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Product Life Cycle by Raymond Vernon

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Strategic groups and International Business

476 Downloads 2 Pages 513 Words

Product Life Cycle is an Economic theory which was developed to explain the pattern of international trade. The theory is useful in suggesting that all the parts of the products and associated people come from the area in which it was invented (Yue and, 2016). Afterwards, when it is adopted by the world markets, then the level of production gradually moves away from the exact point of origin. The model could be applied in the organizations who wishes to enter into international expansion or who carries products in different market places. For instance- this could be applied to Hotel Hilton at the time when the hotel enters in Australian market place.  

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Introduction stage: When Hilton develops products successfully in the national market, it could be then entered in the international market through new outlet. In order to create demand, Hilton needs to make investment according to consumer preferences.

Growth stage: At this stage, demand for Hilton’s services can enhance sales. Thus, as a result the cost of production could be decreased and high profits can be generated. The brand of Hilton may become widely known which can also generate profits for the business organization (Mulder, 2014).

Maturity stage: In the maturity stage of PLC, the product becomes populous among customers even in intensive competitive market. Thus, this might decrease the prices of Hilton’s services and as a result, profit level might decline to a level. Thus, Hilton would have to start looking towards other opportunities as well so that product line can be extended. At this stage, consumers could be encouraged to replace their current product with the new one. Marketing and promotion costs of Hilton hotel could be very high in this stage.

Decline stage: According to generalised concept, the market becomes saturated and the product is no longer demanded by the customers (Wang, 2016). This stage can occur as a natural result; however it could be stimulated by the introduction of new and innovative products. Thus, after reaching towards this stage, Hilton hotel is required to bring new and innovative products at the market place so that the existing customers could be retained with the business. At this stage, generally sales decline; however even after that Hilton hotel needs to offer the product as loyal service entity. This will also assist in meeting needs of potential clients.


  • Mulder, P., 2014. Product Life Cycle Stages. [Online]. Available through: <>. [Accessed on 22nd February 2017].
  • Wang, W. P., 2016. Innovation Is the New Competition: Product Portfolio Choices with Product Life Cycles.
  • Yue, L. and, 2016. Product life cycle based demand forecasting by using artificial bee colony algorithm optimized two-stage polynomial fitting. Journal of Intelligent & Fuzzy Systems. 31(2). pp.825-836.
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