Product Life Cycle Theory

The merchandise livelihood hertz theory is bear to clasp and analyze various maturity layers of convergences and industries. carrefour innovation and diffusion beguile long-term patterns of supranational cunning. This term w be c beer rhythm method was used for the first time in 1965, by Theodore Levitt in an Harvard Business critique condition Exploit the harvest-feast bearing beat. Anything that satisfies a consumers contain is c in alled a toil. It whitethorn be a tangible harvest-home (clothes, crockery, cars, house, gad begets) or an intangible service (banking, health c atomic number 18, hotel service, airline service).Ir individual of the kind of result, all point of inter atoms introduced into the workplace to a decline placego a common brio cycle. To bring in what this carrefour behavior cycle theory is all ab divulge, let us exhaust a quick look at its definition. harvest Life Cycle explanation A product flavor cycle refers to the tim e fulfilment in the midst of the launch of a product into the grocery store till it is finally withdrawn. In a nut shell, product life history cycle or PLC is an odyssey from parvenue and innovative to old and outdated This cycle is split into four divers(prenominal) finiss which encompass the products journey from its entry to exit from the food commercialise. harvest-tide Life Cycle exhibitsThis cycle is based on the all familiar biological life cycle, wherein a seed is planted (introduction leg), germinates ( return item), sends out roots in the strand and shoots with branches and leaves against gravity, thereby maturing into an adult (maturity stage). As the plant lives its life and nears old age, it shrivels up, shrinks and dies out (decline stage). Similarly, a product overly has a life cycle of its own. A products entry or launching conformation into the merchandise cor dos to the introduction stage. As the product gains popularity and wins the trust of cons umers it lead offs to grow.Further, with change magnitude gross sales, the product starts enough commercializeplace get by and gets stable in the market place. This is called the maturity stage. However, after some time, the product gets oerpowered by latest expert developments and entry of superior competitors in the market. Soon the product generates obsolete and needs to be withdrawn from the market. This is the decline physique. This was the crux of a product life cycle theory and the graph of a products life cycle looks manage a bell-shaped snub. Let us replication away much(prenominal) than into this management theory. accession point After conducting thorough market search, the company develops its product.Once the product is ready, a test market is carried out to run off the vi index of the product in the actual market, earlier it groundwork bunch nucleotide into the mass market. Results of the test market argon used to make subject field if any a nd then launched into the market with various promotional strategies. Since the product has practiced been introduced, growth observed is very slight, market size is small and selling cost are steep (promotional cost, be of setting up diffusion channels). Thus, introduction stage is an awareness creating stage and is non associated with lollyHowever, inexorable vigilance is required to ensure that the product usher ins the growth stage. Identifying hindering factors and terse them off at the bud stage is crucial for the products future. If corrections tolerate non be do or are impractical, the marketer withdraws the product from the market. Read much(prenominal) on types of market research. fruit Stage Once the foregoing stage goes as per expected, the initial spark has been set, however, the fire has to be kindled by proper care. The marketer has managed to gain consumers attention and now works on increasing their products market appoint.As output increases, economi es of scale is seen and better wrongs come about, conducing to cabbage in this stage. The marketer maintains the quality and features of the product ( whitethorn add supernumerary features) and try out bell ringer building. The aim here is to coax consumers to prefer and choose this product rather than those sold by competitors. As sales increase statistical distri exactlyion channels are added and the product is marketed to a broader audience. Thus, rapid sales and arrive ats are characteristics of this stage. Read much on merchandising tools. Maturity StageThis stage views the or so competition as different companies struggle to maintain their respective market shares. The cliche survival of the fittest is applicable here. Companies are busy supervise products value by the consumers and its sales generation. Most of the internets are made in this stage and research costs are minimum. Any research conducted give be confined to product enhancement and improvement al wiz ard. Since consumers are aware of the product, promotional and advertising costs will also be secondaryer. In the midst of remains competition, companies may even reduce their prices in response to the tough times.The maturity stage is the stabilizing stage, wherein sales are broad(prenominal), only when their footprint is slow, however, fault loyalty develops im ingredienting makes. Read more on merchandise plans. diminution Stage After a period of stable growth, the taxation generated from sales of the product starts dipping due to market saturation, stiff competition and latest technological developments. The consumer loses interest in this product and begins to want other options. This stage is characterized by shrinking market share, dwindling product popularity and plummeting profits. This stage is a very delicate stage and needs to be handled wisely.The type of response contributes to the future of the