product life cycle Flashcards
describe research and development
the product is being researched and developed. prototypes will be made and tested. changes may have to be made after research feedback
describe introduction
the product is launched. this usually coincides with introductory promotional activities to create ‘hype’ for the product
describe growth
the product has been on the market for some time, customers are fully aware of the product and are purchasing it
describe maturity
the product has been on the market for some time. competition enters the market
describe saturation
the product suffers from too many competitors being in the market
describe decline
the product’s life is nearing the end. the product will stop being produced
impact on sales and profits - research and development
there are no sales yet as the product is still being developed
the product will actually be making a loss due to the costs of development and zero income from sales
impact on sales and profits - introduction
sales are slow to begin with as customers are unsure of the product. customers may have to be persuaded to move from competitor products
the product begins to cut into the losses from development, but high promotional costs still result in a loss being made overall
impact on sales and profits - growth
sales start to rise rapidly. this can be the result of slightly reduced prices, lack of competition and/or consumer confidence in the product
profits are starting to be made and losses from development and promotions during the initial stages are recouped
impact on sales and profits - maturity
sales growth peaks and levels out. many sales can still be made for a long time at this stage
profits can still be healthy but start to fall. the competition will take sales away and thus profits will fall
impact on sales and profits - saturation
sales begin to fall as consumers flock to competitors’ products
profits fall rapidly, especially if prices are slashed to encourage sales
impact on sales and profits - decline
sales fall rapidly and eventually the product will be withdrawn from the market
profits continue to fall. eventually products may be sold at unit cost just to break even
