Planned obsolescence

Planned obsolescence (also called built-in obsolescence or premature obsolescence) is an idea in economics and product design. Planned obsolescence is when someone makes a product so that it will wear out after only a short time. It will either stop working, work much worse than before, or be unfashionable.  This way, the person who bought the product must buy a new one sooner than if the old product had lasted a long time.Giles Slade (2006), "Made to Break: Technology and Obsolescence in America", Harvard University Press, p5. This is often called  "shortening the replacement cycle."

Planned obsolescence works when company selling the product has few or no other companies making the same product, because the consumer has few choices. Before choosing this strategy, the producer has to make sure that the consumer will likely buy from them again and not from someone else. Usually, there is information asymmetry: the producer knows how long the product was designed to last, and the consumer does not. However, when many companies make the same product, they compete. Then product lifespans often increase.  In the 1960s and 1970s, the first Japanese cars were sold in America. Because they had longer lifespans than the American car models, American car manufacturers were forced to build cars that lasted longer.

 History 
In 1924, the American market for cars became saturated.  That meant that almost everyone who could buy a car had already bought one.  In order to still sell about the same number of cars, Alfred P. Sloan Jr. who worked at General Motors suggested that new cars should look different every year. This way, at least some car owners would buy a new car every year. This idea was not new.  It had already been tried with bicycles, but people say it was Sloan's idea. Sloan often used the words dynamic obsolescence, but people who did not like the idea called it planned obsolescence.

This plan changed many things in the automobile industry, product design field and eventually the whole American economy. Smaller companies could not afford to re-style their car models every year. Henry Ford did not like the idea either. Ford was an engineer, and he liked simplicity, economies of scale, and strong design. In 1931, GM sold more cars than Ford and became the strongest company making cars. Changing the design every year meant GM had to use a body-on-frame structure rather than the lighter unibody design used by most European automakers because unibody is harder to change.
The words planned obsolescence were first seen in print in 1932 in Bernard London's pamphlet Ending the Depression Through Planned Obsolescence. London said the government should tell manufacturers of personal-use items to use planned obsolescence so people would always buy them. However, the phrase became famous in 1954 because of Brooks Stevens, an American industrial designer. Stevens was due to give a talk at an advertising conference in Minneapolis in 1954. Without giving it much thought, he used the term as the title of his talk. From that point on, "planned obsolescence" became Stevens' catchphrase. Stevens said planned obsolescence was "Instilling in the buyer the desire to own something a little newer, a little better, a little sooner than is necessary."

Other people quickly began to use the phrase. By the late 1950s, planned obsolescence had become a common term for products designed to break easily or to quickly go out of style. The idea of planned obsolescence was so widely known that, in 1959, Volkswagen made jokes about it in an advertising campaign. Volkswagen tried to make it look as though it did not use planned obsolescence: "We do not believe in planned obsolescence," the ads said. "We don't change a car for the sake of change." In the famous Volkswagen advertising campaign by Doyle Dane Bernbach, one advert showed an almost blank page with the line "No point in showing the 1962 Volkswagen, it still looks the same."

In 1960, cultural critic Vance Packard wrote The Waste Makers, which was meant to be an exposé of "the systematic attempt of business to make us wasteful, debt-ridden, permanently discontented individuals." Packard divided planned obsolescence into two sub categories: obsolescence of desirability and obsolescence of function.

"Obsolescence of desirability," a.k.a. "psychological obsolescence," referred to marketers' attempts to wear out a product in the owner's mind. Packard quoted industrial designer George Nelson, who wrote:"Design... is an attempt to make a contribution through change. When no contribution is made or can be made, the only process available for giving the illusion of change is 'styling!'"

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Category:Economics