mini quiz Product Life Cycle Flashcards
Product Life Cycle
a biological metaphor that traces the stages of a product’s acceptance, from its introduction (birth) to its decline (death).
What are the four major stages a product goes through?
introduction, growth, maturity, and decline.
product category
all brands that satisfy a particular type of need
How do fad items (such as beanie bags, crocs etc) far in PLC?
move through the entire cycle in weeks. Fads are typically characterized by a sudden and unpredictable spike in sales followed by a rather abrupt decline.
- Other products, such as electric clothes washers and dryers, stay in the maturity stage for decades*
introductory stage
the full-scale launch of a new product into the marketplace
Why is marketing costs in the introductory stage high?
higher dealer margins needed to obtain adequate distribution, and incentives are needed to get consumers to try the new product.
Advertising expenses are high because of the need to educate consumers about the new product’s benefits.
Production costs are high in this stage because, as product and manufacturing flaws are identified and corrected and efforts are undertaken to develop mass production economies.
How about sales in Introductory stage?
profits are usually negative because of R&D costs, factory tooling, and high introduction costs.
How about promotion strategy in Introductory stage?
Promotion strategy in the introductory stage focuses on developing product awareness and informing consumers about the product category’s potential benefits.
growth stage
the second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms, and profits are healthy
maturity stage
a period during which sales increase at a decreasing rate
What do companies focus with their products in the maturity stage
Service and repair & Product design (changes tend to become stylistic……..rather than making it more functional)
How are prices and profits in the maturity stage?
- Prices and profits continue to fall.
- Marginal competitors start dropping out of the market.
- Dealer margins also shrink,
- Promotion to dealers often intensifies during this stage in order to retain loyalty.
decline stage
a long-run drop in sales
Diffusion Process
the process by which a new idea or new product is accepted by the market. The rate of diffusion is the speed with which the new idea spreads from one consumer to the next.
