370:) leads to a trade pattern whereby the United States exports the product to other high-income countries. Other developments also occur in the maturing product stage. Once the American firm is selling to other high-income countries, it may begin to assess the possibilities of producing abroad in addition to producing in the United States. With a plant in France, for example, not only France but other European countries can be supplied from the French facility rather than from the U.S. plant. Thus, an initial export surge by the United States is followed by a fall in U.S. exports and a likely fall in U.S. production of the goods.
388:
sales. Eventually, revenues drop to the point where it is no longer economically feasible to continue making the product. Investment is minimized. The product can simply be discontinued, or it can be sold to another company. Production may shift to the developing countries. Labor costs again play an important role, and the developed countries are busy introducing other products. For instance, the trade pattern shows that the United States and other developed countries have now started importing the product from the developing countries.
161:
366:
prices to maintain market share and support sales. Profit margins decrease, but the business remains attractive because volume is high and costs, such as for development and promotion, are also lower. In addition, foreign demand for the product grows, but it is associated particularly with other developed countries, since the product is catering to high-income demands. For instance, in the case of the newly invented product, this rise in foreign demand (assisted by
251:. The theory suggests that early in a product's life-cycle all the parts and labor associated with that product come from the area where it was invented. After the product becomes adopted and used in the world markets, production gradually moves away from the point of origin. In some situations, the product becomes an item that is imported by its original country of invention. A commonly used example of this is the invention, growth and production of the
66:
25:
347:
For example, a new product invented in the United States for local consumers is first produced in the United States because that is where the demand is, and producers want to stay close to the market to detect consumer response. Characteristics of the product and the production process are in a state
387:
By this time in the product’s life cycle, the characteristics of the product itself and of the production process are well known; the product is familiar to consumers and the production process to producers. This occurs when the product peaks in the maturity stage and then begins a downward slide in
343:
This is where the new product is introduced to the market, the customers are unaware about the product. To create demand, producers promote the new product to stimulate sales. At this stage, profits are low but starts increasing and there are few competitors. As more units of the product sell, it
365:
In the maturity stage of the
Product life cycle, the product is widely known and many consumers own it. In the maturity phase of the product life cycle, demand levels off and sales volume increases at a slower rate. There are several competitors by this stage and the original supplier may reduce
356:
In this stage, demand for the product increases sales. As a result, production costs decrease and profits are high. The product becomes widely known and competitors enter the market with their own version of the product. To attract as many consumers as possible, the company that developed the
265:
In the new product stage, the product is produced and consumed in the US; no export trade occurs. In the maturing product stage, mass-production techniques are developed and foreign demand (in developed countries) expands; the US now exports the product to other developed countries. In the
391:
On costs and revenues: Low production costs and a high demand ensures a longer product life. When production costs are high and demand is low, it is not offered on the market for a long time and, eventually, is withdrawn from the market in the 'decline' stage.
378:
It is a stage in which there is neither increase nor decrease in the volume of sale. Through modification in the attribute of the product is needed to attract new consumers. Competitors product at this stage would have started gaining its market share
273:. The country that has the comparative advantage in the production of the product changes from the innovating (developed) country to the developing countries.This model is developed in 1960 and largely accepted by US and other developed countries.
318:
According to
International Product Life Cycle theory there are five phases which describe how a product matures and declines as a result of internationalization:
281:
Raymond Vernon divided products into three categories based on their stage in the product life cycle and how they behave in the international trade market:
38:
76:
433:
182:
395:
Note that a particular firm or industry (in a country) stays in a market by adapting what they make and sell, i.e., by riding the waves.
134:
106:
357:
original product increases promotional spending. When many potential new customers have bought the product, it enters the next stage
222:
204:
52:
348:
of change during this stage as firms familiarize themselves with the product and the market. No international trade takes place.
113:
266:
standardized product stage, production moves to developing countries, which then export the product to developed countries.
91:
44:
120:
479:
102:
175:
169:
262:
The model applies to labor-saving and capital-using products that (at least at first) cater to high-income groups.
474:
244:
469:
186:
270:
127:
248:
367:
425:
429:
252:
295:
There are five stages in a product's life cycle in respect to the
Product Life Cycle Theory:
83:
414:
240:
463:
256:
421:
65:
416:
International
Business Competing in the Global Marketplace 6th ed
315:
The location of production depends on the stage of the cycle.
154:
59:
18:
452:
Appleyard, Dennis R. Alfred J. Field Jr., Steven L. Cobb.
87:
413:
16:Theory to describe international trade patterns.
