Product Flashcards
what are the stages of the product life cycle
RIGMSD
research & development introduction growth maturity saturation decline
what happens in the r&d stage of the product life cycle
product is being researched and developers and prototypes are made and tested- changes can be made after feedback
what impact does r&d have on sales
no sales as product still being developed
what impact does r&d have on profits
product will be making a loss due to development costs and 0 income from sales
what happens in the introduction stage of the product life cycle
the product is launched onto the market and promotional activities are introduced to create hype
what impact does introduction have on sales
sales slow to begin with as customers are unsure of product and may need persuaded to move from competitors products
what impact does introduction have on profits
product begins to cut into losses from development costs but promotional costs result in loss made overall
what happens in the growth stage of the product life cycle
the product has been on the market for some time and customers are aware of product and are purchasing it
what impact does growth have on sales
sales start to rise rapidly - due to slightly reduced prices, lack of
competition or consumer confidence in product
what impact does growth have on profits
profits start to made and losses from development and promotion during initial stages are recovered
what happens in the maturity stage of the product life cycle
product had been on the market for some time and competition begins to enter market
what impact does maturity have on sales
sales growth peaks & levels out- sales can still be made for a long time though
what impact does maturity have on profits
profits can still be healthy but start to fall as completion takes away sales and thus profits fall
what happens in the saturation stage of the product life cycle
product suffers from too many competitors in the market
what impact does saturation have on sales
sales continue to fall as consumers flock to competitors products
what impact does saturation have on profits
profits fall rapidly,
especially if prices are cut to encourage more sales
what happens in the decline stage of the product life cycle
products life is nearing the end and will stop being produced
what impact does decline have on sales
sales fall rapidly and product will eventually be withdrawn from market
what impact does decline have on profits
profits will continue to fall and product will eventually be sold at unit cost just to break even
what are the trends in sales during the product life cycle
no sales slow sales rapid rising sales sales peak sales fall sales fall rapidly
what are the trends in profits during the product life cycle
loss cut into losses profits made healthy but fall fall rapidly continue to fall- sold at unit cost
what are extension strategies
where sales begin to fall as a product matured and a business attempts to inject new life into product
what are the extension strategies
- lowering price of product
- changing place product is sold
- altering methods of promotion
- rebranding product
- developing product variations
- changing packaging
- changing use
what is product portfolio
having a range of products on sale
what are the types of product portfolios
product line portfolios
diversified product portfolios
what is a product line portfolio
a variety of similar products on sale
what is a diversified product portfolio
having products for sales across completely different market segments
what’s the impact of reducing sales as an extension strategy
makes product more affordable and so it appeals to more market segments
what’s the impact of changing the place a product is sold as an extension strategy
making product lie available means it can be seen by more potential customers
what’s the impact of altering promotion as an extension strategy
changing a way product is promoted can raise product awareness and increase sales
what impact does developing product variations has an extension strategy
new product varieties can mean product appeals to tastes&desired of different market segments
what impact does rebranding have as an extension strategy
changing name can create hype or appeal to different market segments
what impact does changing packaging have as an extension strategy
can make product appeal to new market segments e’g more modern to attract teenagers
what impact does changing product use have as an extension strategy
can make product appeal to new markets or suit seasonal tastes
what are the benefits of a product line portfolio
greater profits can be gained from having many products on sale
what are the benefits of a diversified product portfolio
variety spreads risk across different markets in case one product fails
how can businesses analyse their product portfolios
using a Boston Matrix
how does a boston matrix analyse products
by market share and market growth
what’s market share
% of sales a product makes in market
what’s market growth
overall potential for sales that the market has as a whole
what are the boston matrix product types
stars
cash cows
q marks
dogs
what are stars
products that have high market share in a high growth market (iPads)
what are cash cows
products that have high market share in a low growth market (MS Office software)
what are Q marks
products that have a low market share in a market with high growth potential (manufactures of less popular brands of tablets)
what are dogs
products that have low market share of a market with low growth (less popular brands in declining technology industries)
what impact do stars have
- stars need constant investment in marketing to keep ahead in a competitive market
- stars allows business to be a market leader
- over time, stars decline into Q marks or cash cows
what impact do cash cows have
- require little marketing expense
* funds generated can be used to further strengthen stars and improve riskier ventures like Q marks
what impact do Q marks have
- should be invested in due to their position in a promising market
- need development of a strong marketing mix if they’re to be turned into stars
what impact do dogs have
- can adversely affect profits
* should be divested due to lack of market share & declining market for the product - can’t be turned into stars
what are the advantages of product portfolio
- to increase awareness of the business, its reputation & its brand by having more than 1 product
- to make introducing new product easier as customers already aware of business
- to appeal to variety of dif market segments
- to reduce risk of failure
- to cope with products that are only demanded in certain seasons as other products gain sales at dif times of year
- to increase sales & profits from selling dif products - customers can buy variety of products from same business
what are the disadvantages of product portfolio
- staff may require training on the features of dif products - time consuming & expensive
- cost of advertising & promoting lots of dif products could result in less profit
- cost of purchasing & maintaining machinery for dif types of products may be high
- 1 product receives bad reputation= impact on all products sold
- maintaining a varied product portfolio = high cost of r&d
