Page 2: The product life cycle
The product life cycle (PLC) is the term used to describe the stages a product goes through from initial development (start of life) to its removal from the market when sales have declined (end of life). There are six stages to the PLC:
Development is the first stage of the cycle when a business has a new product idea. The idea may come from market research, customer demand, updating existing products or in response to a competitor’s product. This development phase will incur costs but the business will not receive income from any sales until the product is launched into the market. Introduction is the stage when the product is launched into the market.
A business will promote the product to build sales. JD buys third party brands such as Nike and adidas six months before the products are in stores. This gives time for JD to develop targeted advertising campaigns online and in the stores ready for the launch of a new product.
As sales grow and new and existing customers buy the product, it moves into the growth stage of the life cycle. During the maturity stage although growth in sales has slowed down there is still a steady demand for the product. At the saturation stage sales begin to drop because there may be a new or alternative product on the market and the final stage is reached, that of decline, when the sales of the product fall.
The length of each stage will vary depending on the product. JD monitors and manages the life of its products very closely. Product sales are assessed immediately after the product has been launched in store. After four to six weeks an assessment is made as to whether the product needs to be marked down as a reduced price product. For any product not sold after it has been reduced it is then stored ready for a sale. JD usually runs two sale periods during the year in June and December.