Product Life Cycle
(Levitt)

Analyzing Industry maturity stages. Explanation of Product Life Cycle of Levitt, Fox, Wasson, Hofer, Anderson & Zeithaml, Hill & Jones. ('65)

The Product Life Cycle model can help to analyze maturity stages of products and industries.

The term was used for the first time by Theodore Levitt in 1965 in an Harvard Business Review article: "Exploit the Product Life Cycle" (Vol 43, November-December 1965, pp 81-94). Any company is constantly seeking ways to grow future cash flows by maximizing revenue from the sale of products and services. Cash Flow allows a company to maintain its viability, invest in new product development and improve its workforce. All this in an effort to acquire additional market share and become a leader in its respective industry.

A constant and sustainable cash flow (revenue) stream from product sales is key to any long-term investment, and the best way to attain a stable revenue stream is to have one or more Cash Cows. Cash Cows are strong products that have achieved a large market share in mature markets.

Also, the modern Product Life Cycle is becoming shorter and shorter. Many products in mature industries are revitalized by product differentiation and market segmentation. Organizations increasingly reassess product life cycle costs and revenues, because the time available to sell a product and recover the investment shrinks.

Although the product life cycle shrinks, the operating life of many products is lengthening. For example, the operating life of some durable goods, such as automobiles and appliances, has increased substantially. As a result, the companies that produce these products must take their market life and service life into account when they are planning. Increasingly, companies are attempting to optimize revenue and profits over the entire life cycle. They do this through the consideration of product warranties, spare parts, and the ability to upgrade existing products.

Product Life Cycle Industry Maturity Stages It is clear that the Product Life Cycle concept has significant impact upon business strategy and corporate performance. The Product Life Cycle method identifies the distinct stages affecting sales of a product. From the product's inception until its retirement.

The stages in the Product Life Cycle

Introduction stage. The product is introduced in the market through a focused and intense marketing effort designed to establish a clear identity and promote maximum awareness. Many trial or impulse purchases will occur at this stage.
Growth stage. Can be recognized by increasing sales and the emergence of competitors. At the vendor's side, the Growth stage is also characterized by sustained marketing activities. Some customers make repeat purchases.
Maturity stage. This phase can be recognized when competitors beginning to leave the market. Also, sales velocity is dramatically reduced, and sales volume reaches a steady level. At this point in time, typically loyal customers purchase the product.
Decline stage. The lingering effects of competition, unfavorable economic conditions, new trends, etc, often explain the decline in sales.

Several variations of the Industry Life Cycle model have been developed to handle the development of the product, market, and/ or industry. Although the models are similar, they differ as to the number and names of the stages. Here is a list of some major models:

variations of the life cycle model

1973: Fox: precommercialization - introduction - growth - maturity - decline.
1974: Wasson: market development - rapid growth - competitive turbulence - saturation/maturity - decline

1984: Anderson & Zeithaml: introduction - growth - maturity - decline

1998: Hill and Jones: embryonic - growth - shakeout - maturity - decline

Product Life Cycle Forum (21)

Configuration Management Summary
"CM is a process for managing complex (mostly technical) systems by establishing and maintaining consistency of a product’s performance and functional and physical attributes with its requirements, design and operational information throughout its life cycle.
CM verifies that a system performs as intended, and is identified and documented in sufficient detail to support its projected life cycle.

Use of Configuration Mangement. Applications
The CM process enables orderly management of system information and system changes for such beneficial purposes as to revise capability; improve performance, reliability, or maintainability; extend life; reduce cost; reduce risk and liability; or correct defects.

5 Configuration Management Disciplines
The CM process for both hardware and software configuration items comprises five distinct disciplines as established in the MIL–HDBK–61A and ANSI/EIA-649. These disciplines are carried out as policies and procedures for establishing baselines and performing a standard change management process.
1. CM Planning and Management: A formal document and plan to guide the CM program that includes items such as: Personnel; Responsibilities and Resources; Training requirements; Administrative meeting guidelines, including a definition of procedures and tools; baselining processes; Configuration control and Configuration status accounting; Naming conventions; Audits and Reviews; and Subcontractor/Vendor CM requirements.
2. Configuration Identification (CI): Consists of setting and maintaining baselines, which define the system or subsystem architecture, components, and any developments at any point in time. It is the basis by which changes to any part of an information system are identified, documented, and later tracked through design, development, testing, and final delivery. CI incrementally establishes and maintains the definitive current basis for Control and Status Accounting (CSA) of a system and its configuration items (CIs) throughout their lifecycle (development, production, deployment, and operational support) until disposal.
3. Configuration Control: Includes the evaluation of all change requests and change proposals, and their subsequent approval or disapproval. It is the process of controlling modifications to the system’s design, hardware, firmware, software, and documentation.
4. Configuration Status Accounting: Includes the process of recording and reporting configuration item descriptions (e.g., hardware, software, firmware, etc.) and all departures from the baseline during design and production. In case of suspected problems, the verification of baseline configuration and approved modifications can be quickly determined.
5. Configuration Verification and Audit: An independent review of hardware and software for the purpose of assessing compliance with established performance requirements, commercial and appropriate military standards, and functional, allocated, and product baselines. Configuration audits verify the system and subsystem configuration documentation complies with their functional and physical performance characteristics before acceptance into an architectural baseline.

