Growth Dynamics in New Markets

EFFECTS OF A LIMITED PRODUCT LIFE CYCLE DURATION

3.1 Introduction

In this chapter, you learn about the consequences of a limited life cycle duration of a product or service for the accumulation of Current customers. In particular:

• those Current customers who reach the end of the life cycle duration are lost as Current customers;
• since they are not Current customers any longer, they may decide to purchase your product again;
• reducing or increasing the life cycle duration has distinct effects on the behaviour of the variables Current customers and new customers.

On the methodological level, you learn how to represent the life cycle duration and its effects in an evolving simulation model, and how to take advantage of this simulation model to improve your understanding of the dynamic consequences of changing the life cycle duration.

3.2 The concept of life cycle duration and its effects on customer dynamics

The simulation model developed and analysed in Chapter 2 describes how individuals move from Potential customers to Current customers. It also assumes that Current customers cannot dispose of your product and service; in other words, your mobile phones have an unlimited life cycle duration and the service contract is also unlimited. This is not realistic. In Chapter 2, this assumption was reasonable in order to concentrate on the core of word‐of‐mouth dynamics. Now, since you have mastered this basic structure, let us relax this assumption and remember the briefing of ...