4.3c Product (Life Cycle)

Question 1

what is a benefit of using product life cycles?

Answer 1

• businesses can make product decisions using the product life cycle
  ^they can make decisions about its:
  pricing, promotion, product levels and decisions about out products within its product portfolio (range of goods and services offered by businesses)

Question 2

what are the four stages in product life cycle?

Answer 2

1. launch
2. growth
3. maturity
4. decline

Question 3

what is the launch stage?

Answer 3

• the business growth rate is slow when first introduced to the market
  ^because of limited consumer awareness of the product
• businesses will also find it difficult to persuade consumers to switch brand loyalty
• costs are also high for advertising and holding stocks

Question 4

what is the growth stage?

Answer 4

• consumers start to become more aware if the products and sales increase
• competition increases in the market
• business earns higher profits

Question 5

what is the maturity stage?

Answer 5

• sales will eventually peak and then slow down
  ^ forced to cut prices which result in profit loss.
• businesses face competition from other contenders for share of the market

Question 6

what is economies of scale? when are businesses most likely to experience this?

Answer 6

• situation where average costs (of production, distribution, sales) fall as a business increased the amount of product that it produces, distributes and sells
• as sales are during high maturity the business is likely to experience economies of scale and should be able to maximise profitability

Question 7

what is decline stage?

Answer 7

• again an increase in competition
• new tech+ new products
  ^meaning that consumers will start to switch brand loyalty
• profitability will fall, eventually to the point where it is no longer profitable to produce and production will stop

Question 8

in what ways could you extend products life cycle?

Answer 8

• advertising: try to gain a new audience or remind the current audience
• price reduction: more attractive to customers
• adding value: add new features to the current product
• explore new markets: selling the product into new areas or creating a version targeted at different segments
• ew packaging: brightening up old packaging or subtle changes

Question 10

ways to differentiate a product:

Answer 10

• must have a USP
• ensure product provides unique functions that are not provided by rival products
• give it’s products a unique style or design
• create and use a distinctive brand
• provide consistent excellent customer service
• make sure that the product is at a high quality

Question 12

what is market differentiation?

Answer 12

• market differentiation is the process of developing a distinctive or unique product
  ^making products stand out from rivals help firms compete

Question 14

what is product mix, market share and target market?

Answer 14

• product mix is the total range of products offered by a company
• market share is the portion of a market controlled by a particular company or product
• target market is a particular group of consumers at which a product or service is aimed at