International Product Cycle - Explained
What is the Product Lifecyle?
Written by Jason Gordon
Updated at May 27th, 2022
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Table of Contents
What is International Product Cycle?Academic Research on International Product CycleWhat is International Product Cycle?
The international product cycle concerns the stages of product development in the international market. It is best explained by the Product Life Cycle theory, developed by researcher Raymond Vernon. According to Vernon, products go through five stages of production:
- Introduction,
- Growth,
- Maturity,
- Saturation,
- Decline.
A product can be characterized based upon its stage in the lifecycle as well as the nature or effects of the product in the market. Vernon identified 3 product categories:
- New Product
- Maturing Product
- Standardized Product
Per the Product Lifecycle theory, new products are comprised of local parts and labor. Often this are custom-manufactured parts and the efforts of the inventor.
Once established and entering the growth phase, product parts and labor are sourced more broadly - outside of the immediate location (outsourced). Also, the product may be offered for sale in the international market.
A mature product that sells in high volume generally requires parts and labor from even broader sources. This may include outsourcing various aspects of the product (manufacture of parts, assembly, shipping, etc.). The requirements for production increase and there is increased demand from non-local (often global) markets.
Because of comparative advantages in the cost of production, the product may be completely manufactured in a nation that is not where it is primarily sold (often a developing nation). This is particularly true for high-end goods.
Eventually, the product will become obsolete. That is, it will succumb to competitive products or replacement goods. This may happen at different rates based upon the characteristics of the market in which it is being sold.
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