The Product Life Cycle - By Prof. Govindrajan

You would have seen it. This little diagram:

It’s called the Product Life Cycle (PLC). The graph seems innocuous. You cannot be blamed for wondering as to whether this was of any practical use. Actually, this is something which can be of great help in planning for a brand.

Let’s look at another PLC.



Let’s first understand this graph first – and the best way of doing so is looking at the Axes. It has Sales on one axis and Time on the other, so a PLC plots sales over time. If we study the Graph, we see that the Sales were Rs. 131 Billion in 2015 (the last year in the Graph).

The next logical question will be: in a PLC, whose sales were Rs. 131 Billion in 2015? The Answer: the sales of a Product Category in a particular Geography.

Hence, if the PLC is for Toilet Soaps in India, the total value of Toilet Soaps sold in India was Rs. 131 Billion in 2015. This is an important piece to assimilate – as some common mistakes are made due to an incorrect understanding of the above. These mistakes are:

• The Graph shown is that of a Product Life Cycle and NOT a Brand Life Cycle (which will plot Sales of a Brand over time). Hence, this shape of the curve is valid for the Product Category (which in this case is Toilet Soaps). Not all Product Categories show this shape – but this shape represents the modal class. Individual Brand Cycles of the various brands (whose sales were combined to arrive at the figure of Rs. 131 Billion in India in 2015), could have very different shapes of their sales over time. Hence, the Brand Life Cycles of Lux and Cinthol could have very different shapes.
• Never forget that the PLC is for a particular Geography. So when you specify that a Brand is approaching say, Maturity, always specify the Geography in which it is approaching Maturity.

Once a Product Category has been in existence for some length of time, we will be able to plot the sales of the Category over time – and study the Growth patterns. It is the Growth patterns which govern the classification we have been taught:

• Introduction
• Growth
• Maturity 
• Decline

Instead of trying to define each stage, let us just understand them. We will kick off with 4 questions (all of them based on the second graph – or the PLC of Toilet Soaps in India) and it would be great if you could think through these 4 questions – as the act of thinking this through would give us good insights into the concept.

Q1. How does ANY product category come into existence (or the “Introduction stage”?) Or, how did the Graph start in the first place?

Q2. If you look at the Graph, the sales start gathering momentum till it reaches Sales of about Rs. 125 Billion (or the “Growth Stage”). Why has this happened? This is a PLC for Toilet Soaps in India, so what are the factors which have caused a spurt in the growth of Toilet Soaps in India?

Q3. If you look at the Graph, the sales start hitting a plateau after the sales crosses about Rs. 125 Billion (or the “Maturity Stage”) – and has remained so till 2015. Why has this happened? This is a PLC for Toilet Soaps in India, so what factors have caused the sales of Toilet Soaps in India to hit a Plateau?

Q4. If you look at the Graph, the sales of Toilet Soaps has not started declining (or not reached the “Decline Stage”). What factors will cause a decline in the sales of Toilet Soaps in India?

The next parts will deal with each question by turn – and we will then do a more detailed discussion on each of these….

                                                                                                           -By Prof. Govindrajan