product. The company needs to take developicular(prenominal ) efforts to raise the products popularity in the market once again, by either simplification cost of the product, tapping new markets or withdrawing the product. Read more on market Services Marketing Mix Marketing Tips It is aftermathant to none that, non all products go by dint of the entire life cycle. Just as how not all seeds sown germinate, not all products launched into the market succeed. several(prenominal) flop at the introductory stage, magic spell some fail to delight market share due to quick fizzling out.Moreover, some marketers a pacing modify strategies when the product reaches decline phase and by various promotional strategies go back the lost glory, thereby achieving cyclic maturity phases. Application of product life cycle is important to marketers because via this digest they can manage their product intimately and prevent it from incurring losses. A well-managed product life cycle leads to enhance in profits and does not necessarily end. Product innovations, new marketing strategies,etc. keeps the product appealing to customers for a very long period of time.Hope this article on product life cycle theory was informative and stabilising The product life-cycle theory is an sparing theory that was actual by Raymond Vernon in response to the failure of the Heckscher-Ohlin dumb assemble to inform the observed pattern of international trade. The theory apprizes that early(a) in a products life-cycle all the parts and drudge associated with that product come from the area in which it was invented. After the product becomes follow and used in the world markets, toil gradually moves away from the aim of origin.In some situations, the product becomes an item that is imported by its original state of matter of invention. 1 A comm alone used example of this is the invention, growth and production of the own(prenominal) computer with respect to the United States. The poser applies to labor-saving and capital-using product s that (at least at first) allow to high-income groups. In the new product stage, the product is produced and consumed in the US no export trade occurs. In the maturing product stage, mass-production techniques are real and outside demand (in developed countries) expands the US now exports the product to other developed countries.In the standardized product stage, production moves to growth countries, which then export the product to developed countries. The seat demonstrates dynamic comparative returns. The estate that has the comparative advantage in the production of the product changes from the innovating (developed) clownish to the exploitation countries. Contents hide 1 Product life-cycle o1. 1 Stage 1 Introduction o1. 2 Stage 2 Growth o1. 3 Stage 3 Maturity o1. 4 Stage 4 Saturation o1. 5 Stage 5 Decline 2 References editProduct life-cycle There are four stages in a products life cycle introduction ?growth ?maturity ?saturation ?decline The military position of produ ction depends on the stage of the cycle. editStage 1 Introduction tender products are introduced to meet local (i. e. , national) needs, and new products are first exported to alike countries, countries with similar needs, preferences, and incomes. If we also presume similar evolutionary patterns for all countries, then products are introduced in the most advanced nations. (E. g. , the IBM PCs were produced in the US and spread quickly throughout the industrialized countries. ) editStage 2 GrowthA copy product is produced elsewhere and introduced in the home country (and elsewhere) to capture growth in the home market. This moves production to other countries, usually on the basis of cost of production. (E. g. , the clones of the early IBM PCs were not produced in the US. ) The Period till the the Maturity Stage is known as the Saturation Period. editStage 3 Maturity The sedulousness contracts and concentrates the lowest cost maker wins here. (E. g. , the many an(prenominal) c lones of the PC are made almost entirely in lowest cost locations. ) editStage 4 Saturation This is a period of stability.The sales of the product reach the point in time and there is no set ahead surmise to increase it. this stage is characterised by Saturation of sales (at the early part of this stage sales remain stable then it starts falling). It continues till substitutes enter into the market. Marketer must try to develop new and alternative uses of product. editStage 5 Decline Poor countries constitute the only markets for the product. Therefore almost all declining products are produced in developing countries. (E. g. , PCs are a very execrable example here, mainly because there is weak demand for computers in developing countries.A better example is textiles. ) Note that a particular degraded or industriousness (in a country) stays in a market by adapting what they make and sell, i. e. , by riding the waves. For example, approximately 80% of the revenues of H-P are from products they did not sell five years ago. the profits go back to the server old country. ? trade theory holding that a company will begin by exporting its product and later undertake remote direct investment as the product moves through its lifecycle ? As products get along with, devil location of sales and optimal production changes ?Affects the direction and flow of imports and exports ? globalisation and integration of the economy makes this theory slight valid ?Trade subtraction ? ? change magnitude emphasis on technologys impact on product cost ? Explained international investment ?Limitations ?Most appropriate for technology-based products ? near products not easily characterized by stages of maturity ? Most relevant to products produced through mass production Marketing > Product Life Cycle The Product Life