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Concept
Planned obsolescence
Summary
In economics and industrial design, planned obsolescence (also called built-in obsolescence or premature obsolescence) is a policy of planning or designing a product with an artificially limited useful life or a purposely frail design, so that it becomes obsolete after a certain pre-determined period of time upon which it decrementally functions or suddenly ceases to function, or might be perceived as unfashionable. The rationale behind this strategy is to generate long-term sales volume by reducing the time between repeat purchases (referred to as "shortening the replacement cycle"). It is the deliberate shortening of a lifespan of a product to force people to purchase functional replacements.
Planned obsolescence tends to work best when a producer has at least an oligopoly. Before introducing a planned obsolescence, the producer has to know that the customer is at least somewhat likely to buy a replacement from them in the form of brand loyalty. In these cases of planned obsolescence, there is an information asymmetry between the producer, who knows how long the product was designed to last, and the customer, who does not. When a market becomes more competitive, product lifespans tend to increase. For example, when Japanese vehicles with longer lifespans entered the American market in the 1960s and 1970s, American carmakers were forced to respond by building more durable products.
In 1924, the American automobile market began reaching saturation point. To maintain unit sales, General Motors executive Alfred P. Sloan Jr. suggested annual model-year design changes to convince car owners to buy new replacements each year, with refreshed appearances headed by Harley Earl and the Art and Color Section. Although his concept was borrowed from the bicycle industry, its origin was often misattributed to Sloan. Sloan often used the term dynamic obsolescence, but critics coined the name of his strategy planned obsolescence.
This strategy had far-reaching effects on the automobile industry, product design field and eventually the whole American economy.
Official source
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