The international product life cycle model tracks an industry’s evolution across borders and a firm’s marketing program. It combines economic principles with product lifecycle marketing and business models. The four elements are demand structure, production, international competition and marketing strategy, and the marketing strategy of the innovating company. The stages are introduction, growth, maturity, and decline. During the introduction phase, the product is new, and production depends on skilled workers. International competition is non-existent, but it emerges during the growth phase, and the product standard is based on mass production. The maturity stage is characterized by a saturated market, and companies compete through reduced prices and advanced features. Innovators need to protect markets from competition, and during the decline stage, production can move to developing countries.
The international product life cycle is a theoretical model that describes how an industry evolves over time and across national borders. This theory also tracks the development of a firm’s marketing program as it competes on both domestic and foreign fronts. International product lifecycle concepts combine economic principles, such as market development and economies of scale, with product lifecycle marketing and other standard business models.
The four main elements of the international product life cycle theory are: the product demand structure, production, international competition and marketing strategy, and the marketing strategy of the company that invented or innovated the product. These elements are classified according to the stage of the product in the traditional product life cycle. Introduction, growth, maturity and decline are the stages of the basic product life cycle.
During the introduction phase, the product is new and not fully understood by most consumers. Customers who understand your product may be willing to pay a higher price for a cutting-edge product or service. Production depends on skilled workers who produce at short notice with rapidly changing production methods. The market for innovators is primarily domestic, occasionally branching out to sell the product to consumers in other developed countries.
International competition is usually non-existent during the introduction phase of the international product lifecycle, but during the growth phase competitors in developed markets start copying the product and selling domestically. These competitors may also branch out and start exporting, often starting with the county that initially innovated the product. The growth phase is also characterized by an emerging product standard based on mass production. Price wars often start when the innovator breaks into an increasing amount of developed countries, introducing the product into new and untapped markets.
At some point, the product enters the maturity stage of the international product life cycle and even the global market becomes saturated, which means that almost everyone who would like to buy the product has bought it, whether from the innovator or from one of its competitors. Companies compete for the remaining consumers through reduced prices and advanced product features. Production is stable, with an emphasis on cost-reducing production methods so that reduced prices can be passed on to value-conscious consumers.
Product innovators need to protect both foreign and domestic markets from international competition, ultimately resulting in riskier developing markets looking for new customers. When the product reaches the decline stage, innovators can move production to these developing countries in an effort to boost sales and keep costs down. During the decline, the product can become obsolete in most developed countries or the price is so low that the market becomes almost 100% saturated.
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