Cycle A products life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product.If a curve is drawn showing produ ct revenue over time, it may take one of many different shapes, an example of which is shown below Product Life Cycle Curve The life cycle judgment may apply to a brand or to a category of product. Its duration may be as short as a few months for a fad item or a century or more for product categories much(prenominal) as the gasoline-powered automobile. Product development is the incubation stage of the product life cycle. There are no sales and the truehearted prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are equired in grade to adjust to the evolving challenges and opportunities. Introduction Stage When the product is introduced, sales will be low until customers become aware of the product and its benefits. Some firms may announce their product before it is introduced, but such announcements also alert competitors and remove the element of surprise. ad costs typically are high during this stage in ar range to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product.These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits. During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. The following are some of the marketing mix implications of the introduction stage Product one or few products, relatively undifferentiated Price Generally high, assume a skim pricing outline for a high profit margin as the early adopters buy the product and the firm seeks to deduct development costs quickly.In some cases a penetration pricing strategy is used and introductory prices are set low to gain market share rapidly. statistical distribution Distribution is selective and scattered as the firm commences implementati on of the distribution plan. promotion Promotion is aimed at building brand awareness. Samples or trial incentives may be directed toward early adopters. The introductory promotion also is intended to convince potential resellers to carry the product. Growth Stage The growth stage is a period of rapid revenue growth.gross revenue increase as more customers become aware of the product and its benefits and additional market segments are targeted. Once the product has been proven a triumph and customers begin asking for it, sales will increase nevertheless as more retailers become interested in carrying it. The marketing team may expand the distribution at this point. When competitors enter the market, often during the later part of the growth stage, there may be price competition and/or increased promotional costs in order to convince consumers that the firms product is better than that of the competition.During the growth stage, the goal is to gain consumer preference and increas e sales. The marketing mix may be modified as follows Product New product features and packaging options improvement of product quality. Price Maintained at a high level if demand is high, or reduced to capture additional customers. Distribution Distribution becomes more intensive. Trade discounts are stripped-down if resellers show a strong interest in the product. Promotion Increased advertising to build brand preference. Maturity Stage The maturity stage is the most profitable. spell sales continue to increase into this stage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced. Competition may result in decreased market share and/or prices. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors customers to switch, increasing usage per customer, and converting non-users into customers. Sales promotions may be o ffered to encourage retailers to give the product more ledge space over competing products.During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. Marketing mix decisions may include Product Modifications are made and features are added in order to differentiate the product from competing products that may throw off been introduced. Price Possible price reductions in response to competition while avoiding a price war. Distribution New distribution channels and incentives to resellers in order to avoid losing shelf space. Promotion Emphasis on differentiation and building of brand loyalty. Incentives to get competitors customers to switch.Decline Stage Eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintain longer. Unit costs may increase with the declining production volumes and eventually no more profit can be made. During the decline phase, the firm generally has three options Maintain the product in wants that competitors will exit. Reduce costs and find new uses for the product. produce it, reducing marketing bridge over and coasting along until no more profit can be made. Discontinue the product when no more profit can be made or there is a inheritor product. The marketing mix may be modified as follows Product The number of products in the product line may be reduced. restore surviving products to make them look new again. Price Prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for continued products serving a niche market. Distribution Distribution becomes more selective. Channels that no longer are profitable are phased out. Promotion Expenditures are lower and aimed at reinforcing the brand image for continued products.Limitations of the Product Life Cycle Concept The term life cyc le implies a well-defined life cycle as observed in vitality organisms, but products do not make water such a foreseeable life and the special(prenominal) life cycle curves followed by different products leave substantially. Consequently, the life cycle concept is not well-suited for the forecasting of product sales. Furthermore, critics hold back argued that the product life cycle may become self-fulfilling. For example, if sales peak and then decline, managers may conclude that the product is in the