Benefits Of The PLC Model – Managers are always in need of predictive tools to help them navigate a seemingly chaotic market, and the PLC model gives managers the ability to forecast product directions on a macro level, and plan for timely execution of relevant competitive moves. Coupled with actual sales data, the PLC model can also be used as an explanatory tool in facilitating an understanding of past and future sales progression. The PLC model aids in making sense of past events as part of any extrapolatory and interpretive approach to building strategy. Once a product strategy or product line strategy has been formulated, the PLC model can be used as part of an ongoing strategy validation process since it reflects on market trends, customer issues and technological advancement. Companies always anticipate the emergence of new competitors and therefore, must prepare in advance to battle the competition and strengthen their product’s position.
The PLC model is advantages in planning long-term offensive marketing strategies, particularly when markets and economies are stable. Nevertheless, most products die and once products are dead they hold no substantial revenue potential and are a toll on a company’s resources. By combining the elements of time, sales volume and notion of evolutionary stages, the PLC model helps determine when reasonable to eliminate dead products.
Limitations Of The PLC Model – It is difficult to foresee transitions in PLC stages since the key indicator are sales, which are always calculated with some lag. Therefore, the realization a stage transition has occurred is nearly always in retrospect. In addition, fluctuations in sales will produce erroneous conclusions, so slowing sales do not necessary mean the product has reached the Decline phase and the resulting conclusion to retire the product and divert resources is wrong. Products, companies and markets are different, so not all products or services go through every stage of the PLC. There have been many cases where products have gone straight from introduction to decline, usually because of bad marketing, misconceived features, lack of value to the consumer or simply a lack of need for such a product.
However, even if products would go through every stage of the PLC, not all products/services spend the same length of time at each stage. This adds another level of complexity in determining which PLC stage the product is in and consequently, which strategy to apply.
Finally, the PLC model is inefficient when dealing with Brands or Services. Brands are not products but do have a life cycle of their own, and products belonging to a certain brand will experience a very different life cycle than the brand itself. For example, Dell and Mercedes-Benz are very strong brands whose life cycle is marginally affected by the failure of any of the products, which they hold. Apple Computer’s Lisa, Newton (market failures) and iMac (market success) are proof that brands and products have different PLC’s although they are closely related
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