definition of 'Product Life Cycle

Definition: Product life cycle (PLC) is the cycle through which every product goes through from introduction to withdrawal or eventual demise. 

Description: These stages are:

Introduction: When the product is brought into the market. In this stage, there's heavy marketing activity, product promotion and the product is put into limited outlets in a few channels for distribution. Sales take off slowly in this stage. The need is to create awareness, not profits. 

The second stage is growth. In this stage, sales take off, the market knows of the product; other companies are attracted, profits begin to come in and market shares stabilize. 

The third stage is maturity, where sales grow at slowing rates and finally stabilize. In this stage, products get differentiated, price wars and sales promotion become common and a few weaker players exit. 

The fourth stage is decline. Here, sales drop, as consumers may have changed, the product is no longer relevant or useful. Price wars continue, several products are withdrawn and cost control becomes the way out for most products in this stage. 

Significance of PLC: PLC analysis, if done properly, can alert a company as to the health of the product in relation to the market it serves. PLC also forces a continuous scan of the market and allows the company to take corrective action faster. But the process is rarely easy.