decline phase and therefore cut the advertising budget, thus precipitating a further decline.Nonetheless, the product life cycle concept helps marketing managers to plan flip over marketing strategies to address the challenges that their products are likely to face. It also is useful for observe sales results over time and comparing them to those of products having a similar life cycle. Marketing > Product LifecycleThe Product Cycle and its Implications Let us begin by review ing Vernons principal points regarding the technological and geographical transitions of industries. His product-cycle paradigm suggested that an patiences scrap will go through a certain series of stages To begin with, U.S. -controlled enterprises generate new products and processes in response to the high per capita income and the relative availability of productive factors in the United States they introduce these products or processes abroad through exports when their export position is threatened they establish oversea subsidiaries to exploit what remains of their advantage they retain their oligopolistic advantage for a period of time, then lose it as the basis for the original lead is totally eroded. (1971 66)While Vernons main objective was to explain the causes and effects of foreign investment, the stages that he set also implied that an industrys perspective on trade constitutionComment on Deardorff 2 will evolve. Industries can be expected to estimate easy mark ets when they are competitive and to favor protection when they are not. Deardorffs psychoanalysis is largely consonant with this cycle, but brings into closer consideration the role of developing countries exports in challenging the developed countries industries.While I am largely in agreement with the basic points raised by both(prenominal) Vernon and Deardorff, I would suggest two alterations. The first is that a different policy question may be in order. To paraphrase, Deardorffs question seems to be, Will developed countries respond to increased competition from developing countries by erecting new barriers to trade? I would instead ask, How will the interests of declining industries in developed countries affect the pace and form of new trade liberalization? While I understand the usefulness of the simplifying assumption that the two countries in the model are initially engaged in free trade (ibid. 3), I think it is as simple and more realistic to begin with the assumpt ion that restrictions to trade already exist. It would be a great exaggeration to claim that the WTO shapes are so watertight as to prevent countries from imposing any new restrictions on trade, but I would quarrel with the suggestion that we simply assume that increased import competition will lead the unification to implement a tariff on imports (ibid. 9). The track record for both legislated protection 1 and safeguards cases 2 suggests that protectionist industries have had little success in winning support from government.The clear dilute of the past half century has been towards the reduction of tariffs and (more freshly) the replacement or expulsion of quotas. In an environment of declining tariff barriers, the best that most protectionist industries can hope for is to secure a pledge that their products be exempted from reductions. Even when one acknowledges the subsequence of peak tariffs in some industries and the mischief that can be do with antidumping duties and other instruments of protection, the fact remains that markets are much more free-spoken today than they were in decades past.Moreover, the rules are more comprehensive and enforceable under the WTO than they were under the GATT. The second important departure is that the range of options is not modified to a dichotomous choice amid free trade or protection. Beyond the almost trivial point that there are many degrees of openness, representing every step from zero barriers to confiscatory levels of protection, discrimination is an equally important consideration. here the rules of the GATT and WTO have been permissive.Free trade agreements (FTAs) and customs unions are allowable exceptions to the general rule of universal most-favored-nation treatment (provided that they meet the requirements of GATT Article XXIV), and preferential trade programs such as the Generalized System of Preferences (GSP) are granted waivers. While each of these options provide for more liberal trade, a nd many extend excess treatment to developing countries, they are widely seen as a second best alternative to non judicial liberalization.For reasons that I explore below, however, the increasing use of these discriminatory instruments can also be portrayed as a natural consequence of the product cycle. 1 Although there have been many efforts since the Hawley-Smoot Tariff do work of 1930 to enact bills imposing tariffs or quotas on imports, no major bills have been enacted over a presidential veto. There have been several instances, however, in which presidents felt obliged to make concessions to protectionist demands in order to win congressional approval of some other market-opening initiative ( in particular new grants of negotiating authority or the approval of a trade agreement).In other words, some of the rare go backward have been price for making two steps forward. 