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Product life-cycle management (marketing)

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This article is about the commercial term to describe the life of a product in the market. For the engineering term, see Product lifecycle management.

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Product life-cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) changes over time and must be managed as it moves through its succession of stages.
Contents
[hide]

1 Goals 2 Product life-cycle

o o

2.1 Characteristics of PLC stages 2.2 Identifying PLC stages

3 Limitations 4 See also 5 Notes 6 References 7 External links

[edit]Goals
The goals of PLC management are to reduce time to market, improve product quality, reduce prototyping costs, identify potential sales opportunities and revenue contributions, and reduce environmental impacts at end-of-life.[citation needed]

[edit]Product

life-cycle

The concept of product life cycle (PLC) concerns the life of a product in the market with respect to business/commercial costs and sales measures. The product life cycle proceeds through multiple phases,

involves many professional disciplines, and requires many skills, tools and processes. PLC management makes the following three assumptions:[citation needed]

Products have a limited life and thus every product has life cycle. Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller.

Products require different marketing, financing, manufacturing, purchasing, and human resource strategies in each life cycle stage.

[edit]Characteristics

of PLC stages

The four main stages of a product's life cycle and the accompanying characteristics are:[citation needed]

Stage

Characteristics

1. costs are very high 2. slow sales volumes to start 1. Market introduction stage 3. little or no competition 4. demand has to be created 5. customers have to be prompted to try the product 6. makes no money at this stage 1. costs reduced due to economies of scale 2. sales volume increases significantly 2. Growth stage 3. profitability begins to rise 4. public awareness increases 5. competition begins to increase with a few new players in establishing market 6. increased competition leads to price decreases 1. costs are lowered as a result of production volumes increasing and experience curve effects 2. sales volume peaks and market saturation is reached 3. Maturity stage 3. increase in competitors entering the market 4. prices tend to drop due to the proliferation of competing products 5. brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down 1. costs become counter-optimal 4. Saturation and decline stage 2. sales volume decline 3. prices, profitability diminish

4. profit becomes more a challenge of production/distribution efficiency than increased sales Note: Product termination is usually not the end of the business cycle, only the end of a single entrant within the larger scope of an on-going business program. [edit]Identifying

PLC stages

Identifying the stage of a product is an art more than a science, but it's possible to find patterns in the some of general product features at each stage. Identifying product stages when the product is in transition is very difficult.[citation needed]

Stages Identifying Features

Introduction

Growth

Maturity Decline

Sales

Low

High

High

Low

Investment Cost Very High

High(Lower than intro stage) Low

Low

Competition

Low or no competition High

Very High Low

Advertising

Very High

High

High

Low

Profit

Low

High [edit]Limitations

High

Low

It is important for marketing managers to understand the limitations of the PLC model. It is difficult for marketing management to gauge accurately where a product is on its life cycle. A rise in sales per se is not necessarily evidence of growth, a fall in sales per se does not typify decline and some products, e.g. Coca Cola and Pepsi, may not experience a decline. Differing products possess different PLC "shapes". A fad product develops as a steep sloped growth stage, a short maturity stage, and a steep sloped decline stage. A product such as Coca Cola and Pepsi experiences growth, but also a constant level of sales over a number of decades. A given product (or products collectively within an industry)

may hold a unique PLC shape such that use of typical PLC models are only useful as a rough guide for marketing management. For specific products, the duration of each PLC stage is unpredictable and it's difficult to detect when maturity or decline has begun. Because of these limitations, strict adherence to PLC can lead a company to misleading objectives and strategy prescriptions.

[edit]See

also

Product management New product development Software product management Technology lifecycle Product lifecycle management Material selection Toolkits for user innovation Application lifecycle management Obsolescence Diminishing manufacturing sources and material shortages (DMSMS)

Planned obsolescence Product teardown

[edit]Notes [edit]References

Box, J. (1983) Extending product lifetime: Prospects and opportunities, European Journal of Marketing, vol 17, 1983, pp 3449.

Day, G. (1981) The product life cycle: Analysis and applications issues, Journal of Marketing, vol 45, Autumn 1981, pp 6067.

Levitt, T. (1965) Exploit the product life cycle, Harvard Business Review, vol 43, NovemberDecember 1965, pp 8194.

Dhalla, N.K., Yuspeh, S. (1976) Forget the product life cycle concept, 'Harvard Business Review', JanFeb 1976

Rey F.J., Martn-Gil J., Velasco E. et al.(2004) Life Cycle Assessment and external environmental cost analysis of heat pumps, Environmental Engineering Science, vol 21, September 2004, pp 591605

Westkmper, E. (2000) Live Cycle Management and Assessment. Approaches and Visions Towards Sustainable Manufacturing, Annals of the CIRP, Vol. 49/2/2000, p. 501522

[edit]External

links

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