History of Configuration Management
The CM approach evolved from initial US militairy use in the 1950s into other technical applications such as civil engineering and other industrial engineering segments such as roads, bridges, canals, dams, and buildings.
Some organizations have moved away from configuration management, because they want to avoid traceability and accountability.
By knowing what you have at all times and communicating this data organizationwide, it is easier to manage risks, quality, logistics, performance and actually plan.
Lately CM is making a strong comeback as if it were a new thing."

Comparing the Product Life Cycle and the BCG Matrix
"We can map or plot the product life cycle stages to the BCG matrix quadrants as follows:
1. Introduction - Question Mark
2. Growth - Star
3. Mature - Cash Cow
4. Decline - Dog
Reactions are welcome..."

References of PLC Gates Wanted
"What are some useful references about Product Life Cycle (PLC) gates?"

The Effects of Shortening Product Life Cycles
"Due to various reasons, PLC's are getting shorter...
What precisely are the effects of this process? For example to a company that produces high tech gadgets... Thanks..."

Product Life Cycles are Not Fluent
"In reality, product life curves are not so smooth nor bell curve shaped.
There are ditches, then relaunches with an improved product, then steady growth, then decline in hiccups."

The Element of Time in Product Life Cycle
"Has anyone researched the "time characteristics" of various markets with the intention to establish early warnings/triggers of the next product life-cycle stage? This would allow time and revenue trends to guide management decisions."

What is the Influence of a Product Recall on the PLC?
"Nowadays we hear a lot about organisations recalling their products from markets due to various reasons.
How is this product recall mechanism related to the product life cycle?"

Effect of Moment of Introduction on Product Life Cycle?
"Is there a relationship between the introduction time in various parts of the world of a certain product (for example the iPhone which is introduced earlier in the US) and the product life cycle of the iPhone?
Is Apple trying to extend the life cycle or do they skip the first phase in Europe to get a higher profit?"

Product Life Cycle and Capacity Planning
"How does the PLC curve influence various capacity decisions / strategy, depending on the PLC stage?"

Pricing Strategy as per Product Life Cycle Stage
"Can somebody explain appropriate pricing strategy as per Product Life Cycle Stage? Thanks..."

Pepto Bismol's Long Life
"Pepto Bismol is alive and leader of it's category despite its old age (108 years); the product is basically the same... How do you explain that?"

Calculating Product Life Cycle
"If we had to determine the life cycle of a product how can it be done. What quantitative variables should we take in consideration for calculating the same and why?"

Real Estate Business, Life Cycle
"In the present state, the life cycle of a particular product/project in real estate could have a long flat phase, before it achieves growth as well as maturity.. In such case, the curve shall have horizontal line of longer duratio in stages."

Revitalization: Why and When?
"Brand Management: why do marketers go for revitalization and in which stage of the Product Life Cycle (PLC)?"

Stage after Breakeven
"What is the name given to the stage where a product hit a breakeven?"

Opportunity for Value Engineering in PD?
"Opportunity for VE in terms of areas during the life span of a product. We all know that as product development goes in to maturity stage, the opportunity for VE is limited but still opportunity is there. Can we discuss those areas in brief...."

Avoiding the Decline Stage
"Understanding the phases of the product life cycle, are there ways of preventing these products from reaching the decline phase?"

Revitalization from maturity / decline phase
"The wave form is not carved in stone. Sometimes a product (or service) that is already in its Maturity or even Decline phase can suddenly re-emerge in a growth phase. Often this is the result of a technology breakthrough or of a crisis.
Example: TVs after the flat screens were invented. Or coal during an oil crisis.
Though some people may argue that in the case of a technology breakthrough it's not the same product anymore."

Product Life Cycle versus Ansoff Model
"Can the relationship of Ansoff and the Product Life Cycle model be summarised as follows?
- Product Development - Introduction Stage of PLC.
- Market Development - Growth stage of PLC.
- Market Penetration - Maturity of PLC.
- Diversification - Decline stage?"

When is a product successful?
"When can a product considered to be successful in the light of the Product Life Cycle Theory?"

PLC at company level?
"In MIT Sloan Management Review of Fall 2006, Donald Sull and Dominic Houlder of LBS stress that NOT companies, but chances are going through a life cycle. They recommend that companies manage a portfolio of business opportunities (chances) in various life cycle stages. In this way companies can anticipate future developments and prevent frequent portfolio erros, such as: No Exit, Throwing out the Baby with the Bath Water, Sticking to the Knitting, Letting a Thousand Flowers Bloom, One Size Fits All, and Generation Gap."

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