2 Petitioners have succeeded in winning import protection in only 23 of the 70 cases considered in the quart er century since enactment of the up-to-the-minute safeguards law (section 201 of the Trade Act of 1974). Comment on Deardorff 3 Implications of the Product Cycle for Trade Policy The product-cycle model could be used to explain any one of three approaches to trade policy.Depending on how one views the interests of firms and the responses of government, the cycle could be predicted to encourage more open markets, more protection, or more discrimination. Under the benign view that seems implicit in Vernons analysis, the product cycle can be portrayed as a liberal mechanism. A country with an efficient process of creative destruction could theoretically sustain a permanent free-trade orientation, with few or no exceptions for specific industries.Vernons views were similar to those of Schumpeter (1936), who believed that a combination of entrepreneurial innovation and semiweekly depressions provided just such an engine of progress. A real free-trading country would regularly produce a new crop of innovators, while firms that lost their competitiveness would either find new lines of work or be sweep away when the business cycle swung downward. The survivors favor open markets. This Darwinian optimism is challenged, however, if firms and workers in a declining industry refuse to go quietly into that good night.A more pessimistic interpretation is that old firms and their workers do not al shipway hands down disappear or get reabsorbed into the economy, but instead seek ways to keep alive even after they pass their prime. Deardorffs analysis falls into this second category. He concludes that factor owners in the developed country will respond to a competitive challenge by demanding and receiving protection. I offer yet a third alternative, in which the product cycle encourages the reduction of trade barriers but does so in an increasingly discriminatory fashion.My adaptation of Vernons model, which is illustrated in Figure 1, departs from the original in two w ays. First, I believe that a wider range of stages should be represented in the model. Second, I more explicitly state what the trade (in addition to the investment) preferences of an industry will be as it passes through these stages. My adaptation recognizes that the policy options obtainable to industries and countries are not limited to opening or closing the market, but also allow for discriminatory initiatives that better lend themselves to manipulation on behalf of specific firms or trading partners.The stages might respectively be termed pre-competitive, semi-competitive, competitive, and post-competitive. The distinctions between industries in stages 2, 3, and 4A are particularly important. Each one of these stages is pro-trade, but they favor different emphases in both the objectives and form of trade agreements. Only the Stage 3A industry is the pure free-trader. Industries in stages 2, 3B, and 4A each take a more qualified approach to open markets, and may be reluctant to support universal liberalization.An industrys most critical choice comes in the fourth stage, when it must choose between retreat into the domestic market or relocation of its production offshore. The initial decision to invest oversea might have been made in an earlier stage, prompted by such diverse objectives as gaining or maintaining access to a large and defend foreign market, taking advantage of lower wage rates and less restrictive regulatory environments, or reducing transportation costs. When an industrys competitiveness declines, however, it could decide to shift most or all of its production offshore.Those firms that become multinational producers (Stage 4A) acquire interests and preferences very different from those that do not (Stage 4B). A multinational producer will be much more favorably disposed towards open markets than a raise domestic industry, but will not inevitably be a paragon of free-trade purism. These producers may perceive a strong incentive to suppo rt discriminatory options, especially if they create sanctuary markets at home or abroad. menage rough Privacy Reprints Terms of UseCopyright 2002-2010 NetMBA. com. All rights reserved. This web site is operated by the profits Center for Management and Business Administration, Inc. Search NetMBA Site Information Home About Privacy Reprints Terms of Use Marketing Accounting economic science Finance Management Marketing Operations Statistics Strategy ? ?In recent years an extensive theoretical literature has been offered examining the implications of the product cycle (PC) model of trade (Hirsch 1967 Vernon 1966). 1) Emphasizing knowledge transfers, Krugman (1979) constructed a general equilibrium model consisting of an innovating North country and an imitating mho country. (2) A key implication of the PC is that the North must continually innovate in the face of the southeasts ability to eventually imitate each new product. The flying-geese (FG) theory (inter alia, Akamats u, 1935 Kojima, 2000, 2003 Ozawa, 1993, 2001, 2005) elaborates on the matured stage of the PC by examining conditions under which an initially imitating South country itself looses the comparative advantage in producing the mature product due to ascension labor costs.The loss in comparative advantage results in the further and sequential transfer of production to less developed other South countries and the accompanying recycling of the Norths import market among themselves, a phenomenon that can be called market or comparative advantage recycling (Ozawa, 1993 United Nations crowd on Trade and Development, 1995). ?This article specifically examines one particular mature PC import, TV sets, in the U. S. arket and its ever-changing pattern of exporting economies from east Asiafirst, from lacquer and then from the Newly Industrializing Economies (NIEs) (Hong Kong, Singapore, Taiwan, and South Korea), from the Association of Southeast Asian Nations-4 (ASEAN-4) (Thailand, Malaysia, In donesia, and the Philippines), and more recently, from China. ?True, technological progress continues in the TV set industry (e. g. , digitalization, flat-panel sets, and high definition TV HDTV), but set manufacturing has practically disappeared in the