(I) The concept of product life cycle
The product life cycle, also known as the product life cycle, refers to the entire product marketing process from the successful development and launch of the product into the market, through growth, maturity, and finally to decline and elimination by the market. Different products have completely different product life cycles. The typical product life cycle includes four stages: introduction, growth, maturity, and decline. The product life cycle and product service life are completely different concepts: the product life cycle refers to the market life of the product, which is the entire process of the product’s existence in the market. The product life cycle is affected by market factors; the product service life refers to the entire process from the product being put into use to being scrapped. The product service life is affected by factors such as product quality, frequency of use, and maintenance.
Since the length of the marketing period of the products marketed by cross-border e-commerce enterprises in the market is affected by many factors such as consumer demand, product updates, international market environment, and international political changes, this theory combines foreign direct investment with
effectively increasing the efficiency of cross-border e-commerce enterprises’ product marketing. Incorporating cross-border trade and product life cycle into an analytical framework effectively combines static analysis and dynamic analysis.
(II) Characteristics of product life cycle
Product life cycle theory divides products into different strategic periods, comprehensively explaining the dynamic relationship between motivation, timing and location selection for conducting foreign direct investment. The comparative advantage of enterprises will change dynamically with the staged development of product life cycle. Therefore, cross-border trade should be carried out according to their own resource endowments and comparative advantages, and different marketing mix strategies should be adopted according to the different characteristics of each stage. However, due to the continuous emergence of new technologies, product life cycle is getting shorter and shorter. In order to maintain the leading position in technology, enterprises must pay more attention to research and development and continue to innovate.
(III) Product life cycle curve
1. S-shaped curve
(1) Introduction period. Since the product has not yet been launched to the market at the beginning of the introduction period, the sales volume during this period is zero. However, as investment continues to increase, except for a few consumers who pursue novelty, most consumers are still unfamiliar with the product, so the sales volume is very small. Because of the limited sales volume, the cost of the product is increased accordingly. At the same time, the product has not yet started mass production during this period, and the manufacturing cost is high. At the same time, a large amount of advertising fees is required to expand the product’s popularity. Therefore, during this period, the profit is usually low or negative.
(2) Growth stage. After entering the growth stage, the product is gradually accepted by consumers, the product technology is relatively mature and has economies of scale, and the unit cost is reduced. Therefore, during this period, the sales volume grows rapidly and the profit increases significantly.
(3) Maturity stage. When the product enters the maturity stage, it is accepted by most potential consumers and the market tends to be saturated. If there are no new consumers to buy the product, the sales growth rate will stagnate or decline. Therefore, during this period, the profit gradually declines after reaching the peak.
(4) Decline stage. When the product reaches the decline stage, consumers lose the desire to buy the product, product sales decline, and profits also fall sharply. Therefore, during this period, companies with higher costs will stop production due to lack of profitability, and companies that remain in the market will gradually reduce the services attached to the product, thereby cutting the promotion budget to maintain the lowest cost.
2. Special product life cycle curves
Not all product life cycle curves are standard S-shaped curves. There are four special types of product life cycle curves, namely, style type, fashion (popular) type, craze type, and scallop type.
(1) Style type. Once a style product is produced, it may last for several generations and present a cyclical pattern according to the market’s interest in it, sometimes popular and sometimes not. The style product life cycle curve is shown in Figure 5-2. (2) Fashion (popular) type. Fashion (popular) type refers to the style that is currently accepted and popular in a certain field. The life cycle of fashion products is characterized by few people accepting them when they are first launched on the market, but the number of people accepting them slowly increases over time, and eventually they are widely accepted and popular, and slowly decline when consumers begin to turn their attention to another product that attracts them more.
(3) Craze type. Craze products tend to grow and decline quickly, mainly because they only satisfy consumers’ temporary curiosity or needs and attract only a small number of consumers who seek excitement and are unconventional.
(4) Scallop-shaped. The scallop-shaped product life cycle mainly refers to the product life cycle that continues to extend and extend, which is often due to product innovation or the continuous development of new functional uses.