LIFE CYCLE OF INTERNATIONAL PRODUCTS Liviu NEAM ȚU “Constantin Brâncu și” University, Tg-Jiu, e-mail: liviu.neamtu@utgjiu.ro Keywords: life cycle,… [615776]

LIFE CYCLE OF INTERNATIONAL PRODUCTS

Liviu NEAM ȚU
“Constantin Brâncu și” University, Tg-Jiu, e-mail: [anonimizat]

Keywords: life cycle, product strategy, product policy

Abstract: The life cycle of a product on the international market implies accommodation of international
product strategy and policy to specific phase in this evolution of product. Life cycle of a product has four
evolution phases with different lengths from an external ma rket to another. Ther efore, appreciating the
length and the life cycle phase is very important for the international marketing strategy of the firm. Through
the product politics, in the international marketing the optimum combination among products being in varied
stages of life cycle is followed.

1. THEORY OF PRODUCT LIFE CYCLE
In the specialty literature the so-named “t heory of product life cycle” is used very
often. In this conception, in the production development at the firm that has a priority in
realizing a product there are three phases to wh ich correspond three types of strategies in
the international product ion and commercial domain:
-The phase of the new product when th e firm has the absolute advantage in
realizing the product, or a new product which is requested a lot on the external market
even if the production costs and of course t he prices are relatively high; so, the firm
produces and markets the respective product under its name and on its expenses;
-The maturity period, meaning a development of the production within the
respective firm and gradually semination of te chnology to third, competitive firms in
accordance with the respective fi rm. In these conditions the in itial firm is confronting with
the other producers’ co mpetition, and this thing determi nes it to assign a part of its
production capacity to some firms more favored in what concerns the costs by under-contracting or even by external investments;
-The standardization phase, when the tec hnology is widely accessible on the
international plan and a bigger and bigger number of firms have possibilities of realizing
the respective product. The initial firm is in disadvantage in producing the respective
product on its own market and prefers to tr anspose the production abroad, the necessary
being assured by transportation.
An example on the market of the consumption goods is enlight ening: the American
discover from the first post- war years, this product reaches the maximum on the USA
market at the beginning of the 8
th decade; in 1977 the production is transposed in Japan
and other countries from the Extreme Orient; a year later, these countries make the export to USA, and in the ‘8 0s they hold two thirds from t he market; nowadays, the American firm
General Electric imports completely the pr oduct from Japan and from the countries of
South-East Asia.

2. INTERNATIONAL PRODUCT STRATEGY
In the elaborated strategy t he enterprise should take into consideration the product
life cycle. If someone analyzes the international life cycle of a product it will observe that
this has four phases [2,3]:
1. The realization of ex port beginning with the succ ess obtained in the origin
country. The product is launched on the internal market; the success obtained determining ANNALS of the ORADEA UNIVERSITY.
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its sale abroad. This stage corresponds to the launching of a market from the growing
phase, too.
2. The obtaining of product abroad. The dy namism of some new markets appears
and so their potential will be transposed in an effective request. But, after they make
familiar with the product sold on their territo ry, the foreign enterpris es begin to obtain it.
This phase corresponds to the end of growth and the beginning of the product maturing.
3. The external producers increase their pr oduction to supply their own markets and
they obtain the earning due to the work pr oduction growth and begin to export to other
countries. They come to compete with the enterpr ises from the origin countries on the third
markets. This is the characte ristic of the maturing phase.
4. The growth of the production value obtained in the foreign countries and the
registered cost advantages lead to the decrease of the product pr ice realize by the firms in
these countries and to their export even on the or igin market; this mo ment represents the
end of the international life cycle of the product.
In what concerns the life cycle of a pr oduct on the international market some
particularities should be shown (table no. 1). [7]

