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-BY SHYAM PRASADMIB-1113-007

PLC vs IPLC

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PLC(Product Life-Cycle)

Product’s progression through sequence of stages from Introduction to growth, maturity and decline.

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PLC

Introduction Stage : Product is introduced, pricing levels are fixed at low

levels. Distributed to selective customers.

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PLC

Growth Stage : firm seeking to build brand preferences. Market share. Product quality is maintained. Added service measures taken Price remains the same as the firm enjoys profits. Expands in distribution Promoted to broader customers.

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PLC

Maturity Stage: Growth in sales diminishes. Company faces tough competition. Defending market share value.

Additional innovative features maybe added to product Lowering of price maybe done Promotional costs raise backing goodwill of the product.

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PLC

Decline Stage : Finally at the decline stage, the company can do few things.

• Maintain the product by adding new features to it.• Reduce the cost of the product.• Liquidate the product or sell inventory to other company.

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IPLC(International Product Life-Cycle)

1966, Raymond Vernon’s theory.The stages of promotion and life of a product

into the international market till the decline of the same.

The Life cycle begins when a developed country, having an innovative product, wants to exploit its technological breakthrough by selling abroad.

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IPLC

Other advanced nations soon start their own production facilities.

Before too long Lesser Developed Countries(LDC) soon follow.

Efficiency/ comparitive advantage shifts from developed countries to devoloping nations.

Finally advanced nations, no longer cost-effective, imports products their foremore customers.

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IPLC

Moral of the story : Advanced nation becomes victim of its own creation.

This can be explained in four stages Graphically represented with three distinct

curves. Initiating country curve Advanced nations curve LDC curve

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Stages of IPLC

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IPLC

Stage 1: Local innovation stage : Innovations are more likely to occur in highly developed nations.

Reasons :• Consumers are affluent.• Have Unlimited wants.• Supplier firms have both technical

Know-how and abundant capital to develop new products.

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IPLC

Local markets are florished with new product.

Overseas markets are established

Other developed nations start importing because similar needs are noticed while having high income levels.

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IPLC

Stage 2 : Other developed nations start their own production of similar product.

Initiating nation’s exports are stable because LDC’s find a need of that product.

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IPLC

Stage 3: worldwide imitation stage.

Initating firm’s imports are declined as the cost of production begins to raise.

Other developed countries raise their imports with offering lower prices and using product differentiation techniques.

At the end Initiating nation’s exports dwindles.

Example : US native Automobile industry.

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IPLC

Stage 4: Reversal Stage : Product standardization and comparative disadvantage. As the initiating nation lacks competitiveness.

High labour costs make it impossible for Initiating nation to produce. Where as LDC’s have high advantage with lower labour costs.

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Distinctions

PLC IPLC

Prodcut life-cycle takes place at domestic level

Product Life-cycle takes place at International level

Cycles through different stages of development of the firm

Cycles through different stages of expansion of the firm in the global market.

Growth takes place while touching all classes of customers.

Growth takes place depending on level development of a country.

At maturity stage, the company can take measures like cost cutting, introducing new features to the product.

Other developing countries and LDC’s compete with initiating country at maturity stage.

The final stage may lead to company fall down.

The final stage leads to transfer of production plants of innovative company to LDC’s.

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QUESTIONS ?

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THANK YOU!!!