Slide 4.

Chapter 4

The product life cycle in

theory and practice

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.2

Agenda
• To introduce the concept of the product life
cycle (PLC).

• To explain its use as an analytical framework.

• To identify criticisms of the PLC concept.

• To suggest how the PLC may be operationalized

and put into practice.

• To present deviant variations of the classic PLC.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.3

The product life cycle (PLC) is

‘A generalized model of the sales trend for a

product class or category over a period of time,
and of related changes in competitive behaviour’.
(Buzzell)

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.4

‘Most alert and thoughtful marketing executives are by now familiar

with the concept of the product life cycle. Even a handful of uniquely
cosmopolitan and up-to-date corporate presidents have familiarized
themselves with this tantalizing concept in any strategic way
whatever, and pitifully few who used it in any kind of tactical way. It
has remained – as have so many fascinating theories in economics,
physics and sex – a remarkably durable but almost totally
unemployed and seemingly unemployable piece of professional
baggage where presence in the rhetoric of professional discussion
adds a much coveted but apparently unattainable legitimacy to the
idea that marketing management is somehow a profession. There is,
furthermore, a persistent feeling that the life cycle concept adds
luster and believability to the insistent claim in certain circles that
marketing is close to being some sort of science’.

Ted Levitt, “EXPLOIT the Product Life Cycle”, Harvard Business Review, 1965).

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.5

‘The concept of the product life cycle is today

about the stage that the Copernican view of the
universe was 300 years ago: a lot of people know
about it, but hardly anybody seemed to use it in
any effective or productive way’.
(Levitt)
40 years on little has changed!

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.6

The product life cycle

Quantity

Maturity

Growth Decline
Introduction

0
Time

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.7

The stretched product life cycle

contains seven stages:

• Gestation or new product development.

• Launch or introduction.
• Growth
• Maturity
• Saturation
• Decline
• Elimination

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.8

Graphically we may represent

this as follows

Maturity Saturation
Quantity
Decline

Growth
Gestation Elimination
Launch

Time

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.9

The concept of the PLC is firmly rooted

in the concepts of the biological
life cycle and of evolution.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.10

It reflects 4 underlying processes.

Competition

Substitution or displacement

The survival of the fittest

The inevitability of change

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.11

It also reflects a number of what may

be considered useful generalizations
if not eternal truths, namely:
• Needs are inborn and enduring
• Wants are learned and ephemeral
• The great majority of actions are motivated
by self-interest
• The act of consumption changes the customer

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.12

Given this ‘pedigree’ why has the

PLC concept not become the accepted
wisdom and universally endorsed by all?

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.13

Because most people mistakenly try to

use it as a predictive device or forecasting
tool. Its real value is the insight it
provides and its implications unless
managerial intervention can moderate
or modify the process.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.14

When a life cycle reaches a limit of

growth three basic options exist:

• A way round the limit cannot be found and the

process goes into decline.
• An equilibrium is established and the life cycle
is stretched or extended.
• The limit is broken and a new growth phase
is initiated.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.15

The ‘biological’ life cycle.

Renewed growth

Limit Extension
Turbulence

Growth Decline

0 Time

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.16

Characteristics of life cycle stages.

Product Introduction Growth Maturity Decline
life-cycle
Characteristics
Sales Low Fast Slow to decline Declining
Profits Negligible Peak levels Begin to decline Declining to zero
Cash flow Negative Moderate High Low
Customers Early adopters Mass market Mass market Laggards
Competitors Few Growing Many ‘me too’ rivals Taking market
Key actions
Strategy Expand market Market penetration Defend share Productivity
Marketing costs High High (declining%) Falling Low
Marketing Product Brand preference Brand loyalty Image
emphasis awareness maintenance
Pricing High Maintain Maintain/increase Rising
Distribution Patchy Intensive Intensive Selective
Product Basic Improved Broaden position Rationalize
Product development
Re-segment
 Brand life  Generic life 

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.17

The conceptual arguments

against the PLC are:
• Products are not living things, hence the biological metaphor
is entirely misleading.
• The life cycle of a product is the dependent variable, being a
function of the way in which the product is managed over time.
It is certainly not an independent variable.
• The product life cycle cannot be valid for product class, product
form and for brands – indeed, an important function of a brand
name is to create a franchise that has value over time,
permitting changes to take place in the product formulation.
• Trying to fit product life cycle curves into empirical sales data
is a sterile exercise in taxonomy.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.18

The main operative arguments

against the PLC include:
• The four phases or states in the life cycle are not
clearly definable.
• It is impossible to determine at any moment in time
exactly where a product is in its life cycle hence:
• The concept cannot be used as a planning tool.
• There is evidence that companies who have tried to
use the product life cycle as a planning tool have
made costly errors and passed up promising
opportunities.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.19

In large measure disagreements about the existence of

PLC’s arise from lack of definition of what, precisely,
is a product. Doyle (1999) distinguishes 6 possible
levels of definition.

Table 4.2 Doyle’s product life cycle factors

Source: Doyle (1999)

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.20

But, even if everyone accepted Doyle’s

definitions, the problem remains. Managers are
seduced by the consistency of the S-shaped
logistic growth curve into the expectation that it
can be converted into a precise formula which
will predict accurately the behaviour of
individual brands in a market.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.21

The persistent belief is ingenuous. The PLC is

a post-facto generalisation about observed
outcomes for successful innovations. It cannot
tell you in advance which innovation will
achieve this status.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.22

The PLC is a tool which encourages

strategic insight, policy formulation and
long term strategic planning. It is not a
tactical device.

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.23

Product’s position on the life cycle

Figure 4.4 Determining a product’s position on the life cycle

Michael
source:Baker and Susan
Scheuing, 1974 Hart, Product Strategy and Management, 2 Edition, © Pearson Education Limited 2007
nd
Slide 4.24

Linear vs exponential sales forecasts

Figure 4.5 Linear vs exponential sales forecasts

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 4.25

Deviant cases – fads and fashions

Figure 4.6 The classic fashion-good PLC

Figure 4.7 The fad PLC

Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007