Product Life Cycle Flashcards
What does a product life cycle show!?
The product life cycle shows the sales of a product over time
What are the 6 stages of the product life cycle?
• Development
• Introduction
• Growth
• Maturity
• Saturation
• Decline
What is the development stage?
What are the 4Ps like at this stage?
At this stage the product is still in its research phase, the product has not been fully launched.
• Price: Under review from research
• Place: May be available in test markets
• Product: Under development
• Promotion: Possible advertising in trade press to encourage early distribution
What is the introduction stage?
What are the 4Ps like at this stage?
• Competition is usually limited, sales increase slowly
• Price: Could be high to recover development costs or low to penetrate the market
• Place: Distribution is limited
• Product: Only one basic model
• Promotion: Usually INFORMATIVE in an attempt to create awareness
What is the growth stage?
What are the 4Ps like at this stage?
• Sales increase at an increasing rate, losses turn into profits, competitors are attracted and launch similar products
• Price: May start to fall as competition arrives with cheaper products
• Place: Distribution widens as more outlets begin to stock it
• Product: Some product improvements made to stay ahead of the competition
• Promotion: Still largely informative as most consumers are first time users, a PERSUASIVE element will appear in order to build brand loyalty.
What is the maturity stage?
What are the 4Ps like at this stage?
• Sales are still rising but the rate of increase declines until a plateau is reached. Competition is intensive.
• Price: Will have fallen due to competition
• Place: High levels of distribution, will be widely available
• Product: Different models will have been launched for the different market segments
• Promotion: This is now PERSUASIVE as anyone who is going to try the product has done so. Branding and advertising reach a climax.
What is the decline stage?
What are the 4Ps like at this stage?
• Sales eventually reach the decline stage through the effects of new technologies and changing tastes
• Price: Can fall further due to not needing support for a large marketing budget
• Place: Weaker distribution channels are withdrawn. Only sold through main outlets.
• Product: Remove weaker product versions
• Promotion: Marketing budgets are cut to keep costs down
What is The Boston Matrix?
The Boston Matrix analyses all of a firm’s products in terms of their market share and the growth of the market, it is a form of portfolio analysis.
What is a balanced portfolio?
A balanced portfolio is an appropriate mix of products in terms of their market shares and market growth
What are the names of the four quadrants in the Boston Matrix?
- Dogs
- Cash cows
- Problem child
- Stars
What are the dogs in the Boston Matrix?
- low relative market share
- low market growth
Either invest to revitalise product, or let them decline and eventually remove them.
What are cash cows on the Boston Matrix?
- well established
- relatively high market share
- low market growth
- generate a high level of funds for business, future investment
What is the problem child on the Boston Matrix?
- fast growth markets (appealing)
- relatively small market share
- May do well, May not (problem child)
May want to invest to protect and grow these products
What are the Stars on The Boston Matrix?
- fast growth market
- relatively high market share
e.g. leading brand in a new type of app
Managers will need to keep investing in, promoting, and gaining more distribution for these products.
Why is the Boston Matrix valuable?
Helps managers categorise their products and take a view on what they should do next.
Aim for a balanced portfolio, where well established products help prepare for the future.
