1.3.5 Marketing Strategy Flashcards
What are the stages in the product life cycle
- Development
- Introduction
- Growth
- Maturity
- Decline
What are the axis on the PRODUCT lifecycle
Time and sales
Describe the R and D phase and give the implications
Description - This is where the company is developing the product and it hasn’t been released yet. This usually inccurs high costs as R and D is expensive and other research investments.
Implications - Cash flow is usually negative in this stage as the company is investing in R&D however not generating any revenue from sales of the good
Describe the introduction phase and give its implications
Description - This is where the product is first launched and there may be slow sales and low sales revenue as the product may not be known
Implications - Cashflow is usually negative at this stage as the business is making slow sales revenue from the product however they must invest into marketing and promotion. The main aim is to make the product more known to consumers
Why may the intro phase may not be long for some business ?
- The product may already have some anticipation and people may already know about the product prior to the release.
Describe growth and give its implications
Description - The product enters this stage when sales start to increase rapidly, the business starts to shift their aims to growing market share and how to increase prod to meet demand
Implications - Cash flow usually becomes positive and increases as sales revenue increases and costs are spread over a larger volume of production. The aim now is to differentiate the product from competitors
Why may the growth phase start to level off after a period of time
Market may become saturated as other companies may have seen the success and want to mirror it
Describe maturity and give its implications
Description - Characterised by slowing sale growth as the product hits its peak in terms of market penetration
Implications - Cash flow is still usually positive as sales revenue continues as a steady rate and costs are reduced via economies of scale. The aim now is to maintain market share.
Describe decline and give its implications
Description - Where sales start to decline of the product due to new products in the market being released .
Implications - Cash flow may turn negative as sales revenue may fall for the product and production costs may still be the same such as fixed costs for capital machinery
What is the definition of extension strategies ?
Extension strategies refer to techniques used by business to extend the life of a product beyond its natural product lifestyle
What are the two main extension strategies ?
Product related extension strategies
Promotion related extension strategies
What are product related extension strategies ?
- Involves changing the product to make it more appealing to customers to extend its product life style
What are some examples of extension strategies ?
- Product improvements : Business improving its products yearly to attract customers back e.g iPhone with new releases
- Line extensions : New lines such for example how Coca cola introduced Coke zero and diet coke
- Repositioning : For example , changing what markets a business targets and occupying a new niche
What are promotion strategies
Involves in making changes in the products promotion or advertisement to extend its product life cycle
What are some examples of promotion strats
- Changes to advertisements
- Price promotions
