Draw, label and explain the product life cycle of iPhone 11 Pro using the theory of Raymond Vernon.

PRODUCT LIFE CYCLE THEORY

Raymond Vernon, a Harvard Business School professor, developed the product life cycle theory in the 1960s. The theory, originating in the field of marketing, stated that a product life cycle has three distinct stages: (1) new product, (2) maturing product, and (3) standardized product. The theory assumed that production of the new product will occur completely in the home country of its innovation. In the 1960s this was a useful theory to explain the manufacturing success of the United States. US manufacturing was the globally dominant producer in many industries after World War II.

In the early stage of a product, the market is limited to the home country and the demand from other countries is limited to a certain group of people. The limited demand in those countries does not make it worthwhile for firm in those countries to start producing the new product, but it does encourage exports from the original producer of the product. Over time, as the demand starts to grow in other countries, it becomes mature and worthwhile for foreign producers to begin producing for their home markets. The firm starts globalizing by setting up production facilities abroad, thus limiting export from the country of origin.

As the product becomes standardized, pricing becomes the key marketing strategy. Cost considerations play an important role in firm to stay competitive in the market. The firm is forced to reduce their cost and the country of the original producer begins to import the goods which they initially export to other countries.