Marketing Book

One more time – what is marketing? 7
risk seen in any innovation. As a consequence, a
contagion or bandwagon effect will be initiated
as consumers seek to obtain supplies of the new
product and producers, recognizing the trend,
switch over to making the new product in place
of the old. The result is exponential growth.
Ultimately, however, all markets are finite
and sales will level off as the market becomes
saturated. Thereafter sales will settle down at a
level which reflects new entrants to the market
plus replacement/repeat purchase sales which
constitutes the mature phase of the PLC. It is
this phase which Levitt rightly characterizes as
self-deceiving. Following the pangs of birth
and introduction and the frenetic competitive
struggle when demand took off, is it surprising
that producers relax and perhaps become complacent
when they are the established leaders in
mature and profitable markets? But consumers,
like producers, are motivated by self-interest
rather than loyalty and will be quite willing to
switch their allegiance if another new product
comes along which offers advantages not present
in the existing offering. Recognition of this
represents a market opportunity for other
innovators and entrepreneurs which they will
seek to exploit by introducing their own new
product and so initiating another new PLC
while bringing to an end that of the product to
be displaced.
The import of the PLC is quite simple, but
frequently forgotten – change is inevitable. Its
misunderstanding and misuse arise from the fact
that people try to use it as a specific predictive
device. Clearly, this is as misconceived as trying
to guess the identity of a biological organism
from the representation of a life cycle curve
which applies equally to gnats and elephants.
Life cycles and evolution
As noted earlier, the PLC concept is based upon
biological life cycles and this raises the question
as to whether one can further extend the
analogy from the specific level of the growth of
organisms and products to the general case of
the evolution of species and economies. At a
conceptual level this seems both possible and
worthwhile.
Consider the case of a very simple organism
which reproduces by cell division placed
into a bounded environment – a sealed test tube
containing nutrients necessary for the cell’s
existence. As the cell divides the population
will grow exponentially, even allowing for the
fact that some cells will die for whatever
reason, up to the point when the colony reaches
a ceiling to further growth imposed by its
bounded environment. What happens next
closely parallels what happens in product life
cycles, industry life cycles and overall economic
cycles – a strong reaction sets in. Discussing
this in a biological context, Derek de
Solla Price cites a number of ways in which an
exponentially growing phenomenon will seek
to avoid a reduction in growth as it nears its
ceiling. Two of these, ‘escalation’, and ‘loss of
definition’, seem particularly relevant in an
economic context.
In the case of escalation, modification of
the original takes place at or near the point of
inflection and ‘. . . a new logistic curve rises
phoenix-like on the ashes of the old’. In other
words, the cell modifies itself so that it can
prosper and survive despite the constraints
which had impeded its immediate predecessor.
In marketing, such a phenomenon is apparent
in a strategy of product rejuvenation in which
either new uses or new customers are found to
revitalize demand.
In many cases, however, it is not possible
to ‘raise the ceiling’ through modification and
the cell, or whatever, will begin to oscillate
wildly in an attempt to avoid the inevitable (the
‘hausse’ in the economic cycle which precedes
crisis and depression). As a result of these
oscillations the phenomenon may become so
changed as to be unrecognizable, i.e. it mutates
or diversifies and recommences life in an
entirely new guise. Alternatively, the phenomenon
may accept the inevitable, smoothing out
the oscillations and settling in equilibrium at a