Question

Explain Product life cycle theory of trade and provide examples of products that have gone through this cycle

Answer 1

The product life cycle theory states that a product, just like a human being, goes through a life cycle. The stages of Product life cycle is divided into four, it include Introduction, growth, maturity and decline. These are explained as follows:

• Introduction: Under this stage, the company will make substantial investment in the product marketing and advertising which aims at making people aware of its benefits.
• Growth: Once the product is successful, it enters the phase of growth in which the demand for the product will grow in the market, which will lead to increase in production and overall availability in the market in an effective way.
• Maturity: Under this stage, the product is most profitable because people are already aware of the product and its features, therefore, the cost of marketing as well as advertising goes down.
• Decline: At this stage, the product starts to see high competition from its competitors by way of imitation, low prices or product enhancements etc.

Some of the examples of products that have gone through product life cycle is typewriter, VCR, etc. These are some of the products which has shown exponential growth when they first came into market, however, with time these products have matured and then vanished from market due to innovation and high competition.