Product Life Cycle

Question 1

What are the stages of the product life cycle?

Answer 1

Product research and development
Introduction
Growth
Maturity
Saturation
Decline

Question 2

What happens during the research and development stage?

Answer 2

The product is being researched and developed. Prototypes will be made and tested. Changes may have to be made after research feedback.

Question 3

What’s the impact on sales in the research and development stage?

Answer 3

There are no sales yet as the product is still being developed.

Question 4

What’s the impact on profits in the research and development stage?

Answer 4

The product will actually be making a loss due to the costs of development and zero income from sales.

Question 5

What happens during the introduction stage?

Answer 5

The product is launched. This usually coincides with introductory promotional activities to create ‘hype’ for the product.

Question 6

What’s the impact on sales in the introduction stage?

Answer 6

Sales are slow to begin with as customers are unsure of the product. Customers may have to be persuaded to move from competitor products.

Question 7

What’s the impact on profits in the introduction stage?

Answer 7

The product begins to cut into the losses from development, but high promotional costs still result in a loss being made overall.

Question 8

What happens during the growth stage?

Answer 8

The product has been on the market for some time, customers are fully aware of the product and are purchasing it.

Question 9

What’s the impact on sales in the growth stage?

Answer 9

Sales start to rise rapidly. This can be the result of slightly reduced prices, lack of competition and/or consumer confidence in the product.

Question 10

What’s the impact on profits in the growth stage?

Answer 10

Profits are starting to be made and losses from development and promotions during the initial stages are recouped.

Question 11

What happens during the maturity stage?

Answer 11

The product has been on the market for some time. Competition enters the market.

Question 12

What’s the impact on sales in the maturity stage?

Answer 12

Sales growth peaks and levels out. Many sales can still be made for a long time at this stage.

Question 13

What’s the impact on profits in the maturity stage?

Answer 13

Profits can still be healthy but start to fall. The competition will take sales away and thus profits will fall.

Question 14

What happens during the saturation stage?

Answer 14

The product suffers from too many competitors being in the market.

Question 15

What’s the impact on sales in the saturation stage?

Answer 15

Sales begin to fall as consumers flock to competitors’ products.

Question 16

What’s the impact on profits in the saturation stage?

Answer 16

Profits fall rapidly, especially if prices are slashed to encourage sales.

Question 17

What happens during the decline stage?

Answer 17

The products life is nearing the end. The product will stop being produced.

Question 18

What’s the impact on sales in the decline stage?

Answer 18

Sales fall rapidly and eventually the product will be withdrawn from the market.

Question 19

What’s the impact on profits in the decline stage?

Answer 19

Profits continue to fall. Eventually products may be sold at unit cost just to break even.