Product life-cycle management (marketing)

Product life-cycle management (PLM) 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.

Goals

The goals of Product Life Cycle management (PLM) 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. To create successful new products the company must understand its customers, markets and competitors. Product Lifecycle Management (PLM) integrates people, data, processes and business systems. It provides product information for companies and their extended supply chain enterprise. PLM solutions help organizations overcome the increased complexity and engineering challenges of developing new products for the global competitive markets.^{[citation needed]}

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 a 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.

Characteristics of PLC stages

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

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

Identifying PLC stages

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

Identifying features	Introduction	Growth	Maturity	Decline
Identifying features	Stages
Sales	Low	High	High	Low
Investment cost	Very high	High (lower than intro stage)	Low	Low
Competition	Low or no competition	High	Very high	Very High
Advertising	Very high	High	High	Low
Profit	Low	High	High	Low

Limitations

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. Products such as Coca-Cola and Pepsi experience 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.

References

Box, Jonathan Mbosia. (September 2012) Extending product lifetime Prospects and opportunities, Tanzanian Journal of Marketing
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.
Dhalla, N.K., Yuspeh, S. (1976) Forget the product life cycle concept, 'Harvard Business Review', Jan–Feb 1976
Rey F.J., Martín-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 591–604
Westkämper, E. (2000) Live Cycle Management and Assessment. Approaches and Visions Towards Sustainable Manufacturing, Annals of the CIRP, Vol. 49/2/2000, p. 501–522
Chan, K.C. and Mills, T.M. (2015) Modeling competition over product life cycles, Asia-Pacific Journal of Operational Research, vol 32, no. 3, DOI: 10.1142/S0217595915500219

External links

Product life-cycle management (marketing)

Contents

Goals