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Raymond Vernon's Product Life Cycle Theory

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Everything in life has stages. According to Raymond Vernon, so do products! In this lesson, we'll break down his product life cycle theory and what each stage means, from introduction to decline.

Nintendo's Product Life Cycle

When word first leaked about production of a miniature, classic Nintendo console, it was summertime. People should have been more concerned with beach vacations and summer grilling than a remake of a gaming unit featuring the original Super Mario Bros. from three decades prior.

But, that's not what happened.

The internet went wild with anticipation of the console. Reviewers debated the pros and cons of the mini machine. Old-time gamers reminisced about their childhood favorites. Retailers like Amazon posted the console on their website, quick to add wording telling would-be buyers that it was not yet available for purchase.

Weeks passed and word from Nintendo came: the console would be released around Thanksgiving. Excitement grew even more. Hopeful buyers marked their calendars, set to join the post-Thanksgiving rush and get their hands on one of the consoles. Then, release day came and guess what happened? All retailers immediately sold out, and the only available units turned up on third-party auction sites for triple, sometimes quadruple the retail price.

Five months after the release of the console, Nintendo announced that there would be no more mini Nintendos and they were discontinuing the Classic Edition system. As consumers, we can't possibly understand all of the motivations that go into bringing a product to market, only to stop creating it less than six months later. But, maybe former economist Raymond Vernon could shed some light on it.

Product Life Cycle Theory

Vernon established the product life cycle, a theory that every product has its own lifespan and goes through various stages from introduction to decline. Think of it like our own life cycles, where we start out as babies, then progress to teenagers, adults, and old age.

In the product life cycle theory, Vernon established four distinct categories that all products go through. Some products linger in one stage longer than others, but they all eventually progress through the cycle from start to finish. Here are the stages Vernon developed:

Introduction

The introduction stage is the period before a new product hits store shelves, and information about its release is given to the public. It could also be the period when a product is introduced into the marketplace. A lot of the marketing and promotional activities happen in the introductory period to spread awareness of the product and generate buzz.

Growth

The period of growth is when demand for a product increases its popularity and, ultimately, its sales. Profits and revenue surge in this cycle because the product is becoming well known and people are buying. For businesses, this typically means that production and manufacturing costs decline because the volume of the product being made increases to meet demand. This stage may also bring on various competitors trying to get a piece of the pie.

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