How to Create a PLC Curve

Companies launch new products every day, but like biological organisms, those products have a life cycle. The product life cycle (PLC) of a product describes how it changes throughout its existence on the market. Applying this theory requires that you first estimate certain aspects about the market and then mathematically create a curve to display the life cycle.

Instructions

  1. Find the Pertinent Variables

    • 1

      Estimate the market potential. This is the maximum number of users for your product. Label this value "m." In many practical cases, estimating "m" only includes counting the possible number of buyers in the market.

    • 2

      Estimate the degree of innovation. This represents the percent of sales likely due to consumers' demands for novel products. You need to completely understand and observe your market to arrive at an accurate estimate for this value. Refer to degree of innovation as "p."

    • 3

      Estimate the degree of imitation. Like the degree of innovation, this value represents a particular aspect of the market, namely the percent of sales due to others imitating the initial consumers of the product. Again, perform market analysis to estimate this parameter in an accurate manner. Call this parameter "q."

    Compute the PLC Curve Equation

    • 4

      Add p and q. The result will be a number. Call this value "a."

    • 5

      Multiply a by m over p. Call this value "b."

    • 6

      Divide q by p. Call the resulting number "c."

    • 7

      Write the equation of the curve. The equation is the constant, b, multiplied by a fraction, which contains two exponential functions. That fraction is exp(-t*a)/[1+c*exp(-t*a)], where "exp" represents the exponential function. Thus, the full equation of the curve is b*exp(-t*a)/[1+c*exp(-t*a)].

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