ADVANTAGES OF PLC
Many firms are seen to slip in pre-planning new product launch. As a result, they face the bitter experience of suddenly entering the market with a new product and struggling with it, not knowing how to handle the problems peculiar to that stage. With the help of the PLC concept, it is possible to foresee and predict the profile of the proposed productâ€™s life, the events that are likely to take place in the market and the issues on pricing, channel and promotion that are likely to come up. Through deep probing, one should even be in a position to predict when competitors are likely to enter the scene in what areas they will imitate the product, what will be the extent of cost advantages the competitors will have due to â€˜copyingâ€™ and what pricing strategies they may follow to undercut the pioneer.
This does not mean that with PLC, the actual life phase and events in a productâ€™s life cycle can be exactly predicted and appropriate, foolproof plans prepared in advance. The actual position will usually vary from what is projected. But, elaborate pre-planning does render the marketing man equipped to charter the course of the product. It provides him valuable lead time. He can keep strategic options ready in anticipation of the range of events in the market. For example, if he does a thorough job in the pre-planning stage, he will be working and reworking the possible life cycle his product might take; he will also be studying the life history of similar products in different countries and markets. He can use the insights from the exercise in understanding the life cycle of his product.
Facilitates Prolonging the Profitable Phase
The PLC concept can also be of help to the marketing man in prolonging the profitable life phase of a product. Some products get into trouble in their maturity stage. Powerful retaliation from competitors may threaten the product with a â€˜no-more-growthâ€™ and â€˜no-more-maturity situationâ€™ and push them in to decline. This was exactly the situation faced by ITC with Scissors, their cash cow. The brand came close to total extinction. ITC brought forward a series of strategies, with the sole objective of saving the brand from extinction.
Normally, the following are the strategic routes available to a firm for extending the profitable stage of the life cycle of a product.
1. Finding out users for the product.
2. Finding out new uses for the product.
3. Popularizing more frequent use of the product.
4. Making the product more distinctive to the consumers.
5. Adding real and/or psychological value to the product.
In a corporationâ€™s long-term planning too, the PLC can be of help. In modern day, product portfolio planning is becoming a crucial subject. PLC is a tool that can help anticipate product successes. This, in turn, will help investment decisions on products; the firm can assign investment to the right products and avoid committing heavy resources on wrong products.
In short, practicing the PLC concept means that one is substituting stop-gap arrangements in product management with a structured, long-term, product monitoring plan. The concept helps formulate corporate strategy as well as marketing strategy in an effective manner.