Product Life Cycle Analysis

Product Life Cycle Analysis

Products, like living creatures, have a specific life cycle. A product is born, it grows up, and eventually it dies. A product's birth is its creation -- the first moment that a brand new device or invention rolls off the assembly line and is made available to consumers. In the case of a color television, its life cycle would commence at the time a brand model first appears in the stores. If it is a well-designed product, and represents an improvement over previous versions, it will no doubt do well as it will appeal to consumers. The period during which a television "grow up" can be described as the interval of time between its initial appearance, and the time it takes for that product to "catch on," or establish itself. When Sony introduces a new color television, that new television is like a newborn baby. The public has no idea how it will perform, or whether it will live up to expectations. It will take time for this new product to become accepted as the "new generation" in color televisions, yet, once it finds its niche in the marketplace it will continue to dominate its share of the market until such time as it is superceded by something else. This time of supercession -- or obsolescence -- is characteristic of the "death" of a product. Perhaps, Sony comes out with a new model color television, or a different company improves on Sony's offering, or possibly color television itself becomes obsolete, replaced by another way of receiving news and entertainment, and so forth.

At the present time, Sony's Trinitron is enjoying the mature stage of its life cycle. Its bright and flat screen makes it highly desirable both for televisions and computer monitors. Like the species of bird or animal that comes to dominate a specific ecosystem, the Sony Trinitron is at this particular moment in time, uniquely adapted to the requirements of its "ecosystem." That is to say, that the Trinitron's capabilities conform to what the public wants, as well as what it need, or thinks it needs, in terms of video and technology.

Survival of the fittest dictates that the filling (or the emptying) of a niche in a competitive environment proceeds along the S-shaped pattern of natural growth. That means that the rate of growth -- whether it is world population, the spread of communism, or sales of the latest computer -- is greatest in the middle of the life cycle, tapering off as growth reaches saturation level. The niche capacity is assumed to be constant throughout the growth process. A niche in nature rarely remains partially full (or empty), so one should expect a natural-growth process to proceed to completion, thus making the evolution of the process predictable. Are limits to natural growth, and the rate of growth slows down as the population of a product or a species nears its limit. If you put two rabbits in a meadow, you can watch their population go through an exponential-growth pattern at first, but slow down later as it approaches a ceiling -- the capacity of the ecological niche. Over time, the rabbit population traces a trajectory that is S-shaped. The rate of growth traces a curve that is bell-shaped and peaks when half the niche is filled ... A product's sales follow the same pattern as the product fills its market niche.

(Modis, 1994)

Though first introduced in 1968, the Trinitron has managed to keep up with all of the technological developments since that time. (Johnstone, 1999, p. 198) It was first used in conjunction with picture tubes, then transistors, and ultimately with modern digital technology and computers. A product like Trinitron, must be able to survive the "Herding Process" if it is to have a long and successful life.

Intense strategic herding also harms the margins and returns on equity of original-equipment manufacturers (OEMs) of consumer electronics products, such as Philips, Sony, Toshiba, and Zenith (which recently filed for Chapter 11). The OEMs' television-manufacturing activities are acute cases of industry herding around a product's physical characteristics. TVs from every manufacturer not only come with the same screen sizes but are also, excluding minor differences, identical inside. Even innovative technological features, such as Sony's Trinitron picture tube, are typically copied within six months to a year. Brand strength, the only discernible difference among manufacturers, requires huge advertising expenditures to sustain. Partly as a result of the lack of marginal strategic differentiation among the consumer electronics OEMs, the market capitalization of the industry's top five players increased by only 8% between 1994 and 1998. During that time the S& P. 500 rose by 168%.