Product - The Product Life Cycle

Question 1

What happens to demand for a product over time?

Answer 1

It changes, some prodcucts sell well for longer than others

Question 2

What are the 5 parts to the Product Life cycle?

Answer 2

• Development
• Introduction
• Growth
• Maturity
• Decline

Question 3

Explain the Development part

Answer 3

• First stage
• Includes R&D & Market Research
• May include Scientific research
• To find the most cost effective materials & methods

Question 4

What is Scientific Research?

Answer 4

• Pure science without any commercial aim
• Often done in universities
• Large businesses have teams of “Applied” scientists
  
  • They try to use recent discoveries to develop new or improved products

Question 5

Explain the Introduction Part

Answer 5

• Product Launch - on sale for the 1st time

- Backed up with lots of advertising & sales promotions

Question 6

Explain Growth

Answer 6

Sales & profitability increase, until product becomes established

Question 7

Explain Maturity

Answer 7

Sales are at their peak

• Promotion is less important
• Continue to advertise but less than at launch
• As popularity grows, firms will make it more widely available
• Towards the end, market becomes saturated & no more room to expand

Question 8

Explain decline

Answer 8

Sales start to fall as rival products take over & product is soon obsolete

Question 9

How is Life cycle linked to Cash Flow?

Answer 9

Development & Introduction:
Spend money but sales are low, expect to make a loss
Growth & Maturity:
Hope to earn enough £ to pay back initial investment and make a profit
Decline:
Spend less £ supporting product & will begin to make a loss