Product life cycle theory

At this stage, profits are low and there are only few competitors. The market slowly diminishes first in the developed countries, and slowly, later in the developing countries.

Coordination techniques like product groups, formal planning processes, and corporate staff become, over time, a bureaucratic system that causes delays in decision-making and a reduction in innovation.

South-Western College Publishing, Under this scenario, the product is discontinued and stock is allowed to dwindle to zero, but the company sells the rights to supporting the product to another company, which then becomes responsible for servicing and maintaining the product.

Business Cycles ; Industry Life Cycle ; Product Life Cycle Historians and academics have observed that organizations, like living organisms, have life cycles.

Besides the above marketing techniques, sales promotion is another important consideration when the product is in the introductory phase. The theory can lead to an over-emphasis on new product releases at the expense of mature products, when in fact the greater profits could possibly be derived from the mature product if a little work was done on revamping the product.

They will invest in marketing and promoting the product, so that awareness is created in the minds of prospective customers about the qualities and advantages of using this new fabric.

Product life-cycle theory

Operations should be streamlined, cost efficiencies sought, and hard decisions made. However, the key to successful manufacturing is not just understanding this life cycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and sales and marketing strategies, depending on what stage products are at in the cycle.

In the introduction stage, people are unaware of the product and its utility, and hence, the demand for it is very low. In the introduction phase, sales may be slow as the company builds awareness of its product among potential customers.

More information Bartlett, C. If the product is doing well and killing it is out of the question, then the marketing department has other responsibilities. Even within the same industry, various firms may be at different life cycle stages.

Continuing with the mentioned example, during the growth stage, the fabric-making company will come up with attractive designs and prices. One widely-cited conceptual work, however, was published in the Harvard Business Review in by L.

They can then add the steps involved in their transport to plant and manufacture process to more easily produce their own cradle-to-gate values for their products. In the maturity stage, the product is no longer a novelty, but pretty much a widely-used necessity.

Life-cycle assessment

Hence, it is not possible to predict the duration of the cycle. The use phase and disposal phase of the product are omitted in this case. Product Life Cycle Stages. They rely on recommendations from others who have experience with the product.

Phase 3—Growth through delegation eventually leads to a crisis of control. Product Life Cycle Introduction Stage For the sake of the theory, Vernon makes the assumption that a product is first invented and developed in the developed countries like the United States. For instance, for a family car, energy consumption could be used as the single stress factor to assess each phase of life.

Roden, and Harold W. Silicon Valley computer chip manufacturers. Organizations at any stage of the life cycle are impacted by external environmental circumstances as well as internal factors.

Because most companies understand the different product life cycle stages, and that the products they sell all have a limited lifespan, the majority of them will invest heavily in new product development in order to make sure that their businesses continue to grow.


There is no set amount of time that a product must stay in any stage; each product is different and moves through the stages at different times. A recent study comparing energy consumption and greenhouse gas emissions from landfilling without energy recovery against incineration with energy recovery found incineration to be superior in all cases except for when landfill gas is recovered for electricity production.

Usually, they offer the product at a much lower sales price. It is primarily considered a marketing theory. Some items—like fad clothing, for example—may experience a very short growth stage and move almost immediately into the next stages of maturity and decline.

Writing in Marketing Tools, Carole Hedden observed that the cycle is represented by a curve that can be divided into four distinct phases: As the firms grew, they adapted more sophisticated structures and decentralized authority to middle- and lower-level managers.

Additionally the translation of economic quantities into environmental impacts is not validated. Expansion into another geographic region is an effective response to declining demand. Countries have life cycles, for example, and we traditionally classify them as ranging from the First World countries to Third World or developing countries, depending on their levels of capital, technological change, infrastructure, or stability.Organizational life cycle is an important model because of its premise and its prescription.

The model's premise is that requirements, opportunities, and threats both inside and outside the. There is a noteworthy difference in approach to the life cycle of a product between the business point of view and the ISO point of view.

The product life cycle theory was propounded by economist Raymond Vernon in With the help of this theory, he sought to explain the various stages that a product goes through after it enters the market. The theory of a product life cycle was first introduced in the s to explain the expected life cycle of a typical product from design to obsolescence.

Most alert and thoughtful senior marketing executives are by now familiar with the concept of the product life cycle. Even a handful of uniquely cosmopolitan and up-to-date corporate presidents. Long term cost efficiency means looking at the total life cycle cost.

Product Life Cycle Stages to Plan a Relevant Marketing Strategy

This article contains necessary info on how to make life cycle cost calculations.

Product life cycle theory
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