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  • Product Life Cycle (PLC)

    普通 来源:正保会计网校 2016-05-24

    ACCA P3考试:Product Life Cycle (PLC)

    1. The Model

    Product lifespans vary by type of product. Perishable goods (e.g. fruit and vegetables) have a short lifespan. Durables (e.g. cars) have a longer lifespan. Although lifespans vary, product life cycles have common elements and follow similar stages.

    2. The details

    Stages Features Examples of Possible
    Strategies
    Development High cost outlay (e.g. in
    research)
    European airline manufacturer
    investing $600 million in new plant in US (Airbus in Alabama).
    Introduction Initial product launch,
    Customers unfamiliar with product,
    Low profitability
    Rapid skimming (high level promotion and high price),
    Slow penetration (low price)
    Growth Sales volumes increase,
    Competitors enter market,
    Falling unit costs (economies of scale, learning effect, etc)
    Add value/Improve quality,
    Expand distribution,
    Reduce price,
    Build brand loyalty
    Maturity Stable demand for product,
    Increased market competition
    Modify market/product mix,
    Find "spin-off" products to build
    on goodwill of brand
    Decline Having reached saturation point demand falls,
    Decline in number of competitors
    Divest,
    Focus on niche market,
    Minimise promotion

    3. Benefits

    The PLC model helps focus managers and planners on:

    ▍The stage of the life cycle a product has reached;

    ▍The remaining life of a product-the length of time the product will continue to contribute to profits; and

    ▍The urgency to develop new products or improve products.

    4. Weaknesses

    ▍Only indicates where the product/market is now rather than where it will be.

    ▍The theory cannot be used for forecasting due to uncertain stage duration.

    ▍Life cycle patterns vary.

    ▍No allowance for products that fail during development or introduction.

    ▍No allowance for products that seem to be mature forever.

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