International Product Life Cycle (IPLC) INTERATIONAL TRADE XX [COMPANY NAME] | [COMPANY ADDRESS] International Product Life Cycle Table of content 1 International Product Life Cycle Introduction: Rapid global changes, technological advances, various customers’ preferences, huge competition, shorter product life cycles, and high‐speed communications are all factors that increasing the important of the International Business Management concept. Thus, managers have to be fully aware about the international markets and also should be updated with all changes, in order to make better strategical decisions which lead to success of businesses. This project is for International Business Management course, it will discuss the theory of international product life cycle and its stages, and it will analyze the application of this theory by observing some real examples. International Product Life Cycle: The theory: The international product life cycle is a theoretical model that describes how an industry evolves over time and across national borders. This theory also charts the development of a company’s marketing program when competing on both domestic and foreign markets. The concept of International product life cycle combines economic principles, such as market development and economies of scale, with product life cycle marketing and other standard business models. The four primary elements of the international product life cycle theory are: (1) The structure of the demand for the product. Measuring the initial customers’ demand, and observing if the demand increasing or not, and if it is increasing to which extend. Also, by noticing the period when the demand is beginning to be steady before decline, and so on (2) Manufacturing. The variable costs of manufacturing such as labor costs, and row materials costs are starting to decrease as the demand is increasing. Thus it is play a major role in product life cycle. (3) International competition and marketing strategy. 2 International Product Life Cycle Using the right marketing strategy depends on competition in the market whether it is high or low. Also, it depend on the stages of the product life cycle. (4) The marketing strategy of the company that invented or innovated the product. Moreover, the marketing strategy and product mix (4ps) that used by the invented company to promote the invented products are also important element as these marketing strategy and product mix are changeable according to the stages of the product life cycle. Actually, all of these elements are categorized depending on the product’s stage in the traditional product life cycle; Introduction, growth, maturity, and decline are the stages of the basic product life cycle. Generally, when the 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. Moreover, all of these four stages will be discussed in details in the following section. The four stages of international product life cycle: Stage One: Introduction When a product is first introduced in a particular country, the product is new and not completely understood by most consumers. Customers that do understand the product may be willing to pay a higher price for a cutting-edge good or service. As the customers start knowing and understanding this new product, the product will see rapid growth in sales volume because market demand is unsatisfied. Moreover, the production is dependent on skilled laborers producing in short runs with rapidly changing manufacturing methods. The innovator markets mostly domestically, occasionally branching out to sell the product to consumers in other developed countries. Moreover, the international competition is usually nonexistent during the introduction stage of the international product life cycle. 3 International Product Life Cycle Stage Two: Growth It important to mention that, the good marketing strategy which aims to market the product to meet the need in its target market effectively. The supplier of the product will be conducted market surveys to get some estimation of the market size and composition. That in order to introduce the product with the identified need to satisfy the need immediately. As the sales volume is growing rapidly, so this stage of the product life cycle is characterized by high prices, high profits and wide promotion of the product. In addition, the growth stage is also marked by an emerging product standard based on mass production. Price wars often begin as the innovator breaks into an increasing amount of developed countries, introducing the product to new and untapped markets. Moreover, the competition in this stage is depend on the product itself. Some products are difficult to imitate so as the international followers have not time to develop imitations, so the supplier of the product may export it, even into follower economies. However, so products are easy to imitate, so the competitors in developed markets begin to copy the product and sell domestically. These competitors may also branch out and begin exporting, often starting with the county that initially innovated the product. Stage Three: Maturity At some point, the product enters the maturity stage of the international product life cycle and even the global marketplace becomes saturated, meaning that almost everyone who would buy the product has bought it, either from the innovating company or one of its competitors. Businesses compete for the remaining consumers through lowered prices and advanced product features. Production is stable, with a focus on cost-cutting manufacturing methods, so that lowered prices may be passed on to value-conscious consumers. Stage Four: Decline In the final phase of the product life cycle, sales volume decreases and many such products are eventually phased out and discontinued. The follower economies have developed imitations as good as the original product and are able to export them to the original supplier's home market, further depressing sales and prices. The original supplier 4 International Product Life Cycle can no longer produce the product competitively but can generate some return by cleaning out inventory and selling the remaining products at discontinued-items prices. Application of International Product Life Cycle: - I phone - Pepsi Conclusion: 5 International Product Life Cycle References: http://www.wisegeek.com/what-is-international-product-life-cycle.htm http://smallbusiness.chron.com/three-stages-international-product-life-cycle-theory19364.html 6
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