International Product Life Cycle Essay Example | Topics and Well Written Essays - 1000 words

International Product Life Cycle - Essay Example The firm with the innovative product serves the home market first and then exports the product to foreign markets. This point can be clearly supported by the following statement. Many of the products found in the world's markets were originally created in the United States before being introduced and refined in other countries. In most instances, regardless of whether a product is intended for later export or not, innovation is initially designed with an eye to capture the U.S. market, the largest consumer nation. In the second phase, production starts in foreign countries either through licensing or re-engineering of the product. Importing countries in the initial stages, generally, wealthy countries import innovative products gain product familiarity. As product familiarity increases, demand in the foreign markets expands. This attracts more players and results in manufacturing in foreign countries. (Hill W.L) This production in foreign countries slowly replaces exports of the innovative firm. In the third phase, firms manufacturing in foreign countries gain production experience and move down the cost curve. Sometimes they manage to produce the goods at a lower cost than is possible for the innovative firms. ... Of these, only three are U.S. firms, with the rest being from Western Europe, Japan, South Korea, Taiwan, Mexico, Brazil, and Malaysia. In the fourth phase, these foreign firms have adequate product experience and economies of scale to export their products to the innovator's home country. Black-and-white television sets, for example, are no longer manufactured in the United States because many Asian firms can produce them much less expensively than any U.S. firm. Consumers' price sensitivity exacerbates this problem for the initiating country. Some of the key characteristics and features of a product are its quality, styling, and performance. These characteristics are affected by consumer needs, conditions of product use, and ability to buy. The factors that affect product attributes change from country to country. For example, in the US, bicycling is a recreational activity. So buyers want their cycles to be lightweight and have the speed that is essential for rapid touring. However, in Nigeria, the bicycle is often a measure of transportation and customers prefer cycles that are heavy and durable. In Nigeria, speed and lightness are not the criteria for purchase decision-making. Looking at these four phases, one can deduce that in the first phase the product was new. In the second phase, the product was maturing. In the third and fourth phases, the product gets standardized. In phase four, the product becomes a commodity. In this phase, the product is manufactured in less-developed countries and exported to developed countries. Understanding this cycle helps international marketing managers to understand the patterns of international trade and production and helps them in preparing a logistics plan.