The lifetime of a new product goes through consecutive stages from product introduction to market growth, market maturity and sales decline (Forrester, 1963). This progress is known as the product life cycle. It is related to the marketing changes and it is useful to use this model to analyze marketing mix and do strategic decision. This essay will provide a brief explanation of the PLC model and then review the development of the concept. Finally, it will critically evaluate the PLC model based on the literature including the contribution of marketing plan process and the limitation of the concept.
Brief explanation of the PLC model
This progress from introduction to decline likes the real life of a product and “life cycle” derived from this (Brockhoff, 1967). During product development period, sales of the product is zero, the company will increase investment; During the introduction period, sales is slow and usually low or negative profits at the beginning; During the growth stage, the sales growing rapidly and the profits also increased significantly; Profits will arrive the peach at maturity stage and gradually decline after apex; During decline period product sales decline significant and profits fall dramatically (Armstrong and Kotler, 2011; Baker, 2003). The classical model shows below:
Figure 1 the four stages of the product life cycle
Based on the view of Armstrong and Kotler (2011) and combine other literatures, the features of each stages of the PLC could be summarized as show below:
Figure 2 features of the four stages of the PLC
Technology instability, lower quality, design changes frequently
Technology stabilized, product standardization
Elimination weak product
Small market capacity，low market share, high price
Expand market capacity, market share increased, prices decreased
The market is saturated gradually
New products appear, the market share decline
Rich the peak of sales
A lot，began to decrease
According to Armstrong and Kotler (2011), except the classical PLC curve, there are three special types: Style (once the style produced, it may continue for generations, according to customer interest it may show a loop recirculation trend), Fashion (listing rarely accepted at the unique stage, then the number of accepted grow slowly over the imitation stage and been widely accepted, finally slow decline) and Fad (Often fast growing and fast decline, can not meet the needs of more intense).
Figure3: Special product life cycles:
Development of the product life cycle
The origin of the product life cycle concept is not exactly clear (Garddner, 1987). According to Buzzell (1966), one of the earlier references to the similarity S-shaped curve as the PLC was that of Prescott. Muhs (1985) said that Jones actually approached the first reference labeled the PLC. As Jones (1957) said there is a life cycle behind each new product, but the definitions of the PLC not published. The PLC concept became a literature by Chester Wasson. He strongly convinces that the current stage of the market life cycle has a strong relationship with the successfulness of a marketing plan and strategic management. Many researchers are agreed with the PLC concept and one of the most influential people is Day, who comprehensively evaluates the feature of the product life cycle. As Day (1986) announced that each product has a limited life and follows an S-curve begins at entrance the market and finally as decline.
Useless and contribution to the marketing plan process
Product Life Cycle (PLC) provides a suitable marketing plan view. It divides the lifetime…