PRODUCT LIFE CYCLE AND INTERNATIONAL PRODUCT LIFE
CYCLE
ECONOMIC AND MARKETING PERSPECTIVES
Dinker Raval
And
Bala Subramanian
Morgan State University, Baltimore, MD
ABSTRACT
This article makes a distinction between the Product Cycle and Product Life
Cycle and attempts to clarify what has conceptually been a fuzzy area. Vernon’s
model is a production oriented, macro level empirical explanation of shifting
trade patterns while the international product life cycle is a market oriented,
micro level explanation of the life cycle of products in international markets. It
redefines the International Product Life Cycle concept.
I. INTRODUCTION
A review of literature in economics and marketing suggests that since
Raymond Vernon published his article “International Investment and
International Trade in the Product Cycle” in 1966,1 there has been a simultaneous
development of literature pertaining to the ‘product cycle’ in marketing. There are
differences between Vernon’s concept of the product cycle and marketers’
perception of the product life cycle. However, when one reviews publications in
areas where these disciplines tend to overlap, particularly in international
marketing and international business, both of these terms tend to fuse together and
be used almost interchangeably.
While discussing Vernon’s model, Louis T. Wells, Jr. states that “the model
claims that many products go through a trade cycle, during which the United
States is initially an exporter, then loses its export markets and may finally
become an importer of the product”2. Warren Keegan, a marketing scholar, on the
other hand, refers to the International Product Life Cycle in the following manner:
“The International Product Life Cycle model suggests that many products go
through a cycle during which high income, mass consumption countries are
initially exporters, then lose their export markets, and finally become importers of
the product.”3 These are clear instances where trade cycle and product life cycle
have been defined almost identically in the international context.
There could be several possible explanations for the interchangeable use
of the product cycle and product life cycle concepts. One explanation is that the
product cycle, developed by economists as part of the international framework,
was initially unknown to marketers when they developed the product life cycle
concept.4 Another possibility is that marketers, in order to extend the product life
cycle concept to international markets, borrowed the product cycle concept from
economists who employed the concept to explain patterns of international trade.
The interchangeable use has created conceptual fuzziness in the literature and has
overshadowed the differences between the two.
II. PRODUCT CYCLE AND PRODUCT LIFECYCLE
The purpose of this paper is to make a distinction between the product
cycle and product life cycle concepts, clarify the relationship between the two and
redefine the international product life cycle. Raymond Vernon, attempting to
explain patterns of international trade, observed a circular phenomenon in the
composition of trade between countries in the world market. Advanced countries,
which have the ability and competence to innovate as well as high-income levels
and mass consumption become initial exporters of goods. However, they lose
their exports initially to developing countries and subsequently to less developed
countries and eventually become importers of these goods. Vernon’s hypothesis
was an attempt to advance the trade theory beyond the static framework of the
comparative advantage of David Ricardo and other classical economists. It
explored hitherto ignored or unexplained areas of international trade theory such
as timing of innovation, effects of scale economies and the role of uncertainty and
ignorance in trade patterns. His intent was not to propose a theory of product life
cycle as commonly understood by marketing theorists.
The product life cycle concept, typically expressed as an “S” shaped curve
in marketing literature, is based on the analogy of the human biological cycle.5
Products, like living organisms, go through stages of birth, development, growth,
maturity, decline and demise. To be meaningful, the product life cycle concept has
to be used in conjunction with its counterpart, market evolution that is comprised
