product life cycle

Question 1

what is a marketing strategy used for?

Answer 1

Enables to identify a strategy for product i.e. pricing, promotion, distribution

Question 2

what is the introduction phase and what does it involve?

Answer 2

• launching the product to market.

1. involves high costs in research, testing and marketing
2. Price may be low to initiate sales
3. Heavy promotion

Question 3

what is the growth phase and what does it involve?

Answer 3

1. rapid growth in sales and profits.
2. investment in the promotion to ensure sales remain buoyant.
3. Price may increase.
4. New varieties and distribution methods

Businesses must keep up with demand growth

Question 4

what is the maturity phase and what does it involve?

Answer 4

1. sales are near their highest point
2. rate of growth is slowing down.
3. The rate may be slowing down from intense competition from new entrants (they may be offering lower prices).
4. Businesses may consider cutting prices to maintain demand for their products.
5. Promotions will decrease.
6. Focus on retention of customers and repeat purchase

Question 5

what is the decline phase and what does it involve?

Answer 5

1. final stage of the cycle
2. sales begin to fall
3. Lower production

Question 6

advantages of the product life cycle

Answer 6

⦁ Useful analysis tool for businesses with a wide product range
⦁ Useful for making decisions about where funds should be allocated
⦁ Can be used to predict future sales and therefore plan production/distribution

Question 7

disadvantages of the product life cycle

Answer 7

⦁ Products and markets are complicated and don’t necessarily follow a pattern
⦁ Does not provide clear solutions
⦁ Simplifies what could be complex

Question 8

what is an extension strategy?
product focus?
promotion focus?

Answer 8

• may be used to re-launch the product to boost new growth

product focus :
⦁ Re-design
⦁ Cheaper/less risky than creating a new product
⦁ Keeps product in the maturity stage

promotion focus:
⦁ Rebranding, new packaging, discounts, etc.
⦁ Attracting new users (target different groups)
⦁ New markets

Question 9

examples of extension strategies

Answer 9

• adding value
• advertising
• explore new markets = selling in a new geographical area or targeting different segments
• new packaging
• price reduction