Product life cycle management

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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.

Contents 1 The stages 2 Management of the cycle 3 Market evolution 4 Technology life cycle 5 See also 6 Finding related topics 7 References 8 External links

The stages

Image:ProductLifeCycle.png

Products tend to go through five stages:

1. New product development stage
   • very expensive
   • no sales revenue
   • losses
2. Market introduction stage
   • cost high
   • sales volume low
   • losses
3. Growth stage
   • costs reduced due to economies of scale
   • sales volume increases significantly
   • profitability
   • prices to maximize market share
4. Mature stage
   • costs are very low as you are well established in market & no need for publicity.
   • sales volume peaks
   • prices tend to drop due to the proliferation of competing products
   • very profitable
5. Decline stage
   • costs become counter-optimal
   • sales volume decline
   • prices, profitability diminish

Management of the cycle

The progression of a product through these stages is by no means certain. Some products seem to stay in the mature stage forever (e.g., milk). Marketers have various techniques designed to prevent the process of falling into the decline stage. In most cases however, one can estimate the life expectancy of a product category.

Marketers' marketing mix strategies change as their products goes through their life cycles. Advertising, for example, should be informative in the introduction stage, persuasive in the growth and maturity stages, and be reminder-oriented in the decline stage. Promotional budgets tend to be highest in the early stages, and gradually taper off as the product matures and declines. Pricing, distribution, and product characteristics also tend to change.

Customers respond to new products in different ways. Diffusion of innovations theory, pioneered by Everett Rogers, and other diffusion models posit that people have different levels of readiness for adopting new innovations and that the characteristics of a product effect overall adoption.

Microsoft has publicly released the dates at which its various products will be discontinued or unsupported, even before they are released.

The first two stages, introduction and growth, are often seen as offensive in nature. The second two stages, mature and decline stage, are often seen as defensive in nature. The defensive stage is sometimes called the armadillo phase because of that animal's defensive technique of hiding in its shell.

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:

1. Market Crystallization - latent demand for a product category is awakened with the introduction of the new product
2. Market Expansion - additional companies enter the market and more consumers become aware of the product category
3. Market Fragmentation - the industry is subdivided into numerous well populated competitive groupings as too many firms enter
4. Market Consolidation - firms start to leave the industry due to stiff competition, falling prices, and falling profits
5. Market Termination - consumers no longer demand the product and companies stop producing it

Technology life cycle

The underlying technology subsumed within a product or product category can go though similar stages. This is typically referred to as the Technology lifecycle.

See also

• Product management
• New Product Development
• Technology lifecycle
• marketing
• products
• Planned obsolescence
• Product Lifecycle
• Extending the Product Life Cycle

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
• list of companies

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.
• Sequent Learning Networks - www.sequentlearning.com - Product Management Education Programs emphasizing full stream life cycle management.

External links

• ILS FAQ & forum
• Association of International Product Marketing & Management PLM Certification
• University of Michigan's PLM Alliance
• Georgia Institute of Technology's Product & Systems Lifecycle Management (PSLM) Center
• Sybase ASE Product Life Cycle
• FeaturePlan Product Life Cycle Softwarede:Produktlebenszyklus

es:Ciclo de vida del producto fr:Cycle de vie nl:Productinformatiesysteem ja:商品ライフサイクルマネジメント