Product Lifecycle Management (PLM) is a strategic process of allocating resources – how to reduce cost and introduce the product in the market that is according to customer needs and wants. Furthermore, the sound PLM also enables the new product to have a healthy lifespan and profitability.
Since every product has a limited life and goes through five stages of products life cycle i.e. product introduction, growth, maturity and decline.
Product Lifecycle Management
Effective Product Lifecycle Management needs the company to focus on different business areas that can affect the PLM.
Research and Development
When a product introduces in the market it is backed with rigorous research and development process. R&D department works hard to convert product concept into a successful prototype that satisfies market needs and wants. New product manufacturing takes even years and huge financial resources to make a success in the eye of consumers.
When a company manufactures a product, the manufacturing cost. During the product lifecycle, the manufacturing cost varies at each stage. In the initial stage, product manufacturing cost is very high due to low customer base and sale volume.
When the product life goes on, through economies of scale and learning curve the manufacturers can reduce cost and produce more affordable products to customers.
The company can also cut product cost by attainting technological advancement in the manufacturing process that can produce more units in less time.
As I earlier said, manufacturing needs both time and huge funds to introduce a new product in the market. The finances of growth and maturity stages can be covered out of the revenue generated. The decline stage may need extra finances, depending on the strategies adopted, for example rejuvenating by adding more features that are acceptable to the new customers. The company must adopt those financial strategies that maximize profitability throughout the product life.
Information is Crucial for Product Success
Effective information system plays an important role at each stage of product lifecycle. Information can help the company to know about the potential market when introducing a new product. Data and statistics can identify which marketing campaigns achieve targeted goals. The marketing information let management know the product status to take decisions accordingly.
Those companies having effective marketing information system can better understand product life cycle curve and take marketing decision that can increase the lifespan of a product.
Marketing and Promotional Activities
There are several marketing strategies available when companies launch a new product in the market. These strategies can help to set the intensity of each marketing mix element i.e. price, place (distribution) and promotion.
For example, A company may launch a new product and set high prices to recover development cost and low prices to build market share. Distribution is very selective until consumers accept the product. These strategies will change when the product reaches growth, maturity and even decline stage. When management designing campaigns, distribution and pricing strategies, it tries to ensure market share and prosperous product life.
Every product has a limited life. But those companies focus on business areas of product lifecycle management can make sure that the product has a successful and healthy life during its life cycle stages.