The document outlines Raymond Vernon's product life cycle theory, which describes the typical stages a product goes through: introduction, growth, maturity, and decline. The duration of each stage depends on demand, production costs, and revenues. During introduction, the company operates at a loss due to small market size and high costs. The growth stage sees rapid sales and profits increases. In maturity, sales reach their maximum but decline begins. During decline, the product becomes obsolete or tastes change, leading companies to either remain in the market or discontinue the product. However, not all products follow the exact stages or timeline.

1. PRODUCT LIFE CYCLE
The Theory of Raymond Vernon
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2. The duration of the cycle depends on:
q
Demand
q
Production and marketing costs
q
Revenues
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3. INTRODUCTION
 The company works at a loss!
q Growth is minimal
q Market size is small
q Costs are high
 GOAL:
 To introduce the product to consumers
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4. GROWTH
 THE BOOM TIME FOR ANY PRODUCT!
q Rapid sales and profits
q Time of strategical choices
q Maintaining customer loyalty
q Watching out for competitors
 GOAL:
 To stay in this stage as long as possible
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5. MATURITY
 STABILIZATION
q Sales growth reaches
maximum
q Decline begins
q Beating the competition
q GOALS:
q To lower costs
q To maximize profit
q To protect gained market shares
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6. DECLINE
q Falling sales and no more profit can be made
Main reasons:
q The product becomes
obsolete
q Customer tastes change
TWO OPTIONS:
q Remain in the market
q Discontinue the product
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7. LIMITATIONS OF THE PRODUCT LIFE CYCLE
CONCEPT
Not all products follow this cycle
The lenght of each stage can vary
Difficulties in identifing the stage
Not all products go through each stage
The duration of the cycle is unpredictable
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