Criteria Introduction Growth Maturity Saturation Decline

Number of
rivals Few or not all Some more Many The biggest
number In decrease
Number of
bench-
marks Few or not at all Many A lot The biggest
number Constant
The sales
volume Low Significations In relative
growth Maximum stability Constant in decrease
Profit Losses The biggest
profit on the unitUnitary profit in decrease Continual decrease Decrease up to loss
Market
quote Small Big Constant Constant up to
decrease Stabile at a low
level
Promotion Increased cost
through mark For the mark Mark
segmentation To remind For the mark in
decrease
Product Design modification Stabile quality; the line
extension Stabile number
of assortments The pack modification Minor modifications
Distribution Increased costs. Limited number
of canals.
Specialized
canals Unitary costs in
decrease. The increase of
the canals
number.
Larger canals Costs in
decrease. The number and
type of stabile
canals. A
single type of
canal The lowest prices on unit. The decrease
of the canals
number
Unitary costs.
Number of canals in
decrease. A
single type of
canal

Price High price. High tolerances
of profit The decrease
of price and
tolerances The decrease
of price.
Stabile
tolerances Tolerances increase. Prices
modifications Stabile
tolerances.
Reduced price.
Table no. 1. – Marketing aspects to life cycle of products

Thus, a product has a life cycle with different lengths from an external market to
another, and the phases from t he life cycle on varied external markets are not in
concordance, the product being in different stages of its existence in the same moment
depending on the market, and the length of the sa me phase can be different in a country
or another.
In these conditions, a product which is considered to be new in a country could be
in another phase of its life cycle in other count ries and this element is very important for ANNALS of the ORADEA UNIVERSITY.
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the external commerce operations. Therefore, appreciating the length and the life cycle
phase is very important for the internati onal marketing strategy of the firm. [6]
Considering the fact that t he profit on the product unit begins to decrease before the
apparition of this phenomenon in t he sales curve, it results the necessity that the firm
should hold predictable information over t he aspects from the external markets.
It also should identify exactly the phase fr om the life cycle of each product using
numerous criteria and market indicators , costs, profit, a marketing mix.

3. PRODUCT POLICY ON INTERNATIONAL MARKETING

The complexity of the international market and the existence of products in different
stages of their life cycle make necessary the formulation and the transposing in practice of
some strategies in the product domain, which are found in the product politics.
As a rule, through the product politics, in the international marketing the optimum
combination among products being in varied stages of life cycle is followed. This means,
on the other strategic directi ons: the improvement of products and the desertion of the old
products; the innovation which allows the cr eation of new products for the external
markets. [5]
The perfecting of products s uppose their modification wit h view of maintaining on
the market the stimulation of exports by improving the quality, the functional
characteristics, and the performances, by changing the design, the packs etc.
The decision of improvement or of desertion of the product should uphold on a
serious analysis of some aspects as: the sit uation of technological research potential;
marketing activity; financial, hu man and material resources; t he profitableness of predicted
or effectuated actions.
There are cases in which to maintain the profit at a level suitable for the
profitableness objectives, some products should be given up. The elimination of the non-
profitable, old products supposes the analysis of each and every pr oduct situation to
elaborate an exact diagnostic of the causes wh ich determines its lack of profitability and if
it is adequate to improve it. In this view, the analysis should start with the verification of the profitability grade and in case this is under the minimum admi tted level, the possibility of
decreasing the production and commerce costs s hould be taken into cons ideration. At the
same time the exports should be observed if they maintain or fall. The causes being
established, the measures for the product im provement should be taken under the shape
of some programs of concrete acti on or the product should be abandoned.
The accelerated dynamism of technical, economic and social transformations
recorded on the international market makes that the only way of maintenance in the
competition from the external markets to be the diversification and the permanent renewal
of the products. Introducing the new products is an activity which claims substantial
expenses for research, development and co mmerce, with no hope for success and so their
recuperation. Therefor e a well-knowledge of t he tendencies in the technical and economic
domains is required, because on the contrary , there will be failures in launching the new
products. The causes of failure could be: t he weak knowledge of t he market, the product
deficiencies, the overtaki ng of the scheduled expenses, the competition actions,
insufficient efforts, distribution networks in sufficiently developed and organized, forms of
surpassed commerce.
The failures can be prevented if the decisio ns in the process of introducing the new
products in manufacturing and on the market are based on scientific researches, which
solve step by step the advantag es and dis
advantages of projec ts for the new products. ANNALS of the ORADEA UNIVERSITY.
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This permanent development leads logically to selection, a gr eat number of projects being
eliminated in different stages of analysis.
A solution for the problems imposed by the new and improved products is
cooperation in producing and commerce of the varied merchandises. Through such
actions the access to the modern technologies is assured, as well as the necessary sums
for financing the new products.
Another up-to-date problem of international marketing is that of standardizing the
products or, in other words, the attribution of the same char acteristics to the product, no
matter to which sale market is fated. Al though on the world plan, there is a market
segmentation process, sometimes taken to the extreme, and so we deal with a very small
number of consumers or ev en with the individual consum er, the standardization of
products maintains up-to-date. Therefore, at the planning and developing the products for
the international markets, firms should ta ke into consideration the advantages and
disadvantages of standardization. [4]
Through the most significant advantages of the product standardization is:
– Economies in the production stage of controlling the stocks and the services
politics;
– The standardization of product is the main element for the standardization of
marketing mix;
– A firm which commercializes standardized pr oducts on the international market is
easier to be managed, in what concerns both the organization and the control.
Concerning the disadvantages of standardizing, these are:
– The marketing flexibility is diminished bec ause of the incapacity of adapting the
product to the local requests;
– Standardization often discoura ges creativity and innovation, especially in the local
firms which commercialize the product;
– It is ascertained that the staff from the subsidiary units on different markets tends
to find its place in other companies which offer the possibility of using its ideas referring to
the improvement of product.
The study of the standardizati on problem has as result tw o categories of arguments
in the favor of this politics: a better mark eting performance and lower marketing costs. The
factors which encourage standardi zation, respectively the ada ptation are presented in the
table below.

