Difference between revisions of "Product Life Cycle Examples"
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== Example 2: Air Transport (long-term growth phase)== | == Example 2: Air Transport (long-term growth phase)== | ||
| − | The next four charts illustrate the air transport industry. Charts 3 and 4 show global air freight (as measured in millions of ton – kilometers hauled) and global air freight per capita (global) from the early 1970s through 2017. | + | The next four charts illustrate the air transport industry. Charts 3 and 4 show global air freight (as measured in millions of ton – kilometers hauled) and global air freight per capita (global) from the early 1970s through 2017.<ref>https://data.worldbank.org/indicator/IS.AIR.GOOD.MT.K1?end=2017&name_desc=true&start=1970&view=chartSimple<ref/> liner regression models show significant and continuous increases in air freight volume across time. Indeed, air freight has typically increased by 4,671 million ton – kilometers per year. |
Charts 5 and 6 show air passengers (globally) during the same time period. Both simple liner regression models are statistically significant. Global air passengers are increasing by 6 million passengers per year. This is not a matter of population growth alone as the air passenger per capita model is also statistically significant. | Charts 5 and 6 show air passengers (globally) during the same time period. Both simple liner regression models are statistically significant. Global air passengers are increasing by 6 million passengers per year. This is not a matter of population growth alone as the air passenger per capita model is also statistically significant. | ||
Revision as of 18:17, 12 March 2019
The standard product life cycle depiction is idealized vision and is not always observed in practice. Here we will examine several examples and tie the industry back to change in the environment and the strategic options for the firm.
Example 1: United States Coal Production (in the decline phase since about 2000)
Charts 1 and 2 respectively show United States coal production (in millions of short tons) and in millions of short per capita. These charts show long run production from 1850 through 2017. Data is not available for all years. Examining two charts, especially the per capita chart, allow us to disentangle product revenue or unit growth numbers from population growth. Both charts present a similar pattern. Coal production exhibited growth from 1850 through the end of the 20th century. The 21st century shows a decline in United States coal production. Simple liner regression models were constructed to identify trends. These models are not forecasting models. Separate model for 1850 – 1950 and the 1951 – 1999 periods indicate significant growth in United States coal production. The per capita model for 1850 – 1950 does not show significant growth. Both of the models for the 2000 – 2017 time period show a significant decline show in the United States coal production. Short ton production of coal if declined by 17.224 million tons per year.
| Regression Model: U.S. Coal Production (in millions of short tons); All years | |
| R-square | .752 |
| Model F (significance) | 218.35 (p<.01) |
| Model | -10.317 + 5.581 x Year |
| Regression Model: U.S. Coal Production (in millions of short tons); 2000-2017 | |
| R-square | .534 |
| Model F (significance) | 18.345 (p<.01) |
| Model | 35.639 - 17.224 x Year |
Major takeaway points: United States coal production, both in the aggregate and per capita experienced a century long introduction and growth phase. The 21st century witnesses the onset of the product moving into the decline phase.
Example 2: Air Transport (long-term growth phase)
The next four charts illustrate the air transport industry. Charts 3 and 4 show global air freight (as measured in millions of ton – kilometers hauled) and global air freight per capita (global) from the early 1970s through 2017.Cite error: Closing </ref> missing for <ref> tag
Example 6: Global Smartphone Shipments (currently entering maturity phase)
Chart 13 shows global smartphone shipments between 2009 and 2017. The chart illustrates a “classic” PLC shape with identifiable introductory, growth, and maturity phases. The simple linear regression model is statistically significant and shows a year over year increase in shipments of 186 million units. Obviously, this model is not appropriate for forecasting a non-linear trend observed in the chart.
Major takeaway points: In 2017, global smartphone shipments were 1.465 billion units, or one shipment for every *** person on the plant. This is highly suggestive of market saturation and hence entry into the maturity phase. The lack of strong smartphone sales growth is reflected in Apple and other supplier stock price declines (as of February 2019) and to sentiments concerning the “sting of plateauing smartphones.” Apple and Samsung have increased their prices, but this pricing strategy may actually accelerate the plateau effect.[1]
Summary of PLC Analysis, Data File Usage, and Data Sources
| Product Category | Region | PLC Stage | Comments | Data File |
| Coal | United States | Decline since about 2000 | Withdrawal of resources; No new coal fired plants being built | Coal data |
| Air transport (freight and passenger) | Global | Long-term growth phase since at least the early 1960s | Continued investment by carriers and commercial air craft manufacturers | Air transport data |
| Tomato ketchup | North American | Recent entry into decline | Stock price losses for manufacturers of processed foods | Tomato ketchup data |
| Cars | United States | Decline phase started during the mid-1980s; Displaced by light trucks and SUVs | American automotive manufacturers are abandoning the car market to foreign suppliers | Car data |
| Cottage cheese | United States | Decline phase since early 1970s; possible displacement by yogurt products | Rise of yogurt | Cottage cheese data |
| Cell phones | Global | Recent shift to maturity phase; Market saturation | Coping with the plateau | Cell phone data |