Page 340 - Marketing Management

COMPETITIVE DYNAMICS | CHAPTER 11 317

• The growth stage lasts a little over eight years and does not seem to shorten over time.
• Informational cascades exist, meaning people are more likely to adopt over time if others
already have, instead of by making careful product evaluations. One implication is that
product categories with large sales increases at takeoff tend to have larger sales declines at
slowdown.

Critique of the Product Life-Cycle Concept
PLC theory has its share of critics, who claim life-cycle patterns are too variable in shape
and duration to be generalized, and that marketers can seldom tell what stage their product is
in. A product may appear mature when it has actually reached a plateau prior to another
upsurge. Critics also charge that, rather than an inevitable course, the PLC pattern is the self-
fulfilling result of marketing strategies, and that skillful marketing can in fact lead to contin-
ued growth. 67

Market Evolution

Because the PLC focuses on what’s happening to a particular product or brand rather than the
overall market, it yields a product-oriented rather than a market-oriented picture. Firms also need
to visualize a market’s evolutionary path as it is affected by new needs, competitors, technology,
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channels, and other developments and change product and brand positioning to keep pace. Like
products, markets evolve through four stages: emergence, growth, maturity, and decline. Consider
the evolution of the paper towel market.

TABLE 11.2 Summary of Product Life-Cycle Characteristics, Objectives, and Strategies

Introduction Growth Maturity Decline

Characteristics
Sales Low sales Rapidly rising sales Peak sales Declining sales
Costs High cost per customer Average cost per customer Low cost per customer Low cost per customer
Profits Negative Rising profits High profits Declining profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number beginning Declining number
to decline
Marketing
Objectives
Create product Maximize market share Maximize profit while defending Reduce expenditure
awareness and trial market share and milk the brand
Strategies
Product Offer a basic product Offer product extensions, Diversify brands and items Phase out weak products
service, warranty models
Price Charge cost-plus Price to penetrate market Price to match or best Cut price
competitors’
Distribution Build selective distribution Build intensive distribution Build more intensive distribution Go selective: phase out
unprofitable outlets
Communications Build product awareness Build awareness and Stress brand differences and Reduce to minimal level
and trial among early interest in the mass benefits and encourage brand needed to retain hard-core
adopters and dealers market switching loyals

Sources: Chester R. Wasson, Dynamic Competitive Strategy and Product Life Cycles (Austin, TX: Austin Press, 1978); John A. Weber, “Planning Corporate Growth with Inverted Product Life Cycles,” Long
Range Planning (October 1976), pp. 12–29; Peter Doyle, “The Realities of the Product Life Cycle,” Quarterly Review of Marketing (Summer 1976).