ECOS2201-prelect04 - S I D E R E M E N S E A D E M M U T A...

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Unformatted text preview: S I D E R E M E N S E A D E M M U T A T O University of Sydney ECOS2201 - Lecture 4 1 Product Life Cycle The product life cycle traces a product from invention, to production, and eventual decline as it is replaced by other new products It is based on empirical regularities that have been observed in many products over time 2 Its importance lies in providing a look into the future so the developer of a new product can adopt strategies to sustain positive long-run economic profit Note: not all products have the same cycle, some phases may not exist or be short-lived 3 The PLC can be divided into four phases 1. Introduction: New innovative product sold by a few firms 2. Growth: The best designs survive and mass production begins 3. Maturity: Only a few firms survive and R&D focuses on cost reduction 4. Decline: Alternative new product becomes available and decline begins 4 Introduction Firms undertake R&D and come up with a new product One or two firms succeed and begin production. The market is small and profits can be negative. Customers need to learn about the product and may need to be educated in its use....
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This note was uploaded on 02/16/2010 for the course ECOS Economics taught by Professor None during the One '09 term at University of Sydney.

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ECOS2201-prelect04 - S I D E R E M E N S E A D E M M U T A...

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