Stage 7 elimination the last stage and newly added to

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Stage 7: Elimination (the last stage and newly added to PLC) Elimination stage explains that change is inevitable, products have limited lives, and otherwise the products will never be innovated and become better. Managerial Application of the PLC Concept MacKenzie stated it is possible to define the phases of the PLC and take appropriate action. 1. The market development of an important new product will end with the entry of a significant new competitor and it becomes start of the growth phase. 2. The end of high growth is usually signalled by the entry of a cluster of new competitors, increased price competition and intensified promotional activities. 3. Decline is heralded by an observed decline in overall market size. Criticisms of the PLC Thomas (1994) raised the conceptual and operational arguments on the PLC. The conceptual arguments were: 1. Products are not living things, hence the biological metaphor is entirely misleading. 2. 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. 3. The PLC cannot be valid for product class, product form and brands. 4. Trying to fit PLC curves into empirical sales data is a sterile exercise in taxonomy. (mature stage doesn’t mean the profit can be maximum) The main operative arguments include: 1. The four phases or states in the life cycle are not clearly definable. 2. It is impossible to determine at any moment in time exactly where a product is in its life cycle hence. 3. The concept cannot be used as a planning tool. 9 the level beyond which demand for a product or service is not expected to increase (No high demand)
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Moreover, Doyle (1999) cites 6 reasons why PLC is not much use to marketing strategy: 1. Undefined concept : demand, brand need, product, product form & technology are not clearly defined in PLC 2. No common shape : “actual sales” can be shaped by both outside events and by the strategies of competition 3. Unpredictable turning point (see MacKenzie’s view) 4. Unclear implications : rapid growth may not lead to high profits in fiercely competitive market 5. Not exogenous 10 : the PLC is often the result of management actions rather than outside events, particularly if management accept that change is necessary, implement the strategy and shift to the next stage 6. Product oriented : the PLC is a not only about production it is part of a marketing concept including customers needs, competitors actions, market itself, power of suppliers and the emergence of new technologies which can replace existing solutions From slide: Given this ‘pedigree’ why has the PLC concept not become the accepted wisdom and universally endorsed by all? Answer: “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.” Chapter 5 Product Portfolio The purpose behind developing a product portfolio is to allocate the firm’s resources to optimize its long-term growth and profitability. While the single product firm may
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