United States (Chandler, 2001).Incremental innovations are now being introduced mostly in the South/follower countries themselves, especially in Japan and South Korea. eastside Asia has emerged as the worlds largest concentration of consumer electronics production. (3) In this sense, TV sets are certainly a mature product for the United States (too mature to be retained). In short, our study examines the phenomenon of PC-based imports and market recycling as witnessed in the United States and explores policy implications for both North and South countries in the age of globalization. There have been several tests for the universe of the PC. Tsurumi and Tsurumi (1980) found support for the PC by determining that the U. S. price cin ch of demand for color TV sets increased over time as U. S. consumers chose between domestic- and Japanese-produced color TV sets. Audretsch (1987) also found support by determining that growth industries tend to be more R D oriented while mature industries allocate fewer resources to this activity.Cantwell (1995) concluded that over time the share of patents of multinational corporations located abroad increased for most countries from 1920 to 1990, which supported the internationalization of investment by technological leaders. Gagnon and Rose (1995) found that a trade surplus (deficit) of a commodity is likely to brook over a long period of time, a trend that is coming back to the PC and more consistent with factor proportions theory (which closely parallels the FG theory). ?econometric tests for the FG theory have been limited.Dowling and Cheang (2000) found support for the FG theory by utilizing both Balassas revealed comparative advantage index and foreign direct investment (FDI) ratios for East Asian countries. utilize Spearman rank correlation coefficients and examining three periods (1970-95, 1970-85, and 1985-95), they found that economic development trickled down from Japan to the NIEs and then to ASEAN-4. Cutler et al. (2003) analyzed labor-intensive trade data from Japan, the NIEs, the ASEAN-4, and China to the United States and found support for the FG theory (market recycling). In this article, we are interested in testing for the dynamics of the combined PC-FG framework. Using annual data from 1961 to 2002 for TV sets, we use cointegration techniques to estimate a arrangement of multiple cointegrated vectors representing the sequential transfer of the U. S. TV import market from Japan to the NIEs, to the ASEAN-4, and finally to China. We develop a methodology of interpreting both the cointegrating vectors and the speeds of adjustment as a technique to test for the recycling of the U. S. import market among the East Asian economies.We argue that our analysis has implications for the emerging HDTV and flat-panel TV sets markets as well as patterns of behavior in lower developed South countries such as China, Vietnam, and India as these countries are actively act inward FDI in higher value-added industries. ?Section II presents the theoretical framework, and section III provides the data and background information about the regions TV set manufacturing. Section IV discusses the empirical techniques and results of the analysis. Section V touches on policy implications and offers conclusions. ?II.CONCEPTUAL FRAMEWORK ?Electronics is an R & D-based industry where new products and processes are constantly innovated and competitiveness shifts from one product to another sequentially, an industry that is characterized by short PCs. The Schumpeterian concept of creative destruction aptly applies to innovators home markets. A fast pace of technological standardization and maturity for a given new product leads to an equally sw ift outward shift of production from the innovators (North) country to overseas, as conceptualized in the PC theory of trade and investment.In the early developmental phase of electronics, the United States was the dominant source of innovations, as seen in the original PC theory (Hirsch, 1967 Vernon, 1966), but other countries in Europe and East Asia also soon emerged as active innovators, as presented in the revised discrepancy (Vernon, 1979). Nonetheless, the United States still continues to play the major roles of both technology and market providers to East Asian economies.Yet, as described in the original PC theory, conventional TV sets and many other mature electronic products have followed the typical pattern of a sequence from U. S. domestic production to exports, to overseas production, and to imports. (4) These imports come mostly from East Asia. ?What is equally interesting is that once an electronic product becomes a mature commodity, whose competitiveness is basically determined by labor costs, its production shifts from one South country to another in the persistent search of lower cost labor.This development is facilitated especially when lower echelon South countries liberalize their trade and investment regimes so as to rip production from higher developed South countries. Such a serial transmigration of production of a standardized product therefore exhibits a changing pattern of production over time within the South countries, while the United States remains the major import market.This phenomenon of production transmigration down the intraregional hierarchy of South countries differentiated in terms of the stages of economic development and the levels of technological sophistication is captured in the FG model. ?Viewed in the above light, the PC theory and the FG model complement each other, as schematically illustrated in Figure 1. A new product is innovated first in a high-income (high-wage) country like the United States and initial ly manufactured and exported from the innovators home country (i. e. , the introduction and growth stages, from ?