8:
239:is an economic theory that was developed by
92:introducing citations to additional sources
53:Learn how and when to remove these messages
223:Learn how and when to remove this message
205:Learn how and when to remove this message
168:This article includes a list of general
82:Relevant discussion may be found on the
404:
344:enters the next stage automatically.
7:
247:to explain the observed pattern of
243:in response to the failure of the
174:it lacks sufficient corresponding
14:
34:This article has multiple issues.
159:
75:relies largely or entirely on a
64:
23:
269:The model demonstrates dynamic
42:or discuss these issues on the
1:
456:. Boston: McGraw-Hill, 2006.
103:"Product life-cycle theory"
496:
237:Product Life Cycle Theory
454:International Economics
189:more precise citations.
412:Hill, Charles (2007).
339:Stage 1: Introduction
271:comparative advantage
245:Heckscher–Ohlin model
331:World Wide Imitation
291:Standardized Product
255:with respect to the
88:improve this article
374:Stage 4: Saturation
325:Overseas Innovation
249:international trade
480:Product management
368:economies of scale
277:Product life-cycle
475:Economic theories
435:978-0-07-310255-9
361:Stage 3: Maturity
253:personal computer
233:
232:
225:
215:
214:
207:
153:
152:
138:
57:
487:
470:Brand management
440:
439:
419:
409:
383:Stage 5: Decline
322:Local Innovation
288:Maturing Product
228:
221:
210:
203:
199:
196:
190:
185:this article by
176:inline citations
163:
162:
155:
148:
145:
139:
137:
96:
68:
60:
49:
27:
26:
19:
495:
494:
490:
489:
488:
486:
485:
484:
460:
459:
449:
447:Further reading
444:
443:
436:
411:
410:
406:
401:
385:
376:
363:
354:
352:Stage 2: Growth
341:
279:
229:
218:
217:
216:
211:
200:
194:
191:
181:Please help to
180:
164:
160:
149:
143:
140:
97:
95:
81:
69:
28:
24:
17:
12:
11:
5:
493:
491:
483:
482:
477:
472:
462:
461:
458:
457:
448:
445:
442:
441:
434:
403:
402:
400:
397:
384:
381:
375:
372:
362:
359:
353:
350:
340:
337:
336:
335:
332:
329:
326:
323:
313:
312:
309:
306:
303:
300:
293:
292:
289:
286:
278:
275:
241:Raymond Vernon
231:
230:
213:
212:
167:
165:
158:
151:
150:
86:. Please help
72:
70:
63:
58:
32:
31:
29:
22:
15:
13:
10:
9:
6:
4:
3:
2:
492:
481:
478:
476:
473:
471:
468:
467:
465:
455:
451:
450:
446:
437:
431:
427:
423:
418:
417:
408:
405:
398:
396:
393:
389:
382:
380:
373:
371:
369:
360:
358:
351:
349:
345:
338:
333:
330:
327:
324:
321:
320:
319:
316:
310:
307:
304:
301:
298:
297:
296:
290:
287:
284:
283:
282:
276:
274:
272:
267:
263:
260:
258:
257:United States
254:
250:
246:
242:
238:
227:
224:
209:
206:
198:
188:
184:
178:
177:
171:
166:
157:
156:
147:
136:
133:
129:
126:
122:
119:
115:
112:
108:
105: –
104:
100:
99:Find sources:
93:
89:
85:
79:
78:
77:single source
73:This article
71:
67:
62:
61:
56:
54:
47:
46:
41:
40:
35:
30:
21:
20:
453:
415:
407:
394:
390:
386:
377:
364:
355:
346:
342:
317:
314:
299:Introduction
294:
280:
268:
264:
261:
236:
234:
219:
201:
192:
173:
141:
131:
124:
117:
110:
98:
74:
50:
43:
37:
36:Please help
33:
424:. pp.
422:McGraw-Hill
311:Abandonment
285:New Product
187:introducing
464:Categories
399:References
308:Saturation
195:April 2023
170:references
114:newspapers
39:improve it
84:talk page
45:talk page
334:Reversal
328:Maturity
305:Maturity
144:May 2021
183:improve
128:scholar
432:
302:Growth
172:, but
130:
123:
116:
109:
101:
135:JSTOR
121:books
430:ISBN
235:The
107:news
426:168
90:by
466::
428:.
420:.
259:.
48:.
438:.
226:)
220:(
208:)
202:(
197:)
193:(
179:.
146:)
142:(
132:·
125:·
118:·
111:·
94:.
80:.
55:)
51:(
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.