Fans of the classic TV and film series Star Trek are familiar with Mr. Spock’s Vulcan farewell phrase, and it serves equally well as a manager’s mantra when strategizing about an organization’s ability not only to survive, but to thrive. Being aware of the interplay between a product’s or service’s typical development and its surrounding market conditions empowers mangers to “bake” the perfect “pie,” creating and taking advantage of promising opportunities to grow into the future.
Product Life Cycle
Through a combination of experience and education, most managers are familiar with a simplified version of Figure 1 (Edginton, et al., 2004), commonly called the Product Life Cycle (PLC). Modeled after the stages experienced by people as they age, the PLC shows the “life” of a product or service from introduction (birth) to extinction (death). A more sophisticated approach adds alternative outcomes (Edginton, et al., 2001), and then the competitive market segmentation (“pies”) component.
Like any model, the PLC depicts an idealized scenario. In actuality, however, the number of participants (or income), length of time per phase and overall lifespan (elapsed time), will vary according to individual circumstances. For example, a gimmicky fad may immediately take off, soar to the highest high, and just as quickly burn out and vanish, as did a few of the extreme sports. Conversely, others may begin slowly, grow modestly, and eventually become a programmatic mainstay, such as yoga. Keeping this in mind, the model looks like this:
The assumption is that the product or service (A) is fairly unique, but also unfamiliar to potential participants. The initial income slope is low to moderate, but the good news is that A is unchallenged in the market with plenty of untapped market remaining. However, the market is not unlimited; not everyone is interested in every product or service at the same level of intensity.
In a competitive system, every good idea draws imitators, and the growth phase reflects that certainty through the arrival of competitor B. Participation increases noticeably, partially driven by overall interest, heightened by B’s entry and promotions, and although less market share remains, both competitors have room for additional growth.
During this phase, all of the “natural” market has been attracted. These are the participants who have a true affinity for the product or service, and require minimal external motivation to become involved. At this juncture, the market has been equally split between the two competitors, and income begins to flatten.
Realizing that participation has leveled off, both competitors launch special promotions to attract people who have been waiting just outside the margins. Perhaps they are curious or skeptical or among those so-called “late adapters,” who can be enticed to participate by offers of a discount or a no-obligation free trial. As a result, the overall market grows one final time.
Saturation ends with the sobering realization that there simply are no more new people even remotely interested in participating; the moment of decision is at hand, and three outcomes are possible.
1. Decline–In Figure 1, B has gained the advantage over A by some means (e.g., better marketing, offering higher quality, etc.) resulting in A losing market share. In addition, the overall market shrinks to maturity levels as the “buzz” surrounding the product or service wears off. For A, extermination is inevitable, and B will own the market exclusively.
2. Petrification–The two competitors are equally strong, and neither seems to be able to gain an upper hand, even with the passage of a fair amount of time. The long-standing battle between the two major soft drink companies comes to mind. The market becomes a saturated stalemate.
3. Revitalization–The prospect of impending decline has inspired A to either make significant adjustments to its existing product/service, or create a completely new offering. During this phase, A may abandon the previously existing market, or gain a competitive edge over B, thereby forcing B out of the market instead. Regardless, A is back in business at the introductory phase.
Monitoring participation and income over time, mixed in proper proportions with awareness of market capacity and competitive position, is a recipe guaranteed to produce a long and prosperous organizational life.
Edginton, C.R., et al. Leisure programming: A service-centered and benefits approach. 4th ed. Boston: McGraw-Hill, 2004.
Edginton, C.R., et al. Managing Recreation, Parks, and Leisure Services: An Introduction. Champaign : Sagamore Publishing, 2001.
Kim Uhlik is Assistant Professor in the Department of Recreation and Leisure Studies at San Jose State University, where he coordinates the Leadership and Administration emphasis. He can be reached via e-mail at email@example.com.