Product life cycle Flashcards
What are the 4 stages of the product life cycle
- Introduction/launch
- Growth
- Maturity
- Decline
- (Sometimes an additional step) Research and development
Define the product life cycle
The stages that a product goes through from launch to decline in terms of sales revenue
What happens in the 4 stages of the PLC
- Introduction/Launch
High costs – lots of promotion needed, no EOS (economies of scale) in production
Low sales – cash flow problems
- Growth
Increasing revenue
Profits can start to be made
- Maturity
High but flat sales and market share. More EOS.
Most consumers already own the product
Saturation – competition enters the market
Still promotion – to remind customers
- Decline
Sales and profits fall
- (Sometimes an additional step) Research and Development
Design and testing
High costs – Prototype and test marketing help success
Diagram of the product life cycle
Remember the x and y-axis need to be labeled
x-axis: Time
y-axis: revenue/sales
What are the 3 extension strategies
Redesign packaging
A new version of the product
Adding features
Pro’s and Con’s of redesigning packaging (AO3)
Pros:
Relatively simple - change packaging, new name etc
Makes an old product seem new and improved
No need to create a new product
Cons:
May lose loyalty of some customers if they don’t like the new design
Consumers may see through the strategy - may be seen as a brand without new ideas
Pro’s and Con’s of new version of the product (AO3)
Pros:
Should be guaranteed increased revenue in the future - e.g. new Star Wars movies, iPhone 5/ iPhone 5 SE / iPhone 5c
Cons:
Costs involved - e.g. designing new product design
Pro’s and Con’s of adding features (AO3)
Pros:
No need to create a new product
Adding features makes the product seem unique and special
Ex: Cube mountain bike - Cube Electric mountain bike. The same bike but new feature (electric)
Cons:
Consumers may see through the strategy - may be seen as a brand without new ideas
Consumers may think the new feature is unnecessary
