Product Life Cycle: Stages, Advantages and Criticisms

Product Life Cycle

Introduction:

* What is the product?

* Few Pioneer customers

* Slow growth due to: Buyer ignorance, not enough to start the bandwagon effect, uncertianty about standards

Growth:

* Rapid Growth due to: Overcoming of buyer inertia, bandwagon effect in progress, falling prices, clearer standards

Maturity:

* Saturation

* Sales depend on replacement

Decline:

* Sales fall because: introduction of competing products, price competition

* Life extension strategies

Critisisms:

- Not deterministic, can be influenced by external factors

- Level of market saturation only realised in hindsight

- Blurring of boundaries between stages

- How do you define a product?

- Only works in a stable market : Doesnt explain the role of the social system or diffusion of innovation

- Many Products fail in the introduction phase

Advantages:

- Planning Framework

- Strategic Guide

- Well understood my many agents

- Roadmap of how industries evolve

- Facilitates organisational learning

IPR:

Introduction - V important, apply for crucial patents or keep secrets, establishing dominant standards leads to a rapid growth stage, perhaps pre competitive collaboration

Growth - Critical; Own patents or comprehensive licences, shakeout of standards, standards battle

Maturity - Public regulation of dominant designs, essential patents in incremental improvements in competitive strategy

Decline - Replacement of product with an innovative alternative, planning for decline and R&D investment

Market Dynamics:

> Facilitates the Diffusion Curve

> Positive correlation with the Adoption Curve: affect of substitution and the replacement rate

> Adoption of innovation (Rogers 1962)

Creative Destruction and Disruptive Innovations effect shape of PLC and length of stages

Standards Determine Growth stage and securation of dominant design