Product life cycle

By applying a range of marketing analysis techniques a clearer identification of the key features emerge.

With a clearer understanding of their customers, competitors and external factors, a business is able to market more effectively.

Learning Objectives

• Product life cycle: the 4 phases of the life cycle; extension strategies

• Product life cycle & cash flow

Introduction• When a new product is

introduced to a market, customers may have little awareness. Consequently the appropriate type of promotion is perhaps informative advertising, rather than persuasive to help it get out of the introduction stage and into the next.

Growth

• The second stage is growth. During this period more of the market is finding out about the product and it may be appropriate to change advertising and even price strategy.

Maturity• The next stage is maturity.

The Maturity Stage is the time when most profit is earned and in this stage competition is often intensive as companies fight to maintain market share. Its here that both marketing decisions become key, it has to be monitored carefully, since significant moves are highly likely to be reacted to by competitors.

Decline

• The final stage is decline. Now the market is contracting in size, reducing the amount of profit that can be shared amongst competitors. At this stage it’s still possible to be profitable, but careful promotional, positioning and pricing decisions must be made.

Task

• Sketch the Product Life Cycle into your books and label each section

• Using p234 and 235• Summarise each section of the

Product Life Cycle• You MUST remove the waffle

Introduction

The product is test and market research carried out so there is no sales at this point, so the costs are high. As the product is new people do not know about it so advertising costs are high.

Growth

Maturity

Decline

Place the product at the point it appears in its lifecycle

They do not always look the same. It changes depending on the life style of the product

Sale

s

Time

Sale

s

Time

Sale s

Time

Sale

s

Time

What has happened here?

Sale

s

Time

What would you do to extend the lifecycle of your product?

Slide 17

Product Life Cycle – BMW 3 Series

1975-82 1982-1990

Sale

s

1990-1998 1998-2006 2006 ->

Why do BMW keep releasing

another 3 series?

Extending

the life cycle

Find a new use for the product

Develop a wider product range

Change the appearance

, format or packaging

Encourage that the product is used on

more occasions

Adapt the product

Reduce the price

Cadbury Dairy Milk

• Q1,2,3 & 6

• Pg 239

EXTENSION QUESTIONS

• Apple’s Cash Machine

• Cadburys Crème Eggs

• Sony v Nintendo

• Crocs – Fashion victims