The Product Life Cycle - Essay Example

PLC The product life cycle (PLC) is a generally accepted type theory in business research and organizational studies. In this theory, the product or service is compared to a basically biological and a time structure that makes sense, in which it has a beginning, middle, and end that are expressed in terms of growth stages, maturity, and other biological terms. One must also think of high tech markets, in terms of providing a broad definition of the concepts and methods used, as it is aligned with the theory of the product life cycle in comparison with high tech companies that provide products or services, like Cisco Systems. The various stages of the product life cycle must be covered in more detail before specific secondary sources are called upon to both question and reaffirm the presence of these stages at Cisco in the current research investigation. Like any theoretical paradigm, the product life cycle has its opponents as well as its advocates. The opponents of the product life cycle generally claim that it is too general and does not provide an explanation for specific cases which do not seem to follow the model of the life cycle. “According to the National Media Lab (www.nml.org), magnetic tape is good for 5 to 20 years, conventional CDs up to 50 years, and archival microfilm for 200 years. The longevity champ? Print on acid-free paper. It should last 500 years. Print also avoids what University of Michigan data expert John Gray calls ‘the problem of unstable technology’” (Wildstrom, 1996, p. 22). The advocates of the product life cycle system claim that as a general marker of product and marketing development, the product life cycle is a valuable way of looking at market factors. In the introductory stage, or the birth and infancy of the product, many products die out. This early mortality rate supports the more evolutionary aspects of the product life cycle theory. Generally, during the introductory stage of the product life cycle, the product is not expected to make a big splash and immediately start making profits. This would be akin to parents expecting that their child would naturally be a prodigy or genius: they hope, but they do not have absolute faith. During this stage, promotion is important so that consumers start to recognize the product, and production numbers are generally small. For example, a company putting out a new product and promoting it intensively will generally not begin to produce the product in large quantities unless economies of scale are involved or the managers are not risk-averse in their stance on product growth and marketing. During its introductory stage, Cisco Systems faced economies of scale with other startup tech companies during a period of heightened competition in the US. During the growth stage, the product or service begins to be recognized and develops a sort of life of its own. Comparing the theoretical model to its biological model, you might say that this is the stage in which the product develops a consciousness of the external and internal environments. Personifying the product is of course the point of the theory. Generally, during the growth stage the product gains competitors and a part in the market that is active, such as shown by Cisco’s capture of a large amount of service market share in high tech. The service, which may not have produced much of a profit in the introductory stage, starts bringing in revenues, and the parent company also becomes more expansive in terms of alliances, outsourcing, partnerships, etc. At this stage, marketing becomes key as the product must develop a stable sort of brand recognition if it hopes to reach maturity. Towards the end of the growth stage, the product’s market share tends to stabilize, much as human beings tend to slow down and become more slow as they mature. During this older phase, present companies may want to emulate Cisco Systems to employ high tech indicators to gauge where their product is on the life cycle and develop a deeper understanding of the cycle itself. As one source states, “IT-strategies are crucial for an effective (business) development because they identify the constant and the changing parts of an IT infrastructure during product life cycle. In order to achieve this, we state three design invariants: the deep structure of the process, the dependencies within the process, and the information handled” (Bernstein and Shuchan, 1996). This is best accomplished during the growth phase because the maturity phase tends to be more stable and easier to observe. “Even old-school marketers are looking beyond the traditional. Procter & Gamble decreased its 2000 television spending and increased its grass roots marketing budget, challenging field teams to come up with new ways to market to consumers. Pepsi, Nike and other youth-targeted brands figured out years ago that Gen X and Y are the most jaded of all audiences and grew up on a steady diet of niche radio programming and extreme sports events” (Whitbeck, 2001). This shows how marketing is changing with the product life cycle as it expands into new information technology avenues. During the maturity stage of the product life cycle, the product tends to level out and become more even-keeled and less variable. Most products, fortunately or unfortunately, do not make it to the maturity phase: those that do tend to stay there for a significant amount of time until they begin to show signs of sluggishness are devoured by superior predators. Cisco has services that have made it to the maturity phase, but it also maintains a base of new services. During the stage of maturity, sales do not grow at the same speed at which they grew during the product’s growth stage, much as metabolism slows down in the biological life-cycle. Mature products tend to occupy a stable position in which growth is still present, but is stabilized. Competition becomes more intense during this phase, and therefore it is imperative for marketing managers to make sure to engage in product differentiation. Towards the end of the maturity stage of the product life cycle, the market then becomes saturated and profit margins are impacted. At this point, a media blitz or international expansion often shows signs that the product is graying around the temples. During the final decline phase of the product life cycle, the market generally is seen to downturn and the evolutionary spectacle of the new devouring the old occurs. Cisco Systems survived the tech bubble of the early 2000s, and since has shown growth. Mature companies may find it difficult to change and stray to the tar-pits of cost-effective stabilization. Others may cut prices significantly and attempt to regain a target audience that has moved on to newer and more innovative products. This completes the product life cycle, with the assumption that the remains of the product will fuel new and more lively products in the cycle. Although this is an attractive theoretical model with Darwinian undertones, it is not necessarily a reality that is written in stone. Many products reach maturity, begin to decline, and then find a fountain of youth in expansion or proactive risk taken by their companies. A product may also skip from stage to stage without following a linear pattern. Therefore, the product life cycle should perhaps be best construed as a general rule of thumb to which there are plenty of exceptions in the real world of marketing. “‘Were in an old, classic industry, not prone to IT innovation,’ says Hector Mario Cruz, head of IT at FRISA. ‘When youre a small player trying to make an impression in an industry, the first message that you want to send to customers is that [you] can provide the highest quality’” (Rothfeder, 2003). This respect for the customer can be looked at as a good sign for the future. Because Cisco Systems is a large and popular high-profile company, it can afford to be very selective in determining an effective level of education, skill, and experience, in both domestic and foreign operations. “Cisco Systems Inc. receives 20,000 applications per month and hires approximately 5% of the applicants. (Forbes, 10/16/00) (CEO Chambers) makes it a point to keep the employees that he hires or acquires through an acquisition by making their working environment and compensations satisfying to all. Employees at Cisco are really happy, and this happiness creates healthy loop.” (Whitbeck, 2001). When executives at a company are happy, generally employees may or may not be happy. It is not necessarily an automatic reflection. But in conclusion, companies like Cisco Systems show a good divergence in the product life cycle. They have been through to the stage of maturity in terms of many of their software development and other services, while still maintaining a constantly evolving marketplace where new services are introduced. In a sense, Cisco has many services at different parts of the product life cycle, from its beginnings to its ends. The product life cycle (PLC) is a good way of looking at organizations and industries such as the high tech industry. REFERENCE Bernstein, Abraham, and Christian Shuchan (1996). Document and process transformation during product life cycle. http://www.inf.ethz.ch/personal/schucan/ipic.html. Rothfeder, J. (2009) Analysis: Lessons From Midsize Companies. http://www.cioinsight.com/print_article/0,3668,a=112815,00.asp. Whitbeck, J. (2001). Out of Home Media Meets the 21st Century. Brandweek. Wildstrom, Stephen H. (1996). Data Life Span. Business Week, 3840, p. 22. Read More