Product Life Cycle

Question 1

product life cycle and dynamic aspects of markets

Answer 1

compared to competition analysis, product life cycle analysis is studied over time. The basic PLC tool charts sales/profits against time and the four generic stages; introduction, growth, maturity, decline

Question 2

PLC forecasting

Answer 2

Ideally PLC enables managers to plan production, inventory, staffing, distribution, and so on
Historic reliable data:
-sales ^ 45% per year after takeoff
-growth stage lasts about 8 years
-slowdown occurred at 34% of penetration
-slowdown, sales drop 15% per year
Difficulty predicting what types of products relate to this data, can’t tell whether fad or enduring.

Question 3

PLC tactical

Answer 3

PLC tools have heuristic value, but logical managers would perform deeper analysis to make tactical decisions (pricing).
Note that market moves toward commodification over time.

Question 4

Forces Leading to Commodification

Answer 4

1. Competition

2. Consumer

Question 5

Competition

Answer 5

• the ability of competitors to copy advantages erodes the ability to prevent commodification. Recent upgrades in reverse engineering technology have increased the threat.

Question 6

Consumer

Answer 6

• consumer knowledge can reduce support and loyalty for brand names. they may also recognize how products are objectively indifferent.

Question 7

Subjective vs objective differences

Answer 7

Both are different - competitive market
Subjectively different but not objectively - dark side
Objectively different but not subjectively - communicate!
Both not different - commodity

Question 8

Four approaches to commodification

Answer 8

1. Change the cost
2. Change the product
3. Change the consumer
4. Change something else

Question 9

Changing cost

Answer 9

Classic response to commodifying market is to reduce prices, total commodity - demand is based on price

Question 10

Changing the product

Answer 10

compete in terms of product quality. Features added or performance improved to where brands are no longer equal - continuous innovation.

Question 11

Changing the consumer

Answer 11

change the consumer goals, make them look for unthought of aspects in product. change their version of ideal

Question 12

Change something else

Answer 12

look for ways to innovate within the product category, beyond changing the product

Question 13

Conclusion

Answer 13

PLC exists, commodification is an inexorable force

• seek alternative profit streams prior to commodification
• appreciate continuous innovation
• find ways to stall start of commodification