Evaluate the Usefulness of the Product Lifecycle to a Firm

In this essay I will look at the advantages and disadvantages of using a product lifecycle, as well as evaluating the usefulness of such a model to a firm.

The Product Lifecycle is a part of the portfolio analysis, in which a firm can analyse the stages in a products life. It is a model used to aid with decision making in a firm, and part of the marketing planning process. The shape and length of the lifecycle varies with the different products, as each one is unique. The different stages are launch, growth, maturity, saturation and decline.

How useful is the Product Lifecycle?. There are several different uses it holds to a firm. Managers use it because it highlights the need for a firm to change its marketing policies at the different stages of a products life. It then aids them in planning out their marketing strategies.

A firm might draw out a Product Lifecycle to identify the stage at which its product is at in the lifecycle, from there they can decide what to do to keep the product alive or to maintain high sales.

The Product Lifecycle can be used as an aid to set budgets within a firm as well. For example, if a firm produces a product lifecycle for a product and identifies the stage it is in, this can set budgets for its marketing/promotion department, its production department and its distribution department. For example if a firm sees that its product is still in the growth stages of the lifecycle, they are going to have to invest a lot of money in its development (on promotion and distribution).

The Product Lifecycle can also be used to consider what might happen in the near future. Its usefulness in this area is debatable, the Product Lifecycle graph shows a products development up to the present time, it is not a model for the future. It can however help managers predict what could happen in the short term, and to decide measures to keep the lifecycle as they like it. E.G. they may notice that their product is in the maturity stage, and the market is now saturated with competitors and after drawing up a product lifecycle they may realise that there is a decline in sales which indicates they may have entered the decline stage. They will now be able to make a decision based on this knowledge. They can either cease production and let the product slowly disappear (to become a 'dog' in the Boston matrix) or to extend the product lifecycle, with an extension strategy.

Extension strategies are