3. Draw, label and explain the product life cycle of iPhone 11 Pro using the theory of Raymond Vernon.
4. Is it practical for the Philippines to withdraw its membership from the ASEAN? Why or why not?
5. How does tariff regulates the import and export of goods?
According to Raymond Vernon there are four stages in a product’s life cycle: introduction, growth, maturity and decline.
The length of a stage varies for different products, one stage may last some weeks while others even last decades. This shows that the Product Life Cycle is very similar to the diffusion of innovation model that was developed by Everett Rogers in 1976.
The life span of a product and how fast it goes through the entire cycle depends on for instance market demand and how marketing instruments are used.
The introduction stage
When an organization has developed a product successfully, it will be introduced into the national (and international) outlet. In order to create demand, investments are made with respect to consumer awareness and promotion of the new product in order to get sales going. At this stage, profits are low and there are only few competitors. When more items of the product are sold, it will enter the next stage automatically.
The growth stage
In this stage the demand for the product increases sales. As a result, the production costs decrease and high profits are generated. The product becomes widely known, and competitors will enter the market with their own version of the product. Usually, they offer the product at a much lower sales price. To attract as many consumers as possible, the company that developed the original product will still increase its promotional spending. When many potential new customers have bought the product, it will enter the next stage.
The maturity stage
In the maturity stage, the product is widely known and is bought by many consumers. Competition is intense and a company will do anything to remain a stable market leader. This is why the product is sold at record low prices. Also, the company will start looking for other commercial opportunities such as adaptations or innovations to the product and the production of by-products.
Furthermore, consumers will also be encouraged to replace their current product with a new one. There is fear of decline of the product and therefore all the stops will be pulled out in order to boost sales. The marketing and promotion costs are therefore very high in this stage.
The decline stage
At some point, however, the market becomes saturated and the product is no longer sold and becomes unpopular. This stage can occur as a natural result but can also be stimulated by the introduction of new and innovative products. 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.