I. The factors which encourage the
standardization II. The factors which encourage the
adaptation
1.Economy in production 1.The differentiation of the usage conditions
2.Economies in research-development 2.The influences of settlement and governs
3.Economies in marketing 3.The differentiation of the consumers behavior
Table no. 2. – The determinant factors of standardization, respectively the adaptation

The adaptation of a product to a new market supposes to take into consideration
two types of aspects: technical and commercial.
The technical aspects refer to the respec t of some norms and technical settlements
from the import country referring to the manufacturing manner, to the minimal
performances, security in us age, information/instructions, etc. the sources of such
normative are both national (British Standard In stitution – BSI, in Great Britain, Deutsches
Institut fur Normin – DIN, in Germany) and international (ISO – International
Standardization Organization; CEN – Co mité Européen de Normalisation). ANNALS of the ORADEA UNIVERSITY.
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If the norms are facultative, the technica l settlements are compulsory, the exporter
or importer being allowed to as k an expertise firm to certify the quality of product and the
conformity with norms and settlements.
In what concerns the commercial aspects of the product there are three aspects:
mark, range and quality. [1]
The manufacture or commerce mark allows the identifica tion of product and could
be a sign of quality. To protect against the c ounterfeit products or the abusive usage the
mark can be deposed at the nat ional organisms for the prot ection of the intellectual
property.
The range of a product consists in the asse mbly of product models respectively
available at the producer, respectively the total amount of the possibilities offered to
clients. The export draws many times a r eduction of range, some of the models being
eliminated because of technical, cultural or economic reasons.
The quality of merchandise and especially the maintenance of a constant quality
are important in the competing fr om the external markets. The quality of product is usually
expressed by solidity, viability and facility in usage. The quality of pack, the respect for the
delivery term, the assurance of post-sale serv ice should also be taken into consideration.

BIBLIOGRAPHY:

[1] Albaum G, Strandskov J și Duerr E., (1998), International Marketing and Export Management . Addison
Wesley, pg. 181.
[2] Bradley F., (1995), International marketing strategy. New York, Prentice Hall, pg. 234.
[3] Bradley, F., (2001), Marketing interna țional, Editura Teora, Bucure ști, pg. 285.
[4] Cateora P.R., Graham J.L., (2002), International Marketing . McGraw Hill, pg. 207.
[5] Croue, Ch., (1999), Marketing International, 3-eme edition . De Boeck Wesmael S.A., Bruxxelles, pg. 295.
[6] Danciu, V., (2005), Marketing interna țional. Ed. Economic ă, București, pg. 199.
[7] Neamtu, L., (2008), Marketing interna țional. Ed. Universitaria, Craiova, pg. 160.
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