Product Life Cycle Concept (PLC)
All Products and Services typically go through 4 distinct stages in their life cycle; Introduction, Growth, Maturity and Decline. (Kuznets.S 1929)
It is important that a company understands the different PLC stages and know where their product stands. They can then develop different strategies to extend their product life and fully exploit market opportunities for their products in each respective stage. (Agrarwal R 1997, 571-584)
But how does a company recognize at which stage of PLC is their product in?
It is important to note that many products do not follow the traditional shape of PLC graph. A prime example is the Cycle-Recycle Pattern which often describes the sale of new drugs. Professor Cox was able to indentify 6 different shapes of PLC graph in a research of 256 pharmaceutical products. (Cox W.E 1967, 375-384)
PLC concept is also too generalised as it only take into account of Sales vs. Time. This theory is perfect in an ideal world but in the real world, one has to put into consideration management policy, company strategic decision, market trends etc… (Jovanic B 1994, 322-347) In short, instead of being product-orientated, we should be market-orientated.
As with products, markets also go through 4 stages namely Emergence, Growth, Maturity and Decline.
A good method is suggested by Donald Clifford as describe below; (Donald Clifford 1969)
• Collection of information (price, units sold, profit margins, return of investment, market share and values) of products’ behaviour over a period at least 3-5 years.
• Analysis on competitors’ short term strategies (new products emerging into market, competitor’s plan on production increase, plant upgrade and product promotion). ...