Flipped Classroom Assignment Tung Nguyen- Tham Nguyen- Angelique Paraiso

Product Life Cycle

1. Explain the product life cycle including all 4 stages.
The product life cycle: the stages of introduction, growth, maturity, and decline that typically
occur over the life of a product.
1.1 Introduction
Characteristics: thí
(1) new products that are not known to (4) low sales growth and high price
customers (few customers) (5) rapid technological change,
(2) poorly defined market segments, (6) operating losses:
(3) unspecified product features, (7) a need for financial support.
Focus strategies: research and development, marketing and promotion activities, investment in
product design to enhance product awareness and generate demands
Example: space tour, driving-less car, chat GPT
1.2. Growth
Characteristics:
(1) high competition (5) developing differentiation in brand and
(2) demand accelerated, market size product:
expanded (6) high investment in marketing and
(3) fast growth in sales and revenue product improvement.
(4) high profit margin
Focus strategies: Much investment in marketing campaigns; Improve product design and
features to differentiate it from rivals’ products
Example: electrical vehicle
1.3. Maturity
Characteristics:
(1) heavy competition (4) most profitable stage
(2) largest market size, highest and stable sales (5) lower price, lower profit margin:
(3) slow growth in sales and revenue
Focus strategies: keep the product in this stage as long as possible by continuing innovate the
product, focusing on differentiation and brand value
Example: Coca-cola
1.4. Decline
Characteristics:
(1) new and more efficient alternatives appear (4) few companies in the market
(2) sales and revenue drop
(3) price and profit margin decrease
Focus strategies: Exploit the product benefit by either stop supporting (cut costs) or improving
the product, extending its life cycle or focus on niche market
Example: Coca-cola
2. Describe the first mover advantages and disadvantages? (Tham)
Advantages:
Technology leadership : When a first mover enters a market, its market share is 100 % because
it is the only company active within the market (Halberstadt et al., 2022), it can use all types of
resources, especially innovative Information Communication Technology- ICT to support social
entrepreneurial activities such as social media analytics, big data or blockchain to increase the
financial and operational sustainability of social enterprises (Soni et al., 2021). In this way, it can
connect with more people and share information more quickly and readily (Fraizer and Madjidi,
2011).
 Brand Loyalty- Brand name recognition: Not only does it engender loyalty among existing
customers, but it also draws new customers to a company's product, even after other companies
have entered the market. Asymmetric marketing can create a positive image with (potential)
customers and increase brand awareness and trust. (Halberstadt et al., 2022)
Control of Resources: first mover firms may be able to gain advantages by pre-empting rivals
in the acquisition of scarce assets. Such assets may be physical resources or other process inputs
(Vecchiato, 2015). Create alliances with key suppliers and producers of complementary goods,
so as to control key inputs and the provision of complementary goods; (Markides & Sosa, 2013).
Buyer-Switching Costs: a first-mover builds a strong business foundation. Once a customer has
purchased the first mover's product, switching to a rival product may be cost-prohibitive in terms
of initial transaction costs or investments, time and resources spent in qualifying a new supplier,
or contractual switching cost that may be intentionally created by the seller.(Vecchiato, 2015.
The commitment of users to a social enterprise can be because of emotional connections to the
products. (Halberstadt et al., 2022).
Disadvantages: Later market entry may be a better business decision. First-mover disadvantages
become advantages for followers in some cases. (Halberstadt et al., 2022)
Significant investment: mover investments in a number of areas including R&D, buyer
education, and infrastructure development: imitation costs are often lower than innovation costs.
(Vecchiato, 2015).
Later entrants can avoid mistakes made by first-mover
The later an enterprise adopts, the fewer problems they are likely to be (i.e. uncertainty will
decrease over time). Once a new technique becomes widely accepted, a large number of initial
problems will disappear. There will be a considerable number of people familiar with operation
and maintenance problems. Hiring personnel who are acquainted with the new technique may be
a cheap way of acquiring information. They will have been educated at other enterprises’
expense and will thus effectively subsidize the later adopter (Karlsson, 1988).
Later entrants can reverse-engineer products and improve on them
Later movers might benefit from the resolution of technological and market uncertainty. Rather
than lagging behind and focusing solely on catching up, followers can capitalize on their
individual strengths and even overtake first movers (Deng and Wang, 2016). They can observe
and learn from existing businesses and leapfrog, for example, when a technology changes or
technological innovation occurs. . Thus, followers may be able to directly enter a market using
the latest technology, while first movers may still be operating with older technology. Followers,
in this case, can enjoy developmental and/or cost advantages over first movers. (Halberstadt et
al., 2022).
3. Explain the difference in strategies when the product life cycle declines. (Angelique)
Maintaining: Keeping a product going without significantly reducing support, technological
development, or other investments.
Harvesting: Involves selling the product while reducing market support costs and technology
investments, with the ultimate goal of maximizing profits before exiting the market entirely.
Exiting the market: Dropping the product from the firm’s portfolio.
Consolidation: This involves focusing its efforts on a specific niche that will remain viable after
the decline, and using a focused strategy in a less competitive industry as competitors exit the
market.
4) Discuss the importance of understanding this concept as a business entity.

To recognize, aware which stage their product currently place;

Helps businesses to plan, strategize, and manage their products throughout their entire life cycle;
Helps businesses to make informed decisions about product development, marketing, and pricing
strategies.
Suggested Activity: Lead the class through an example of a real product and how it went through
a lifecycle.
 References
Dess, G. G., McNamara, G., Eisner, A. B., & Lee, S. (2021). Strategic management: Text
& cases.
Duc Dao. (2023, March 14). VinFast to chức Cho khách hang Lai thử o to điện trên toàn
quốc. Người Đô Thị. https://nguoidothi.net.vn/vinfast-to-chuc-cho-khach-hang-
lai-thu-o-to-dien-tren-toan-quoc-38728.html
Halberstadt, J., Kollhoff, S., Kraus, S., & Dhir, A. (2022). Early bird or early worm?
first-mover (dis)advantages and the success of web-based social enterprises.
Technological Forecasting and Social Change, 181, 121784.
https://doi.org/10.1016/j.techfore.2022.121784
Karlsson, C. (1988). Innovation adoption and the product life cycle. University of Umea.
Markides, C., & Sosa, L. (2013). Pioneering and first mover advantages: The importance
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https://doi.org/10.1016/j.lrp.2013.06.002
Prasad, R., Verma, S., & Jha, M. (2019). A comparative study of product life cycle and
its marketing applications. Journal of Marketing and Consumer Research, 63.
https://doi.org/10.7176/jmcr/63-06
Vecchiato, R. (2015). Creating value through foresight: First mover advantages and
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https://doi.org/10.1016/j.techfore.2014.08.016
Werker, C. (2003). Innovation, market performance, and competition: Lessons from a
product life cycle model. Technovation, 23(4), 281-290.
https://doi.org/10.1016/s0166-4972(01)00109-2