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International Trade Product Life Cycle

The international product lifecycle (IPL) is an abstract model briefing how a company evolves over time and across national borders. This theory shows the development of a company’s marketing program on both domestic and foreign platforms. International product lifecycle includes economic principles and standards like market development and economies of scale, with product lifecycle marketing and other standard business models.

The four key elements of the international product lifecycle theory are

  • The layout of the demand for the product
  • Manufacturing the product
  • Competitions in international market
  • Marketing strategy

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The marketing strategy of a company is responsible for inventing or innovating any new product or idea. These elements are classified based on the product’s stage in the traditional product lifecycle. These stages are introduction, growth, maturity, saturation, and decline.

IPL Stages

The lifecycle of a product is based on sales volume, introduction and growth. These remain constant for marketing internationally and involves the effects of outsourcing and foreign production. The different stages of the lifecycle of a product in the international market are given below −

Stage one (Introduction)

In this stage, a new product is launched in a target market where the intended consumers are not well aware of its presence. Customers who acknowledge the presence of the product may be willing to pay a higher price in the greed to acquire high quality goods or services. With this consistent change in manufacturing methods, production completely relies on skilled laborers.

Competition at international level is absent during the introduction stage of the international product lifecycle. Competition comes into picture during the growth stage, when developed markets start copying the product and sell it in the domestic market. These competitors may also transform from being importers to exporters to the same country that once introduced the product.

Stage two (Growth)

An effectively marketed product meets the requirements in its target market. The exporter of the product conducts market surveys, analyze and identify the market size and composition. In this stage, the competition is still low. Sales volume grows rapidly in the growth stage. This stage of the product lifecycle is marked by fluctuating increase in prices, high profits and promotion of the product on a huge scale.

Stage three (Maturity)

In this level of the product lifecycle, the level of product demand and sales volumes increase slowly. Duplicate products are reported in foreign markets marking a decline in export sales. In order to maintain market share and accompany sales, the original exporter reduces prices. There is a decrease in profit margins, but the business remains tempting as sales volumes soar high.

Stage four (Saturation)

In this level, the sales of the product reach the peak and there is no further possibility for further increase. This stage is characterized by Saturation of sales. (at the early part of this stage sales remain stable then it starts falling). The sales continue until substitutes enter into the market. Marketer must try to develop new and alternative uses of product.

Stage five (Decline)

This is the final stage of the product lifecycle. In this stage sales volumes decrease and many such products are removed or their usage is discontinued. The economies of other countries that have developed similar and better products than the original one export their products to the original exporter’s home market. This has a negative impact on the sales and price structure of the original product. The original exporter can play a safe game by selling the remaining products at discontinued items prices.

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