Product Life Cycle · PLC
Product Life Cycle
What is the product life cycle?
- Four stages: introduction, growth, maturity, and decline
- Strategy and investment mix differ by stage
- The idea behind the BCG Matrix
Once you start using the PLC, the questions asked in meetings change. Instead of 'Is this product selling well?', people ask 'Which phase are we in, and when does the next one start?' When the questions change, budgets, staffing, and performance metrics change with them. The team behind an introduction-stage product is measured on pilot customer count and learning speed, while the team behind a mature product is measured on profit margin and repurchase rate. That is why different products in the same company get different yardsticks.
Determine the stage with three numbers, not gut feel: year-over-year sales growth, the share of sales from new customers, and the trend in average selling price. Double-digit growth with a steady price points to the growth stage. Growth that has slowed to single digits, with prices cut every year, points to maturity. It also helps to be clear about the boundaries with adjacent concepts. The BCG Matrix uses two axes, market growth rate and share, instead of a time axis, so even products in the same mature stage split into cash cows and dogs depending on share. The chasm theory is a magnifying glass on just the gap between the introduction and growth stages, while the PLC is the map of the whole curve. Also remember that when the stage changes, the core customer base changes with it.
The most common mistake in practice is judging the stage at the level of “our product.” A stage belongs to a market category, not to your own sales. If the market grows 7% a year while only your sales fall, reading that as decline leads to exactly the wrong prescription. Here is what actually happens. The moment a product is labeled “declining,” its marketing budget is halved, strong PMs move to new businesses, and sales leaves it out of proposals because it is “going to be dropped anyway.” A year later, when sales really do fall, the conclusion is “it was in decline after all.” The verdict created the cause. So any decline verdict should come with market-size data and share trends, plus a condition to review it again after six months.
John KimAuthor of B2B Marketing Design and CEO of Nanum Consulting
Okgum LeeExpert in corporate analysis, fundraising, and business planningThe concept took shape in marketing literature of the 1950s and was popularized by Theodore Levitt's 1965 Harvard Business Review article "Exploit the Product Life Cycle."
Consider a hypothetical case. Company A makes home appliance components, with 190 employees and annual revenue of KRW 62 billion (≈ US$46,386,400). Sales of its flagship air purifier filter, now in its eighth year, slowed to single-digit growth for two years in a row, and someone at a management meeting said, 'It's in decline, so let's wind it down.' The product's marketing budget had already been cut to about 60% of the prior year.
- After three months of digging into market data, the head of strategic planning found that the whole category was growing 7% a year, while Company A’s share alone had slipped from 18% to 12%.
- The head of sales pushed back in the meeting: "This isn't decline. We're the only ones losing ground." The evidence was the share of new accounts, down from 24% three years ago to 9%.
- Management reclassified the product as mature, not declining, discontinued the 7 lowest-selling of its 20 SKUs, and redirected the KRW 500 million (≈ US$374,100) saved into developing a high-efficiency model.
- The product planning team lead found an adjacent use, industrial HVAC equipment, and opened a B2B channel. Their summary: "We didn’t find a new product. We found a new use."
- Eighteen months later, sales of the product were up 11% year over year, new accounts rose from 9% to 21% of sales, and operating margin climbed from 4.2% to 6.8%.