In this essay will explain and evaluate the stages of the international product life cycle and identify locus of operations and target market at each stage. We also will identify the different dimensions of the international product mix with company illustrations and examine the new product development process and the activities involved at each stage in international markets. Finally we will also will examine the degrees of product newness and address international diffusion processes and providing some examples regarding international product life cycle.
Overview about the IPLC
IPLC was create by Raymond Vernon in late 60s.It was a model that explain about the international pattern of organisation.Product life cycle theory divides the marketing of a product into four stages: introduction, growth, maturity and decline. When product life cycle is based on sales volume, introduction and growth often become one stage. For internationally available products, these three remaining stages include the effects of outsourcing and foreign production. When a product grows rapidly in a home market, it experiences saturation when low-wage countries imitate it and flood the international markets. Afterward, a product declines as new, better products or products with new features repeat the cycle.Vernon focused on the dynamics of comparative advantage and draw inspiration from the product life cycle to explain how trade patterns change over time.
His product life cycle described an internationalization process where in a local manufacturer in an advanced country begins selling a new, technologically advanced product to consumers in its home market. Production capabilities build locally to stay in close contact with its client and to minimize the risk that will get.
As demand from consumers in other markets rises, production increasingly shifts abroad enabling the firm to maximize economies of scale and to bypass trade barriers. As the product matures and becomes more of a commodity, the number of competitors increases.
Finally, the creator from the advanced nation becomes challenged in its own home market making the advanced nation a net importer of the product. This product is produced either by competitors in lesser developed countries or, if the producer has developed into a multinational manufacturer, by its foreign based production facilities.
International Product trade cycle Stages
The IPLC international trade cycle consists of three stages which are new product,maturing product,and standardizing product.Below are the explanation of the stages:
When a product is first introduced in a particular country, it sees rapid growth in sales volume because market demand is unsatisfied. As more people who want the product buy it, demand and sales level off. When demand has been satisfied, product sales decline to the level required for product replacement. In...