The product life cycle is an excellent tool which can be used by Business managers, strategists and marketing managers to come up with product strategies. Such product strategies look at the various stages the product is in the life cycle and then come up with the appropriate strategies.
I initially recommend you to read the article on Product life cycle and strategies. After that, you can refer to the current article for the Benefits and Limitations of Product life cycle.
The Benefits of Product Life Cycle
Strategies – The number 1 benefit of Product life cycle is that it can help you to define the strategies which can be used based on the life cycle stage. So if a product is in growth stage, then naturally a lot of advertising and investments are needed to keep the product in the growth stage. Thus, strategizing becomes easier with the Product life cycle.
Decision making – Whenever you are presented with multiple options, you need more data to take a decision on which direction to move in. Product life cycle helps managers with such decision making because it has the sales data as well performance over time data. The combination of these 2 can help managers take decisions faster.
Forecasting sales becomes easier – With enough experience, it is easier to forecast how a product will move through the product life cycle and therefore, what levels of sales will it achieve.
For example – If Samsung launches a new mobile phone, it knows that the mobile will grow for 1 or 2 months, it will then reach maturity for 3 to 6 months and then the model will start declining because consumers start searching for new models. On an average, a single product in the portfolio of Samsung Smartphones survives for 2 – 3 years at the max, even though product series like Galaxy or Note might survive longer.
Competitive advantage – A marketing manager can also run the product life cycle of competitors products besides running their own (provided they have the sales data). This gives a good insight into the preparations the competitors must be going through. Accordingly, the firm doing this analysis has a competitive advantage as it can take one step ahead of the competitor.
Example – Competitors product is in the introductory stage whereas the company’s product is in the maturity stage. The mature product starts advertising and pulling customers so that the newer product never takes off. Or alternatively, the company can themselves introduce a new product which competes with the competitors product.
Saying Goodbye – Its always hard to say goodbye especially to a product you launched with so many hopes. However, the product life cycle is the perfect measure of when to say goodbye to a product and it can help marketing managers with the decision to eliminate a product from their portfolio when the sales has declined far below the market average. Such products will demand investments but the returns will be very poor.
Limitations of the Product Life Cycle
Fluctuations in sales data – One major problem in the Product life cycle is that the graph is completely dependent on sales data. Thus if there are fluctuations in the sales data, then the graph is useless and cannot be used to predict precisely the movement of products or the overall product rise and decline. Such fluctuations can arise due to production issues, seasonal sales of the product or due to any other reason.
Delay in sales data – Another limitation for the product life cycle is that there is delay in collecting and analysing the sales data. Sales is generally recorded after the movement of goods and besides this, the actual movement of one product from one life cycle to another might be recorded months down the line. This is because of delay in analytics.
Varying market conditions – There may be a variance in the sales data due to varying market conditions. Therefore products which are hit in one place, might not be hit in other regions or territories due to the differences in consumption patterns of those territories.
Effect of other elements – There are various other elements which effect the product life cycle. Product itself is just one P amongst the 4 P’s of marketing and there are three other elements such as Price, Place, promotions or even people and packaging. Overall Marketing, Logistics, Price etc have an effect on the sales of the product and hence the stages and their length in the PLC might vary based on these elements.
Not applicable to brands or services – Product life cycle is generally applicable to products only and not applicable to brands or services. For example – Microsoft has so many products which have come and gone but this does not mean that the brand Microsoft is in Maturity stage or decline stage. Some products of the brand are growing whereas others are maturing or declining.