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What is PLM?
Product Lifecycle Management(PLM) refers to systematic approaches used by companies to manage the entire lifecycle of a product from inception, through engineering design and manufacture, to service and disposal of manufactured products. PLM integrates people, data, processes and business systems and provides a product information backbone for companies and their extended enterprise.
Introduction Stage
The introduction stage is the first stage of the product lifecycle. In this stage, significant time and resources are spent on product and market research to determine customer needs and how to best meet them with a new product. Product designs are developed, prototypes are created and tested. Early adopters and influencers are identified to build awareness and interest in the new product prior to launch. Companies focus marketing efforts on educating customers about the product and its benefits. Prices are often set relatively high to maximize revenue from early customers. Production runs are small initially to limit risk if demand is lower than expected.
Growth Stage
As the product is launched and gains broader market acceptance, it enters the growth stage. Successful products see rapidly increasing sales as more customers adopt the new product. Production volumes increase significantly to meet demand. Investments are made in equipment, facilities and workforce to boost manufacturing capacity. Marketing efforts shift to a wider target audience using mass media channels. Distribution channels are expanded to make the product more widely available. Competition from other companies starts to emerge as they attempt to enter this growing market space. Continual product enhancements and new features are introduced to maintain customer interest and competitive advantage.
Maturity Stage
once adoption peaks and market penetration levels off, the product reaches maturity. The rate of sales growth declines from the high levels seen in prior growth stages. The product category and customer needs may be well defined. Competition is high from other established brands fighting for market share in the now sizable market. Product improvements focus more on quality, reliability and lowering manufacturing costs. New products are launched periodically to appeal to changing customer preferences. Marketing emphasizes brand loyalty through promotions and loyalty programs. Prices may be reduced through competitive pressures or introduction of lower-cost variants.
Saturation Stage
In the saturation stage, the market potential for the product is largely realised. Further unit sales increases are minimal. Competition is intense as companies compete for a share of the static market. Price wars can start to occur as companies attempt to gain sales by lowering prices. Marketing shifts to maintaining brand image and retaining existing customers. New product introductions and line extensions aim to give maturity-stage customers a reason to upgrade. Companies direct investments to other growing product categories. The product may be discontinued when costs to support and manufacture it exceed the profit potential.
Decline Stage
The decline stage follows as demand and sales start to contract due to product obsolescence, substitutes or declining customer interest. Competition shifts focus to newer growing categories. Production runs are at minimum volumes. Remaining customers are loyal long-time users resistant to change. Marketing is reduced to servicing this shrinking customer base. Companies may keep some production going to satisfy this residual demand at low cost. Alternatively, the product is eventually withdrawn from the market when customer base shrinks to unsustainable levels. Resources are freed up to reallocate to more promising opportunities.
Product Life Extension Strategies
Companies employ various strategies to lengthen the later stages of the product lifecycle and slow the natural decline. Line extensions introduce new variants to appeal to subset customer segments. Updates add new features appealing to both new and existing customers. Technologies allow improvements in performance specifications. Brand building aims to instill loyalty beyond individual products. Backwards compatibility maintains relevance as new standards emerge. Outsourcing manufacturing can lower costs. Niche market focus keeps products viable for specialized needs. Ultimately, all products eventually are replaced or made obsolete by changing market conditions and advancing technologies. But with strategic management, companies extract greater long-term value from products over their full market lifecycles.
Benefits of Understanding Product Lifecycles
Understanding where a product sits within its lifecycle stage helps companies plan strategies accordingly. In introduction, resources support product development and early marketing. In growth, production and distribution are scaled up. Maturity emphasizes brand loyalty and competitive offerings. Saturation triggers line extensions or successors. Decline manages an orderly withdrawal. This framework aids decision making around investments, pricing, marketing programs, distribution and resource allocation throughout a product’s economic lifetime. Anticipating and influencing transitions between stages provides competitive advantages versus firms with shorter product visions. Lifecycle knowledge leads to maximizing profits and value over the long run from successful products.
In Summary, product lifecycle management (PLM) is a critical business strategy that helps organizations optimize their product development processes and bring innovative products to market faster. PLM software enables companies to manage the entire lifecycle of their products, from concept and design to manufacturing and end-of-life. By centralizing product data and streamlining workflows, PLM systems facilitate collaboration among teams, ensure product quality, and reduce time-to-market. With features such as CAD integration, change management, and compliance tracking, PLM software empowers organizations to innovate more effectively, respond to market demands quickly, and stay ahead of the competition.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
