Implications and Limitations of Product Life Cycle Concept

Implications and Limitations of Product Life Cycle Concept

 Product life Cycle Concept

Product life cycle concept shows a framework to spot the occurrence of opportunities and threats in a product market and the industry. This can help firms to reassess their objectives, strategies, and different elements of a marketing program.
A new product launch requires an investment of considerable resource, and most companies have to contend with substantial short-term losses. During the growth stage, sales rise rapidly and competition increases and large investments are required. The company that captures the largest share of the market should have lowest per unit cost because of economies of scale and experience. If the market-share leader reduces the price, it discourages aspiring new entrants and low-share firms. Such low-share firms, as well as new entrants, have not only to invest to take advantage of market growth but also to increase market share. The “first starter” company is likely to lose some market share during this stage but its sales keep on increasing.
During the maturity phase, companies with larger market share enjoy the rewards of their earlier investments. Product price is sufficient to keep even high-cost companies in business because they do not need investments, as was the case during the growth stage. Most competitors are content with the present position and do not try to increase their market share. The market leader keeps investing to improve a product and attain more efficiency in production, marketing, and physical distribution.

Product Life Cycle Concept

Product Life Cycle (PLC) Limitation

The major weakness of product life cycle concept is that it is prescriptive in nature and focuses on strategies based on assumptions about different life cycle stages. Besides, it is difficult to tell what stage the product is in. A product may seem to have reached the maturity stage but it might be a temporary phase before it takes another upsurge. It ignores the fact that market forces drive the PLC reflecting consumer preferences, technology, and competition. Mary Lumpkin and George Day have strong views that greater emphasis on competitive issues and understanding the dynamics of competitive behavior can help better understand how product-market structures evolve.

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