Product life-cycle management (marketing)
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Product life-cycle management (PLM) is the succession of strategies 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.
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.
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:
- 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.
Once the product is designed and put into the market, the offering should be managed efficiently for the buyers to get value from it. Before entering into any market complete analysis is carried out by the industry for both external and internal factors including the laws and regulations, environment, economics, cultural values and market needs. Product life cycle is guanine concept and this term ‘product life cycle’ is associated with every product that exists, however, due to a limited shelf life the product has to expire. From the business perspective, as a good business, the product needs to be sold before it finishes its life. In terms of profitability, expiry may jolt the overall profitability of the business therefore there are few strategies, which are practiced to ensure that the product is sold within the defined period of maturity.
Extending the product life cycle
Extending the product life cycle by improving sales, this can be done through
- Advertising: Its purpose is to get additional audience and potential customers.
- Exploring and expanding to new markets: By conducting market research and offering the product (or some adapted form of it) to new markets, it is possible to get more customers.
- Price reduction: Many customers are attracted by price cuts and discount tags.
- Adding new features: Adding value to the product catches the attention of many buyers.
- Packaging: New, attractive, useful or eco-friendly packaging influence the target customers.
- Changing customer consumption habits: Promoting new trends of consumption can increase the number of customers.
- Special promotions: Raising interest by offering Jackpot and other offers.
- Heightening interest: Many of the following things attract many customers who match certain profiles: Eco-friendly production processes, good work conditions, funding the efforts of non-profit organizations (cancer cure, anti-war efforts, refugees, GLTBI, environment and animal protection, etc.) and the like.
Something important to notice is that all these techniques rely on advertising to become known. Advertising needs the others to target other potential customers and not the same over and over again.
Characteristics of PLC stages
There are the following major product life cycle stages:
|1. Market introduction stage||This is the stage in which the product has been introduced first time in the market and the sales of the product starts to grow slowly and gradually and the profit received from the product is nominal and non-attained. The market for the product is not competitive initially and also the company spends initially on the advertisement and uses various other tools for promotion in order to motivate and produce awareness among the consumers, therefore generating discerning demands for particular brand. The products start to gain distribution as the product is initially new in the market and in this stage the quality of the product is not assured and the price of the product will also be determined as low or high.
|2. Growth stage||In the growth stage, the product is present already in the market and the consumers of the products are habitual of the product and also there is quick growth in the product sales as more new and new customers are using and trying and are becoming aware of the product. The customers are becoming satisfied from the product and they bought it again and again. The ratio of the product repetition for the trial procurement risen and also at this level, the competitors have started to overflow the market with more appealing and attractive inventions. This helps in creating increased competition in the market and also results in decreasing the product price.
|3. Maturity stage||In maturity stage, the cost of the product has been decreased because of the increased volume of the product and the product started to experience the curve effects. Also, more and more competitors have seen to be leaving the market. In this way very few buyers have been left for the product and this results in less sales of the product. The decline of the product and cost of attaining new buyers in this level is more as compare to the resulted profit. The brand or the product differentiation via rebating and discounts in price supports in recalling the outlet distribution. Also, there is a decline in the entire cost of marketing through enhancing the distribution and promotional efficiency with switching brand and segmentation.
|4. Saturation and decline stage||In this stage, the profit as well as the sales of the product has started to decline because of the deletion of the product from the market. The market for the product in this stage, started to show negative rate of growth and corroding cash flows. The product, at this stage may be kept but there should be less adverts.
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.
Stages 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 Very High Profit Low High High Low
- Application lifecycle management
- Brand awareness
- Consumer behaviour
- Diminishing manufacturing sources and material shortages (DMSMS)
- Material selection
- New product development
- Planned obsolescence
- Product lifecycle management
- Product management
- Product teardown
- Software product management
- Technology life cycle
- Toolkits for user innovation
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