product life cycle (PLC) concept

Definition:
The paradox of the product life cycle (PLC) concept is that it is one of a very small number of original marketing ideas to enjoy a wide currency and yet is largely discredited in terms of practical application and relevance. That it should be discredited reflects a failing on the part of practitioners to understand the role and potential contribution of theory and concepts rather than any intrinsic deficiency in the concept itself - an assertion we will now seek to substantiate. The analogy of a product life cycle is firmly founded in the biological sciences and the observation that living organisms pass through an inevitable cycle from conception through gestation to growth leading to maturity. In turn, the mature organism begins to decay progressively until its life is terminated in death. This progression is as familiar to us as life itself, and none would deny the inescapable sequence through which the normal organism will pass. That said, it would be a foolhardy bioscientist who would attempt to generalize about the expectations of a particular organism without first establishing its genus, species and sub-species, and even then they would only speculate about any distinct organism in terms of some form of probabilistic statement concerning expected future outcomes, The validity of this assertion is easily demonstrated by reference to ourselves - human beings. An inspection of life expectancies quickly reveals major disparities between the inhabitants of advanced, affluent economies and their less fortunate brothers and sisters in the developing countries. Thus, while the average British male can look forward to a life span of 72 years, an Indian has a life expectancy of only 39 years. However, if we were to compare a Briton and an Indian aged 30 years, the discrepancy in their respective life expectancies would be relatively small. The problem is a familiar one in the field of descriptive statistics; means or averages are largely meaningless unless we also possess some measure of dispersion about the mean. In the case of Indians, infant mortality is very high and the age distribution at death is heavily skewed towards young persons. On the other hand, if you survive the dangers of childhood the probability of a reasonably long life is quite high. A broadly similar pattern also applies to Britons, in that infants and young children are more susceptible to disease and death by accident or genetic defect than are teenagers and adults. On the other hand, by enabling weak specimens to survive childhood one increases the probability of death in middle life, with the result that life expectancies for mature adults are very similar in advanced as well as in developing countries. Actuaries understand this perfectly and base life insurance premiums upon average probabilities. The impression that your policy is written specifically for you is illusory, for no actuary would presume to predict your personal life expectancy. The irony is that while all of this is entirely commonplace and acceptable to us as insurance risks, as managers we expect analogous models to possess a level of predictive ability which cannot be achieved with very large populations of essentially homogeneous units. The level of information we are likely to possess about a product group such as detergents or industrial fasteners is minuscule by comparison with the demographic data available upon people in general or particular nationalities. But, despite this, we try to make a generalized statement about the sales history of a successful (unspecified) product into a highly specific predictive device. In fact, PLCs can be used as forecasting tools, but only when one has a considerable amount of information about the product, or one analogous to it, and the market into which the product is to be introduced. However, the real relevance of the PLC is that it is a constant reminder of the inevitability of change and does mirror the stages through which all successful products pass. These stages and the titles given to them are represented in Figure 26. As can be observed, the conventional PLC is seen as comprising four basic stages when sales are plotted against elapsed time from introduction. First, there is a period of very slow growth when the new product or idea is introduced to prospective users. This phase is terminated by a transition to a period of very rapid growth which eventually levels off into a period of maturity followed by a decline culminating in termination of the life cycle. As noted, this is a conventional representation of a life cycle and must not be taken too literally, for depending upon the product type, the length of the various phases may vary considerably in just the same way as the average length of the mature phase of human beings has a strong correlation with socio-economic status. Similarly, overall life spans will vary enormously, so that fashion goods, like mayflies, are here today and gone tomorrow, while basic materials such as steel have very extended lives analogous to, say, elephants. But, given these caveats, the PLC does contain a number of important messages for us at both a strategic and a tactical level.

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