INTRODUCTION: may be available for the manufacturing

                  

 

INTRODUCTION:

Like Human Beings the product also has a limited life cycle
which passes through several stages of its existence in the market. The Product
Life Cycle explains the period of time the product stays in different phase of
its life. Vernon established the product life cycle, a theory that every
product has its own lifespan and goes through various phases from Introduction
to Decline. Some products linger in one stage longer than others, but they all
eventually progress through the cycle from start to finish.

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The idea of product life cycle theory was adapted from
biology and an analogy is drawn with the birth of an organism. The first
product life cycle theory was explained in earlier 1950’s which was further
developed by Raymond Vernon in his published article “International
Investment and International Trade in the Product Cycle” in 1966. Raymond
was one of the team members who looked into Marshall Plan, the US investment
plan to enhance the economy after World War 2. He was had a prominent role in IMF and GATT. Later was a professor
at Harvard Business Scholl and later at John Kennedy School of Goveermnt.1

In 1966 when the model was published he looked at the
transformation of how United States were evolving into Multinational
Corporations and their contribution to global trade. The product life-cycle
theory is based on the assumption that places may be available for the
manufacturing of a particular product based on the life-cycle and
during the cycle the manufacturing will be transferred to regions with
best conditions for manufacturing.

Whereas on the other side Warren Keegan, a marketing scholar,
refers to the International Product Life Cycle in the following manner:
“The International Product Life Cycle model suggests that many products go
through a cycle where high income, mass consumption nations are initially
exporters, later lose their export markets, and finally become importers of the
product.”2 These are clear scenarios where trade cycle and
product life cycle have been defined almost identically in the international
context.

Vernon’s International
Product Life cycle

Internationalisation of companies were noticed in USA and
later spread in the world. Vernon made comparative advantage as a tool to
define the product life cycle and its pattern in the life time of a product.  The product span of life depends on the
consumers purchasing power accompanied by their demands. As the product gains
popularity its demand rises resulting in more production where the company has
to shift its production plant. In order to gain maximum profits these plants
are in developing countries or in any of its foreign production plant.3

The 4 stages in the
model:

1. Introduction

When a product is first introduced in any country’s market,
it sees rapid growth in sales because the market demand is unsatisfied for
certain period. When the same demand has been satisfied, product sales decline to
certain level for product replacement. In developed countries market, the
product life cycle rapidly grows due to the presence of “follower”
economies that rarely introduce new innovations but quickly imitate others.

Example: Nintendo
Gaming Console: When word first leaked about production of a miniature,
classic Nintendo console, it was summertime. People should have been more
concerned with beach vacations and summer grilling than a remake of a gaming
unit featuring the original Super Mario Bros. from three decades prior.

But, that’s not what happened.

The internet went wild with anticipation of the console.
Reviewers debated the pros and cons of the mini machine. Old-time gamers
reminisced about their childhood favourites. Retailers like Amazon posted the
console on their website, quick to add wording telling would-be buyers that it
was not yet available for purchase.

2. Growth

In a developed country where the standard of living is high
their wants are also insatiable in such scenarios any new product in the market
booms up the expectation and the urge for new product. In an era of
internationalisation it is more continent for the supply and availability of
the product. An effectively marketed product meets a need in its target market.
The supplier of the product has conducted market research and has established for
market size and composition. When a product’s sale begins to increase
drastically and when the product experiences high demand. This initial stage of
the product life cycle is high prices, high profits and wide promotion of the
product in the market. The producer of the product may export it, even into
follower economies.

Holographic
Projection: Only recently introduced into the market, holographic
projection technology allows consumers to turn any flat surface into a
touch screen interface.
3D
Televisions: 3D may have been around for a few decades, but only after
considerable investment from broadcasters and technology companies are 3D
TVs available for the home, providing a good example of a product that is
in the growth stage.

 

3.  Maturity:

It is a not always that product passes to all the stages of
the cycle. There are few products that never get beyond the introduction and growth
stage, whereas few products stay in the maturity stage for a considerable
length of time.

For example, the Philips light
bulb was one such product found to stay in maturity stage for decades. The time
it stays in a particular stage purely depends on the graph of demand and
supply. Low production cost and a high demand results longer product life. When
production costs are high and comparatively low demand for the product, it doesn’t
survive long time and, eventually, it will be withdrawn from the market and
enter the decline stage.

4. Decline:

The product in the decline stage is due to low or negative
growth which results in new inventions and advancements. It is hard for the
companies to relive the product either by slashing the prices or withdrawing it
from the market completely by clearance.

For example I pod
Launched in 2001, but 12 years and 26 devices later, the generation-defining
iPod range looks like it’s about to fade into history without so much as a
whimper.  “I think all of us have known for some time that iPod is a
declining business,” said Apple boss Tim Cook earlier this week.

Limitations:

1. No empirical support

2. Different products have different properties so their
life cycle also varies.

3. It appears that life comes to an end with decline, but
there are examples when after decline the product may have found new popularity
and rejuvenation.

4. The model worked well when the environment was relatively
stable, not subject to uncertainty as it is today.

5. Reality seldom conforms to theory. Marketing executives
believe in the PLC concept – but streetwise marketers point out unusual
circumstances might interfere with expected life cycle behaviour. It may result
in different shape of PLC.

References:

1. Raymond
Vernon. International Investment and International Trade in the Product Cycle.
Quarterly Journal of Economics, May, 1966

2. Louis T.
Wells, Jr. A Product Life Cycle for International Trade? Journal of Marketing,
July 1968.

3.  Warren Keegan. Global Marketing Management.
(4th edition) Prentice-Hall,Englewood Cliffs, NJ.

4. Sak Onkvisit
and John J. Shaw. An Examination of International Product Life Cycle and Its
Application Within Marketing. Columbia Journal of World Business, fall 1983

5. Nariman K.
Dhalla and Sonia Yuspeh. Forget the Product Life Cycle Concept Harvard Business
Review, January-February 1976.

6. Philip Kotler.
Marketing Management (6th edition) Prentice-Hall Inc.,Englewood Cliffs, NJ. Pp.
369-373.

7. Louis T.
Wells, Jr. A Product Life Cycle for International Trade? Journal ofMarketing,
July 1968.

8. Philip Kotler.
Marketing Management (6th edition) Prentice-Hall Inc., Englewood Cliffs, NJ.
Pp. 366-367.

9. William J.
Stanton, Michael J. Etzel and Bruce J. Walker. Fundamentals ofMarketing (9th
edition) McGraw-Hill, New York, NY. P.200.

 

 

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