There are five stages in a product's life cycle:
Introduction
Growths
Maturity
Saturation
Decline
The location of production depends on the stage of the cycle.
Stage 1: Introduction[edit]
New products are introduced to meet local (i.e., national) needs, and new products are first exported to similar 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.)
Stage 2: Growth[edit]
A 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 Maturity Stage is known as the Saturation Period.
Stage 3: Maturity[edit]
The industry contracts and concentrates—the lowest cost producer wins here. (E.g., the many clones of the PC are made almost entirely in lowest cost locations.)
Stage 4: Saturation[edit]
This is a period of stability. The sales of the product reach the peak and there is no further possibility 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.
Stage 5: Decline[edit]
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 poor example here, mainly because there is weak demand for computers in developing countries. A better example is textiles.)
Note that a particular firm or industry (in a country) stays in a...