The conditions a
product is sold under will change over time. The Product Life Cycle
refers to the succession of stages a product goes through. Product Life Cycle
Management is the succession of strategies used by management as a product
goes through its life cycle.
The
product lifecycle goes through many phases and involves many professional
disciplines and requires many skills, tools and processes. Product life cycle
(PLC) is to do with the life of a product in the market with respect to
business/commercial costs and sales measures; whereas
Product Lifecycle Management (PLM) is more to do with managing descriptions
and properties of a product through its development and useful life, mainly from
a business/engineering point of view.
Market evolution
Market Evolution is a process that parallels the product life cycle.
As a product category matures, the industry goes through stages that mirror the
five stages of a product life cycle:
Market Crystallization - latent demand for a product category is
awakened with the introduction of the new product
Market Expansion - additional companies enter the market and more
consumers become aware of the product category
Market Fragmentation - the industry is subdivided into numerous well
populated competitive groupings as too many firms enter
Market Consolidation - firms start to leave the industry due to stiff
competition, falling prices, and falling profits
Market Termination - consumers no longer demand the product and
companies stop producing it
1. Market introduction stage o cost high o sales volume low o no/little
competition - competitive manufacturers watch for acceptance/segment growth o
losses o demand has to be created o customers have to be prompted to try the
product 2. Growth stage o costs reduced due to economies of scale o sales volume
increases significantly o profitability o public awareness o competition begins
to increase with a few new players in establishing market o prices to maximize
market share 3. Mature stage o Costs are very low as you are well established in
market & no need for publicity. o sales volume peaks o increase in competitive
offerings o prices tend to drop due to the proliferation of competing products o
brand differentiation, feature diversification, as each player seeks to
differentiate from competition with "how much product" is offered o very
profitable 4. Decline or Stability stage o costs become counter-optimal o sales
volume decline or stabilize o prices, profitability diminish o profit becomes
more a challenge of production/distribution efficiency than increased sales
Market Identification
A "micro-market" can be used to describe a
Walkman, more
portable, as well as individually and privately recordable; and then Compact
Discs ("CDs") brought increased capacity and CD-R offered individual private
recording...and so the process goes. The below section on the "technology
lifecycle" is a most appropriate concept in this context. Most of the context is
not in english you may need a translator.
In short, termination is not always the end of the cycle; it can be the end
of a micro-entrant within the grander scope of a macro-environment. The auto
industry, fast-food industry, petro-chemical industry, are just a few that
demonstrate a macro-environment that overall has not terminated even while
micro-entrants over time have come and gone.
Technology Life Cycle
The Technology Life Cycle is closely associated with the economic potential
of obtaining gain through the exploitation of a process or manufacturing system,
taking into consideration such attributes of the product or process as its
patents,
knowhow,
trademarks, and/or trade-secrets, the reputation of the proprietor of the
technology and other associated intangibles. See
The Technology Life Cycle. It is very important in the business
Lessons of the Product Life Cycle (PLC)
It is claimed that every product has a
life cycle. It is launched, it grows, and at some point, may die. A fair
comment is that - at least in the short term - not all products or services die.
Jeans may die, but clothes probably will not. Legal services or medical services
may die, but depending on the social and political climate, probably will not.
Even though its validity is questionable, it can offer a useful 'model'
for managers to keep at the back of their mind. Indeed, if their products are in
the introductory or growth phases, or in that of decline, it perhaps should be
at the front of their mind; for the predominant features of these phases may be
those revolving around such life and death. Between these two extremes, it is
salutary for them to have that vision of mortality in front of them.
However, the most important aspect of product life-cycles is that, even under
normal conditions, to all practical intents and purposes they often do not exist
(hence, there needs to be more emphasis on model/reality mappings). In most
markets the majority of the major brands have held their position for at least
two decades. The dominant product life-cycle, that of the brand leaders which
almost monopolize many markets, is therefore one of continuity.
In the most respected criticism of the product life cycle, Dhalla & Yuspeh
state:
"...clearly, the PLC is a dependent variable which is determined by
market actions; it is not an independent variable to which companies should
adapt their marketing programs. Marketing management itself can alter the
shape and duration of a brand's life cycle."[citation
needed]
Thus, the life cycle may be useful as a description, but not as a
predictor;
and usually should be firmly under the control of the marketer. The important
point is that in many markets the product or brand life cycle is significantly
longer than the planning cycle of the organisations involved. Thus, it offers
little practical value for most marketers. Even if the PLC (and the related
PLM support) exists for them, their plans will be based just upon that piece
of the curve where they currently reside (most probably in the 'mature' stage);
and their view of that part of it will almost certainly be 'linear'
(and limited), and will not encompass the whole range from growth to decline.
