The product life cycle (PLC) is tied closely to the concept of Diffusion of Innovation, which explains how information and acceptance of new products spread through a market. Innovation is anything new that solves needs by offering a significant advantage over existing methods customers use. Innovation can encompass both highly advanced technology products, such as new computer chips, and non-technological products, such as a new soft drink.
For marketers, a key concept to emerge from research on new product diffusion is the identification of adopter categories into which members of a market are likely to fall. These categories include:
Innovators – Represent a small percentage of the market that is at the forefront of adopting new products. These people are often viewed as enthusiasts and are eager to try new things, often without regard to price. While a good test ground for new products, marketers find that Innovators often do not remain loyal as they continually seek new products.
Early Adopters – This group contains more members than the Innovator category. They share Innovators’ enthusiasm for new products though they tend to be more practical about their decisions. They also are eager to communicate their experiences with the Early Majority and because of their influence they are important to the future success of the product (i.e., act as opinion leaders).
Early Majority – This represents the beginning of entry into the mass market. The Early Majority account for up to one-third of the overall market. The Early Majority like new things but tend to wait until they have received positive opinions from others (i.e., early adopters) before purchasing. Adoption by the Early Majority is key if a new product is to be profitable. On the other hand, many new products die quickly because they are not accepted beyond early trials by Innovators and Early Adopters and never reach mass market status.
Late Majority – Possibly as large as the Early Majority, this group takes a wait-and-see approach before trying something new. Marketers are likely to see their highest profits once this group starts to purchase.
Laggards – This is the last group to adopt something new and, in fact, may only do so if they have no other choice. Depending on the market this group can be large though because of their reluctance to accept new products marketers are not inclined to direct much attention to them.
As we have seen, there are many components, both internal and external, that must be considered within the marketing planning process. In fact, for many marketers creating the Marketing Plan represents one of the most challenging and burdensome tasks they face.
Fortunately, over the years marketing academics and professionals have put forth theories, models and other tools that aid planning. Possibly the most widely used planning tool within marketing is the Product Life Cycle (PLC) concept. The basic premise of the PLC is that products go through several stages of “life” with each stage presenting the marketer with different challenges that must be met with different marketing approaches. By understanding a product’s position in the PLC, the marketer may be able to develop more effective plans.
There have been several attempts over the years to define the stages that make up the PLC. Unfortunately, the PLC may be different for different products, different markets and different market conditions (e.g., economic forces). Consequently, there is not a one-model-fits-all PLC. Yet there is enough evidence to suggest that most products experience patterns of activity that divide the evolution of the product into six distinct stages. These stages are:
· Development – Occurs before the product is released to the market and is principally a time for honing the product offering and preparing the market for product introduction.
· Introduction – Product is released to the market and sales begin though often gradually as the market becomes aware of the product.
· Growth – If the product is accepted it may reach a stage of rapid growth in sales and in profits.
· Maturity –At some point sales of a product may stabilize. For some products the maturity phase can be the longest stage as the product is repeatedly purchased by loyal customers. However, while overall sales may grow year-over-year, percentage sales increases may be small.
· Saturation – at this point, the market become saturated with competitors coming up with complimentary products that consumers find appealing. Most times the product could be a replica of the mother product which competitors have copied as a counter strategy.
· Decline – All products eventually see demand decline as customers no longer see value in purchasing the product.
As expatiated above, the PLC helps the marketer understand that marketing decisions must change as a product moves from one stage to another. For example, marketers will find that what works when appealing to Innovators in the Introduction stage is different than marketing methods used to attract Early Majority during the Growth stage.
While not perfect, the PLC is a marketing tool that should be well understood by marketers since its underlying message, that markets are dynamic, supports the need for frequent marketing planning. Also, for many markets the principles presented by the PLC will in fact prove to be very much representative of the conditions they will face in the market.
Finally, the PLC is just one of many models that can assist marketers as they are engaged in the planning process. Most are beyond the scope of this article. For those interested in learning more about these models are encouraged to consult one or more of the many excellent Marketing Strategy textbooks or trade books as this article represent the writer’s views and understanding of the marketing planning.
The 21st century is an era of diversity. It is a time of reassessment of the basis that forms the foundation, comprises the structure and serves as a covering of any organisation that will remain relevant in the market place.
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