Explain the product life cycle theory. What is Product Life Cycle? 2022-10-22
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The product life cycle theory is a marketing concept that describes the stages a product goes through from its introduction to the market to its removal. The theory is based on the idea that products have a limited lifespan and go through four distinct stages: introduction, growth, maturity, and decline. Understanding the product life cycle can help businesses make strategic decisions about the marketing and management of their products.
The first stage of the product life cycle is the introduction stage. During this stage, the product is new to the market and is not yet widely known or available. Marketing efforts during this stage are focused on introducing the product to potential customers and creating awareness of its existence. Because the product is new and unknown, sales are typically low and the cost of production is high.
The second stage of the product life cycle is the growth stage. During this stage, the product becomes more widely available and known, and sales begin to increase rapidly. Marketing efforts during this stage are focused on increasing demand for the product and establishing it as a viable option in the market. As sales continue to grow, the cost of production tends to decrease due to economies of scale.
The third stage of the product life cycle is the maturity stage. During this stage, the product has become well-established in the market and sales begin to level off or decline. Marketing efforts during this stage are focused on maintaining the product's market share and maximizing profits. Competition in the market may also increase during this stage as other companies introduce similar products.
The final stage of the product life cycle is the decline stage. During this stage, sales of the product begin to decline as it becomes less popular and is eventually phased out or replaced by newer products. Marketing efforts during this stage may focus on clearing remaining inventory or repositioning the product in an effort to extend its life.
Understanding the product life cycle is important for businesses as it can help them make informed decisions about the marketing and management of their products. By anticipating the different stages of a product's life, businesses can make strategic decisions about how to allocate resources and plan for the future. For example, a business may decide to invest more in marketing during the introduction stage to create awareness of a new product, or may decide to focus on cost-cutting measures during the decline stage to maximize profits before phasing the product out.
It recognizes the importance of product innovation and customer engagement in driving the success of a product and helps businesses to plan and respond to the challenges and opportunities that they will face at each stage of a product's lifecycle. Learn More Further Developments of International Product Life Cycle Theory In addition to early developments, international product life cycle theory has undergone a lot of changes. A product life cycle strategy means that you can reinvigorate an existing product, develop a new replacement product or change direction to stay abreast of a changing marketplace. Before ever creating a product, you have to do a lot of market research and come up with a detailed plan for execution. Explore New Markets: When there is no scope to sell further in the domestic market, it is better for the company to try selling abroad. Stage five Decline This is the final stage of the product lifecycle. Market Maturity At this point a product is established in the marketplace and so the cost of producing and marketing the existing product will decline.
New Packaging: When the old packaging has lost its attractiveness, then brightening up old packaging, or subtle changes such as putting crisps in foil packets be done by the company. The international product life-cycle theory claims that the market entry of a product is carried out in a foreign market depending on the position of the product in its country-specific product life-cycle curve. Competition Although several parameters such as strategy, risk, profits etc. Moreover, Netflix is now investing in new self-produced content. The theory was used to explain the developments and patterns of international trade Hill 2007. Every three to five years, automobile manufacturers do more extensive modifications.
During this stage, you rely more heavily on brand loyalists to drive sales. This can involve using social media, customer feedback systems, and other techniques to build a relationship with customers and gather valuable insights into their needs and preferences. Product pricing and availability in the marketplace become important factors to continue driving sales in the face of increasing competition. Marketing: Under the introduction stage, market penetration is done through heavy advertising and skimming. As a result, Pepsi resumed the use of the original Tropicana carton. In the traditional model, the focus is on sales and marketing activities during the introduction and growth stages. An expansion of the distribution network will be sought in order to facilitate market penetration in view of increasing pressure from competitors.
🏆 New product life cycle theory. 7.2 Managing New Products: The Product Life Cycle. 2022
With this consistent change in manufacturing methods, production completely relies on skilled laborers. During the second stage, the product continues to garner popularity. Examples Let us look at some product life cycles examples to understand the concept better. Products in this stage will first begin to encounter market saturation, which can be defined as when a product has reached its maximum level of productivity in the market. . Publicity of the product about its coming f. A product that might be in the mature stage in one country might be in the introductory stage in another market.
Product Life Cycle perfectly explained with 12 Real Examples.
A firm tends to produce what is needed by the consumers. For producers who tend to introduce new products every few years, this may lead to product waste and inefficient use of product development resources. Another aspect is presented by the Casson 1987 exchange of threat for longer period negatively influence the credibility of firm reputation. Strategies during Introduction Stage: i. This flat line means that people is as interested in it today, as they were years ago.
Life cycle theory. Product Life Cycle Theory: Definition, Stages & Example. 2022
The Product Life Cycle describes the evolution of the Popularity of a Product from its first launch to its end. One of the most well-known life cycle theories is the demographic theory, which explains how populations change over time. In this stage, the competition is still low. S and different developed countries have currently started commercialism the merchandise from the developing countries. For example, within the case of the recently fabricated product, this rise in foreign requirement assisted by economies of scale ends up in a trade pattern whereby the U. Then the product enters into a period during which its market grows rapidly.
For more technical or expensive products such as computers or plasma televisions, many firms utilize professional selling, informational promotions, and in-store demonstrations so consumers can see how the products work. To reach wholesalers and retailers such as Walmart, Target, and grocery stores, firms utilize personal selling. Which of the following life cycle model can be chosen if the development team has less experience on similar projects? November 30, 2021 No matter what your product, there are four predictable life cycle stages: introduction, growth, maturity, and decline. The introduction stage of the product life cycle for The Bot will primarily consist of an organization trying to educate the public about its existence through promotional activities, along with initially having high costs. Sales and profits begin to decline as the product becomes less popular and is eventually phased out by the manufacturer. S With a plant in France, for instance, not solely France however alternative European countries is equipped from the French facility instead of from the U.
What Is International Trade Theory?: Product Life Cycle Theory
Before introducing products in global markets, an organization must evaluate and understand factors in the external environment, including laws and regulations, the economy and stage of economic development, the competitors and substitutes, cultural values, and market needs. At this phase, earnings are low however starts improving and there are few competitors. It suggests that there are predictable patterns of growth and decline that can be observed and understood, and that these patterns are influenced by a combination of internal and external factors. Note that a specific firm or business in a country stays in a very market by adapting what they create and sell, i. The length of each stage can vary from product to product, with some taking a day and others taking months or years. The strongest players in the market remain to saturate and dominate the stable market. These strategic methods of supporting a product are known as product life cycle management.