Planning: Decline Stage

Characteristics
  • Competition: As time goes on firms drop out until no one is producing the product.
  • Target Market: Mostly consists of Laggards, who have been loyal to this type of product for a long time and have not moved on to newer products.
  • Product: No new improvements are introduced and some models are discontinued.
  • Prices: May be rising as competitors drop out and companies still in the market have little incentive to engage in price competition. Also, there may be a large, loyal market that may not be sensitive to price increases. However, some companies looking to get out of market but that have existing inventory, may drastically markdown the product to encourage rapid sales.
  • Promotion: Companies limit promotions to occasional reminders to loyal customers, though overall little is spent.
  • Distribution: With declining demand distributors are removing products. The marketer may even make the decision to remove the product from unprofitable distributors. Sales may shift to online-only distribution or via non-traditional channels.
  • Profits: For companies remaining, profits may be stable and possibly significant if this stage takes a long time to play out.
Brand Strategy

Marketers are faced with Market Exit strategies when they reach the Decline stage. There are two ways marketers can address this. First, companies may consider a “milking” strategy that involves getting the most out of the product in terms of sales without spending any additional funds to support the product. This strategy works best if a sizable market remains that is loyal to the product and not very price sensitive. A customer base with these characteristics allows a marketer to ride through the Decline stage for some time while earning sizeable profits. Second, companies may look to sell off or “divest” the product. In some situations this can be done by first investing in the product in order to make the product more attractive to companies interested in acquiring the product.

However, discontinuing a product does not mean a company no longer earns revenue from the product form. Many discontinued products, especially those used in business and industrial settings, will continue to earn money through support services, such as selling supplies and service/repair contracts.

Decline Stage of the PLC
Criticisms of the PLC: Part 1