This is the stage of low growth rate of sales as the product is newly launched in the market. Monopoly can be created, depending upon the efficiency and need of the product to the customers. A firm usually incurs losses rather than profit. If the product is in the new product class, the users may not be aware of its true potential. In order to achieve that place in the market, extra information about the product should be transferred to consumers through various media.
Growth comes with the acceptance of the innovation in the market and profit starts to flow. As the monopoly still exists manufacturer can experiment with its new ideas and innovation in order to maintain the sales growth. It is the best time to introduce new effective product in the market thus creating an image in the product class in the presence of its competitors who tries to copy or improve the product and present it as a substitute me.the growth of a product is determined on the country of a product.
In this the end stage of the growth rate, sales slowdown as the product have already achieved it acceptance in the market. So new firms starts experimenting in order to compete by innovating new models of the product. With many companies in the market, competition for customers becomes fierce, even though the increase in the growth rate of sales at the initial part of this stage. Aggressive competition in the market results the profit to acme at the end of the growth stage thus beginning the maturity stage.
This is the stage where most of the product class usually dies due to the low growth rate in sales. As number of companies starts dominating the market, makes it difficult for the existing company to maintain its sale. Not only the efficiency of the company play an important factor in the decline, but also the product category itself becomes a factor, as market may perceive the product as 'old' and may not be in demand.
Weaknesses of product life cycle
One weakness of the product lifecycle concept is that it in no way predicts the length of each phase, and nor can it be used to forecast sales with any accuracy.
Another is that the model can be self-fulfilling: If a marketer decides that a product is approaching its Decline phase, and so stops actively marketing it, the product's sales will almost inevitably decline. This might not have happened had it been managed as if it was still in its Maturity phase.
Furthermore, it's possible that by improving a product aggressively on an ongoing basis, growth can continue for a long time.
Successful marketers need to draw on a wide range of data and analysis to help them decide which phase a product is in, and whether that phase can be extended. And while this model is useful and thought-provoking, they need to base their decisions on a good understanding of the facts.
Strengths of product life cycle
Managers are always in need of predictive tools to help them navigate a seemingly chaotic market, and the PLC model gives managers the ability to forecast product directions on a macro level, and plan for timely execution of relevant competitive moves.
Coupled with actual sales data, the PLC model can also be used as an explanatory tool in facilitating an understanding of past and future sales progression. The PLC model aids in making sense of past events as part of any extrapolatory and interpretive approach to building strategy.
Once a product strategy or product line strategy has been formulated, the PLC model can be used as part of an ongoing strategy validation process since it reflects on market trends, customer issues and technological advancement. Companies always anticipate the emergence of new competitors and therefore, must prepare in advance to battle the competition and strengthen their product’s position.