planned obsolescence

(noun)

a policy of deliberately planning or designing a product with a limited useful life, so it will become obsolete or nonfunctional after a certain period

Related Terms

Examples of planned obsolescence in the following topics:

  • Issues in Marketing

    • Planned obsolescence is a policy of designing a product with a limited useful life, so it will become unfashionable or no longer functional after a certain period of time and put the consumer under pressure to purchase again.

  • Factors for Calculating Depreciation

    • There are four main factors that affect the calculation of depreciation expense: asset cost, salvage value, useful life, and obsolescence.
    • Useful life refers to the window of time that a company plans to use an asset.
    • Obsolescence should be considered when determining an asset's useful life and will affect the calculation of depreciation.

  • The Need for Management

    • When he arrived at IBM in April 1993, an active plan was in place to dis-aggregate the company.
    • The prevailing wisdom of the time held that IBM's core mainframe business was headed for obsolescence.
    • The company's own management was in the process of allowing its various divisions to rebrand and manage themselves — the so-called "Baby Blues. " Gerstner reversed this plan, realizing from his previous experiences at RJR and American Express that there remained a vital need for a broad-based information technology integrator.

  • Influence on the Entire Supply Chain

    • From customer service representatives providing real-time information on scheduling and product availability, to procurement departments that develop rapid communication systems, such as electronic data interchange and Internet linkage, to convey requirements from product marketing managers more rapidly, organizations must clearly communicate its marketing plan internally to successfully launch products with ever-shorter time schedules.
    • For instance, some of the world's largest consulting firms estimate that up to 60% of marketing costs are related to non-product ancillary areas (distribution, people, freight, storage, obsolescence, technology, and inventory management).

  • Efficiency Metrics

    • In addition, excess inventory increases the risk of losses due to price declines or inventory obsolescence.
    • A low turnover rate may point to overstocking, obsolescence, or deficiencies in the product line or marketing effort.

  • Inventory decisions

    • Inventory that exceeds what is needed to satisfy customer demand imposes unnecessary costs such as storage, deterioration, obsolescence, theft, and money tied up in inventory that cannot be used for other purposes.

  • Special topic: just-in-time and lean systems

  • The Marshall Plan and Molotov Plan

  • Purpose of the Marketing Plan

    • A formal marketing plan provides a clear reference point for activities throughout the planning period.
    • Still, what's the point of creating a formal marketing plan?
    • Exactly what purpose does a marketing plan serve?
    • A formal marketing plan provides a clear reference point for activities throughout the planning period.
    • However, perhaps the most important benefit of these plans is the planning process itself.

  • Noncash Items

    • A machine bought in 2012, for example, will not be worth the same amount in 2022 because of things like wear-and-tear and obsolescence.