Planned obsolescence

Planned obsolescence is when marketers deliberately introduces obsolescence into their product strategy. The marketer's objective is to generate long-term sales volume by reducing the time between repeat purchases. In a highly competitive industry, this can be a risky strategy because consumers may buy from your competitors. There are also ethical considerations.

Types of obsolescence

Technical or functional obsolescence

• New technology replaces old (example: video tape -> DVD)
• Obsolete products do not have the same functions or capabilities as new ones

Style obsolescence

• Marketers change the styling of products so as to make owners of the old model feel 'out of date' (example: cars, clothing)
• A fashion is any style that is popularly accepted by groups of people over a period of time
• A fad is a short term fashion
• The fashion cycle is the repeated introduction, rise, popular culmination, and decline of a style as it progresses through various social strata
• Marketers claim that style changes relieve peoples' boredom and allows for both self-expression and conformity at the same time

Intentional physical obsolescence

• A product is designed to last for a specific lifetime (example: home entertainment electronics)
• If a product will be technically or stylisticly obsolete in five years, many marketers will design the product so it will only last for that time (this is done through a technical process called value engineering — great euphemism!)
• Doing this will reduce the cost of making the product, and lower the price to consumers (unless there is a lack of competition in the industry, in which case the cost reduction will probably not be passed on to the consumer in the form of lower price)

Postponement obsolescence

• Technological improvements are not introduced even though they could be (example: a large software manufacturer that specializes in operating system - name withheld for legal reasons)
• The marketer feels either that consumers don't need the innovation or they are concerned that the new model will cannibalize the sales of their old model
• This will only work in a monopoly or oligipoly.

See also

List of Marketing Topics	List of Management Topics
List of Economics Topics	List of Accounting Topics
List of Finance Topics	List of Economists