Product Life Cycle Theory Flashcards
It is the series of stages
through which a living thing
passes from the beginning of its
life until its death. Even if a
product is not a living thing.
Life cycle
It refers to the length of time a
product is introduced in the
market until it is removed from
the shelves.
Product Life Cycle
The theory was developed to explain the pattern of
international trade and foreign direct investment. This pattern follows the product life cycle. The theory assumed that production of the new product will occur completely in the home country of its innovation
Product Life Cycle Theory
He developed the product life cycle theory in 1966 help companies plan out the progress of
their new products.
Raymond Vernon
4 stages in the product life cycle
Introduction
Growth
Maturity
Decline
It is the process of managing a product’s life cycle from inception, through design and manufacturing, to sales, service, and eventually, to retirement.
Product Life Cycle Management
In this stage, the need is to create awareness, not profits, and
the underlying goal is to gain widespread product and brand recognition
as consumers try the product. Big money is spent on distribution and
promotion.
Introduction stage
Charging an initially high price and gradually reducing (“skimming”) the price as the market grows.
Price skimming
Charging a low price to “penetrate” the market and capture market share, before increasing prices in relation to market growth.
Price penetration
The stage where demand for the product begins to increase
and sales usually grows exponentially from the takeoff point. At this stage, profitability reaches the highest level.
Growth stage
The stage where sales increase continues in a decreasing
pattern, but the sales curve tends to decrease after the top selling
point is reached.
Maturity Stage
The stage when no amount of marketing or promotion can keep the sales figures from declining. Sales likely to continue until the cost to produce the product rises higher than the profits generated from it.
Decline stage
The stage when sales increase continues in a decreasing
pattern, but the sales curve tends to decrease after the top selling
point is reached.
Decline stage
Reducing marketing efforts and attempt to maximise the life of the product for as long as possible
Milking or harvesting
