Product Life Cycle Management

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The conditions a Product (business) 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.

The stages

Products tend to go through five stages:

New product development stage

very expensive
no revenue
losses

Market introduction stage

cost high
sales volume low
no/little competition - competitive manufacturers watch for acceptance/economic growth
losses
demand has to be created
customers have to be prompted to try the product

Growth stage

costs reduced due to economies of scale
sales volume increases significantly
profitability
public awareness
competition begins to increase with a few new players in establishing market
prices to maximize market share

Mature stage

costs are very low as you are well established in market & no need for publicity.
sales volume peaks
increase in competition
prices tend to drop due to the proliferation of competing products
brand differentiation, feature diversification, as each player seeks to differentiate from competition with "how much product" is offered
very profitable

Decline or Stability stage

costs become counter-optimal
sales volume decline or stabilize
prices, profitability diminish
profit becomes more a challenge of production/distribution efficiency than increased sales
consumer demand for spare parts, maintenance and or product servicing

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

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.

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 Product lifecycle. 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 (abstract)' 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."

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 Product Lifecycle Management 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.

See also

Product management
New Product Development
Software product management
Technology lifecycle
marketing
product (business)
Planned obsolescence (business)
Extending the Product Life Cycle
Product lifecycle
Material selection
Toolkits for User Innovation

Finding related topics

list of management topics
list of economics topics
list of finance topics
list of human resource management topics
list of accounting topics
list of information technology management topics
list of business law topics
list of production topics
list of business ethics, political economy, and philosophy of business topics
list of business theorists
list of economists
list of corporate leaders

References

Box, J. (1983) Extending product lifetime: Prospects and opportunities, European Journal of Marketing, vol 17, 1983, pp 34-49.
Day, G. (1981) The product life cycle: Analysis and applications issues, Journal of Marketing, vol 45, Autumn 1981, pp 60-67.
Levitt, T. (1965) Exploit the product life cycle, Harvard Business Review, vol 43, November-December 1965, pp 81-94.
N. K. Dhalla and S. Yuspeh, Forget the product life cycle concept, 'Harvard Business Review' (January-February 1976)

Madan

External links

PWGSC
Environment Canada
ISO

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