International Product Life Cycle

Topics: United States, Developed country, Developing country Pages: 1 (283 words) Published: July 30, 2009
The international product life cycle (IPLC) theory, developed and verified by economists to explain trade in a context of comparative advantage, describes the diffusion process of an innovation across national boundaries. The life cycle begins when a developed country, having a new product to satisfy consumer needs, wants to exploit its technological breakthrough by selling abroad. Other advanced nations soon start up their own production facilities, and before long LDCs do the same Efficiency/comparative advantage shifts from developed countries to developing nations. Finally, advanced nations, no longer cost-effective, import products from their former customers. The moral of this process could be that an advanced nation becomes a victim of its own creation. IPLC theory has the potential to be a valuable framework for marketing planning on a multinational basis. In this section the IPLC is examined from the marketing perspective, and marketing implications for both innovators and initiators are discussed below. Stages and Characteristics

There are five distinct stages (Stage 0 through Stage 4) in the IPLC. Table below shows the major characteristics of the IPLC stages, with the United States as the developer of the innovation in question. Exhibit shows three life-cycle curves for the same innovation: one for the initiating country (i.e., the United States in this instance), one for other advanced nations, and one for LDCs. For each curve, net export results when the curve is above the horizontal line; if under the horizontal line, net import results for that particular country. As the innovation moves through time, directions of all three curves change. Time is relative, because the time needed for a cycle to be completed varies from one kind of product to another.
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