The Product Life Cycle Model (Essay Sample)

The Product Life Cycle Model
The Product Life Cycle (PLC) has been a common phenomenon in both management and economic studies. The PLC theory stipulates that a firm that can easily forecast the change of the product from one stage to another can manage its sales revenue through adoption of appropriate marketing mix strategies. This will enable the organization to, effectively, integrate into the changing economy, and, in some cases, gain from better sales and increased profit outlay. The four stages that PLC Model attributes its philosophy includes introduction stage, growth stage, maturity stage, and decline stage. The model is alleged to be significant in business environment; however, some of the issues and applications are arguable. In any case, PLC Model occupies a key part in marketing and it is one of the fundamental variables that enhance formulation of business strategy (Meenaghan and Turnbull, 1978). Although some of the studies demonstrate the negative impacts of PLC Model, the contemporary business entity should rely on PLC Model in order to realize effectiveness and strategic objectives.
Managerial team in an organization need tools that can enable them to project the future trend of the company's activities, and PLC comes in handy. In the current chaotic and ever-changing economy, PLC model enables managers to estimate product directions on both micro and macro level, and enhances timely execution of its plan to combat potential competitors' moves. Being vested with relevant financial information and tools, the management, with the help of PLC model, can provide a clear financial and managerial report on the progression of past, current and future sales. The model provides a clear understanding on the past business events as a way of providing an interpretive and extrapolatory approach in developing a long-term strategy (Steinhardt, 2010). When the product strategy has been initiated, the PLC model can be relevant in validating the ongoing strategy as it shows the trends in the market, technological advancement, and customer issues. Organizations anticipate on emergence of competitors in the industry; thus, adequate preparation is relevant in order to strengthen the company's product position and to achieve large market share in the economy.
Consequently, PLC Model has enabled the management in planning its long-term marketing strategies especially when the economies and markets are stable. However, most of the products normally become extinct due to technological advancement and hold no revenues. PLC will enable the organization to ascertain obsolete products in order to minimize usage of organization's resources on non-beneficial products. Through the combinations of various elements including sales volume, time, and the idea of radical stage, the model enables the determination of reasonable combinations in an attempt to mitigate dead products.
The PLC model enables the organization to determine the cost of undertaking product development. Currently, product development has been a key feature in determining the profitability of the organization, and minimizing the cost outlay associated with this stage is crucial.PLC Model shows the cost associated with developing a product and the strategies that can be used to minimize the cost of developing the product. In addition, PLC Model assist managers to determine the revenue earned for the organization. With incumbent structure and reliable data on the sources of revenue for the organization, it is easy for the management to predict the revenue earned on its operations. Strategic goal for every organization is to maximize its revenue through minimization of cost outlay, and PLC Model will enable the organization to realize this goal (Lamb and Dunne, 2011).
Apart from cost minimization and increase in revenue outlay, PLC Model is useful to management as it contributes to efficient marketing plan. It assists the management in fining the organization's market through research and analysis of market trends, identify potential competitors and customers. PLC Model provides a platform in which the company can strategize on ways of keeping and attracting customers. Strategic marketing plan, facilitated by PLC model, will enable the organization to identify the kind of support that the product needs in the case where the product is at its infancy and declining stage, product redesigning strategies, whether the product is to be reinvigorated or not, and management's decision to withdraw the product from the organization (Steinhardt, 2011). Competition across the economy has fostered the management to undertake strategic marketing plan in order to safeguard its competitive advantage in the economy.
Organization's cash flow can be managed when PLC Model is routinely monitored. Most of the operations can be ignored by the management when they handle the huge sales volume of the products; however, with PLC Model in place, forecasting of cash flow will be vital in making investment decisions. Experienced managers know that managing the working cash flows is a demanding exercise. Most of the daily tasks of management arise from problems of achieving the timely supply of goods and services at the right level of quality to the business, and the problems of manufacturing the product right first time without quality defects. Both tasks have to be satisfactorily completed before delivery and invoicing can take place in turn resulting in cash flow from customers to the business (Saaksvuori and Immonen, 2008). In ascertaining the investment requirements of a business, PLC Model has been useful. However, the amount of business risk inherent in a particular business is affected by the nature and behavior of the working capital cycle.
The timing of sales and costs, which characterizes PLC Model, enables an organization to improve its overall profitability. The model enables an organization to analyze the market trends, and focus its sales to the preferred target consumers. This ensures that the organization maximizes its resources. In addition, PLC Model is useful to the organization as it allocates resources to various products in the sector. When resources are located to different products, there is high possibility of increasing revenue outlay unlike when they are allocated to specific products in the organization. As such, the company would be assured of growth and exploit the available resources. As competitors enter the market during growth, each firm attempts to get larger share of the slower-growing market in the maturity stage. The sales of the industry continue to grow but at a decreasing rate; therefore, the need to establish a coherent PLC Model.
However, despite the positive attributes on PLC Model, its disadvantages are clear in the way it operates. PCL Model is characterized by four stages; introduction, growth, maturity, and decline. Though the four life cycle stages are distinct, it is impossible to ascertain a given stage in the life of a product. Some of the products would ever remain in the growth stage, others in the maturity stage, while others will move directly from introduction to decline stage. According to Mukherjee (2010), the life time of a product will not necessarily have to pass through the product lifecycle stages rather it would depend on the market strategy of the company. In addition, the length of product life cycle stages cannot be ascertained, and the management cannot use the information provided by the PLC Model to forecasts on future market trends. Various products have different length of time, and the management cannot provide a clear data on the time framework in which the products can change from one stage to the other. This inhibits the planning strategy of the company. As such, the company needs to rely on the information from the customers and shareholders on the effectiveness of the product (Hesselbach and Her...