Orientation and Career Planning Some employee life cycle models treat "servicing of employee needs" as the next stage. The market, at this point, is becoming saturated with the product. However, if this strategy fails, the manufacturer will have no option, but to withdraw the product from the market.
Despite its decline in sales, companies continue to offer the product as a service to their loyal customers so that they will not be offended.
It is important to note that, not all products go through the entire life cycle. It is a new product, and most of its initial budget is spent on raising brand awareness and marketing the product. The maturity stage is the stabilizing stage, wherein sales are high, but the pace is slow, however, brand loyalty develops, thereby roping in profits.
To create demand, producers promote the new product to stimulate sales.
This stage is characterized by shrinking market share, dwindling product popularity and plummeting profits. Low production costs and a high demand ensures Employment and product life cycle theory longer product life.
Further, with increasing sales, the product captures enough market share and gets stable in the market. The maturity stage shows a peak in sales of the product. The location of production depends on the stage of the cycle.
For example, a new product invented in the United States for local consumers is first produced in the United States because that is where the demand is, and producers want to stay close to the market to detect consumer response.
Identifying hindering factors and nipping them off at the bud stage is crucial for the product's future. As a result, production costs decrease and profits are high. The market for this product will be small and sales will be relatively low as a result.
This occurs when the product peaks in the maturity stage and then begins a downward slide in sales.
Saturation[ edit ] It is a stage in which there is neither increase nor decrease in the volume of sale. In addition, foreign demand for the product grows, but it is associated particularly with other developed countries, since the product is catering to high-income demands.
International trade and international investment in the product life cycle. Journal of International Economics, 21 3 Sometimes, the product itself isn't complete.
Maturity[ edit ] In the maturity stage of the Product life cycle, the product is widely known and many consumers own it. In this stage a corporation in a developed country will innovate a new product.
For example, the Philips light bulb was a product that found itself in the maturity stage for decades. MarketingWit Staff Last Updated: Growth[ edit ] In this stagedemand for the product increases sales. Introduction Stage After conducting thorough market research, the company develops its product.
Appetites for the product in developed nations will continue to increase in this stage. The marketing and promotion costs are therefore very high in this stage.
As sales increase distribution channels are added and the product is marketed to a broader audience. As a result, the production costs decrease and high profits are generated. Any research conducted will be confined to product enhancement and improvement alone.
As the product is being produced locally, labor costs and export and costs will decrease thereby reducing the unit cost and increasing revenue. The increased product exposure begins to reach the countries that have a less developed economy, and demand from these nations start to grow.
Pros of the Product Life Cycle The product life cycle helps with planning. As sales increase, corporations may start to export the product out to other developed nations to increase sales and revenue.
This is why the product is sold at record low prices.
Others will choose to move on to other opportunities or be laid off. Product development can still occur at this point as there is still room to adapt and modify the product if needed. The decline stage At some point, however, the market becomes saturated and the product is no longer sold and becomes unpopular.
Some models of the employee life cycle have five stages, while others have six or more. When many potential new customers have bought the product, it will enter the next stage. From there, the product goes through four key phases, which comprise the life cycle:The Product Life Cycle idea helps advertising managers to arrange alternate marketing schemes to deal with the challenges that the products are liable to confront.
It additionally helps to check sales returns and contrasts them with those products which have the same kind of life cycle. The Product Life Cycle Theory is an economic theory that was developed by Raymond Vernon in response to the failure of the Heckscher-Ohlin model to explain the observed pattern of international trade.
The theory suggests that early in a product's life-cycle all the parts and labor associated with that product come from the area where it was.
The Product Life Cycle idea helps advertising managers to arrange alternate marketing schemes to deal with the challenges that the products are liable to confront. It additionally helps to check sales returns and contrasts them with those products which have the same kind of life cycle.
Current theory: Product Life Cycle A product's sales position is expected to change over time as is its profitability, and the product life cycle is an attempt to recognise distinct stages of the sales history of a.
Jun 27, · The International Product Life Cycle Theory was authored by Raymond Vernon in the s to explain the cycle that products go through when exposed to an international market. According to the PLC theory, at an early stage of a product's life cycle the product is likely to be made in a more _____ method than in its later stages.
labor-intensive According to the PLC theory, companies produce products where labor rates are high during the introductory stage of the products' cycles.Download