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ANUP P.

MADESHIYA
A-22
THIS THEORY SUGGESTS THAT INTRA-INDUSTRY TRADE TAKES PLACE BETWEEN THE COUNTRIES WITH
SIMILAR LEVELS OF DEVELOPMENT.
ACCORDING THIS THEORY, THE COMPANIES THAT DEVELOP NEW PRODUCTS FOR THE DOMESTIC MARKET,
EXPORT THE PRODUCTS TO THOSE COUNTRIES THAT ARE AT SIMILAR LEVEL OF DEVELOPMENT AFTER
MEETING THE NEEDS OF THE DOMESTIC MARKET.
ACCORDING TO LINDER, THE SIMILARITIES IN CONSUMER PREFERENCES IN THE COUNTRIES THAT ARE AT
THE SAME ECONOMIC DEVELOPMENT PROVIDE THE SCOPE FOR INTRA-INDUSTRY TRADE AMONG
COUNTRIES. EXAMPLE INDIA AND CHINA
HOWEVER MOSTLY DEVELOPING COUNTRIES DO NOT TRADE BETWEEN THEMSELVES AS THE SURPLUS OF
MOST OF THESE COUNTRIES WOULD BE RAW MATERIALS AND AGRICULTURAL PRODUCTS AND THEIR
REQUIREMENTS WOULD BE TECHNOLOGY AND HIGH TECHNOLOGY-ORIENTED PRODUCTS. EXAMPLE
VIETNAM AND ETHIOIA.
BASIS FOR TRADE AMONG COUNTRIES

 SIMILARITY OF LOCATION
 CULTURAL SIMILARITY
 SIMILARITY OF POLITICAL AND ECONOMIC INTERESTS
SIMILARITY OF LOCATION:
COUNTRIES PREFER TO EXPORT TO THE NEIGHBOURING COUNTRIES IN ORDER TO HAVE THE
ADVANTAGES OF LESS TRANSPORTATION COST. FOR EXAMPLE, FINLAND IS A MAJOR EXPORTER TO
RUSSIA DUE TO LESS TRANSPORTATION COSTS.

CUTLURAL SIMILARITIES:
COUNTRIES PREFER TO EXPORT TO THOSE COUNTRIES HAVING SIMILAR CULTURE. FOR EXAMPLE,
EXPORTS AND IMPORTS AMONG EUROPEAN COUNTRIES, BETWEEN USA AND CANADA, AMONG
THE ASIAN COUNTRIES, AND AMONG THE ISLAMIC COUNTRIES.
 SIMILARITY OF POLITICAL AND ECONOMIC INTERESTS:
SIMILAR POLITICAL INTERESTS CLOSE POLITICAL RELATIONS AND ECONOMIC INTERESTS
ENABLE THE COUNTRIES TO ENTER INTO AGREEMENTS FOR EXPORTS AND IMPORTS.
COUNTRIES PREFER TO TRADE WITH THEIR POLITICALLY FRIENDLY COUNTRIES. FOR
EXAMPLE, INDIA USED TO EXPORT TO THE FORMER USSR. THE ENEMITY OF THE USA
WITH CUBA RESULTED IN THE USA IMPORTING OF SUGAR FROM MEXICO BY
ABANDONING SUGAR IMPORT FROM CUBA.
THAN
K
YOU
The international product life cycle is a theoretical model
describing how an industry evolves over time and across national
borders. This theory also charts the development of a company’s
marketing program when competing on both domestic and foreign
fronts. International product life cycle concepts combine economic
principles, such as market development and economies of scale,
with product life cycle marketing and other standard business
models .The four primary elements of the international product life
cycle theory are: the structure of the demand for the product,
manufacturing, international competition and marketing strategies,
and the marketing strategy of the company that invented or
innovated the product. These elements are categorized depending
on the product’s stage in the traditional product life cycle.
Introduction, growth, maturity, and decline are the stages of the
basic product life cycle.
The introduction stage of a product's life cycle is when you can
build an awareness of your product or service in certain markets
and develop a specific market. This is the stage in which a new
product is first made available in the market. In the introduction
stage, customers are few, competition is less, sales are low, risk is
high and profits are low or nil. There are heavy distribution and
promotion expenses. This stage is full of risks and uncertainties.
prices are also high because(1) costs are high due to low level of
output.(2) technological problems in production may not have been
solved, and(3) high profit margins are required to support the heavy
promotion expenditure. the product at the introduction stage
requires high activity in promotion.
If the product is popular with consumers, then sales will start to
rise. It may be a rapid growth or a slower one. Rapid growths that
fall away just as quick are called 'Fads'. That process is known as
Growth. It is typically characterized by a strong growth in sales
and profits, and because the company can start to benefit from
economies of scale in production, the profit margins, as well as the
overall amount of profit, will increase. This makes it possible for
businesses to invest more money in the promotional activity to
maximize the potential of this growth stage.
During the maturity stage, the product is established and the aim
for the manufacturer is now to maintain the market share they have
built up. This is probably the most competitive time for most
products and businesses need to invest wisely in any marketing
they undertake. They also need to consider any product
modifications or improvements to the production process which
might give them a competitive advantage. At the very end of the
Maturity stage, and where there is no further growth possible,
saturation occurs. This is also referred to as Saturation Point. This
is when little or no advertising is needed and sales are levelling off.
This is the period of stability. during this period, the sales of the
product reaches the peak. there is a steady demand for the product
and no possibility for growth. However, at this stage other
competitors also become popular and capture the market.
Eventually, the market for a product will start to shrink, and this is
what’s known as the decline stage. This shrinkage could be due to
the market becoming saturated (i.e. all the customers who will buy
the product have already purchased it), or because the consumers
are switching to a different type of product. While this decline may
be inevitable, it may still be possible for companies to make some
profit by switching to less-expensive production methods and
cheaper markets.
THANK YOU
VERY MUCH