Three stages in the international product life cycle theory Essay

Three stages in the international product life cycle theory - Essay Example Production of a particular product in a certain region is based on market analysis regarding resource availability, needs, and purchasing power of the target market. The characteristics of this stage are that the sales volumes and prices are high. At this level, the demand is greater than the supply with little competitors in the niche thus allowing for expansion of the business. Furthermore, at this stage the advertisement is at its peak with the technique having tremendous effect on the target market. During the growth stage, international imitators have had no chance to create imitations at a cheaper price that eventually destabilizes the market. A good example of a company that vividly elaborates this stage is Chinese Tecno Mobile Phone Company. The company based in the most populated country came up with a product to meet the demand for cheap Smartphone. The company realized massive profits in 2004 when it started. The next stage of the cycle is the maturity stage. In this stage, the demand becomes level, and the rate of increase of sales is reduced. At this level, the imitators have had enough time to create a product that creates competition in the available market at a cheaper price. However, esteemed customers who enjoy services of the original product which explained a level demand of the product as no new customers are using the product. Producer of the original product at this stage might opt to reduce prices if competition on the available market becomes stiff. The decreased sales volume and prices lead to a reduction in the amount of profits realized at a specific financial period (Funk,  2004). A good example of this is the Antex Knitting Meals located in Los Angeles. The profits realized by the company after establishment in 1979 were high compared to the current profits selling 2.7 million yards of fabric per week. Currently, the company sales add up to 1.5million yards of fabric per week. Decline is the