The Product Life Cycle

Question 1

What are the six stages of the product life cycle?

Answer 1

1. Development
2. Introduction
3. Growth
4. Maturity
5. Saturation
6. Decline

Question 2

What is happening during the development stage?

Answer 2

The product is still being designed and developed.
There are no sales.

Question 3

What is happening during the introduction stage?

Answer 3

The product has just been launched.
The product might be unknown.
Sales will be low which means profits will be negative.

Question 4

What is happening during the growth stage?

Answer 4

There is more interest in the product.
Sales increase rapidly.
At the end of this stage, profits will reach their highest point.

Question 5

What is happening during the maturity stage?

Answer 5

Sales reach their highest point in the cycle.
The rate of growth will start to slow down.
Competitors will start to enter the market, driving sales down.

Question 6

What is happening during the saturation stage?

Answer 6

Similar products will enter the market.
Businesses will have to lower their prices to stand out.
Some businesses are forced out of the market.
Sales will start to fall.

Question 7

What is happening during the decline stage?

Answer 7

The product is being replaced by newer, better products.
Sales and profits will fall.

Question 8

What are the two choices businesses can take when they hit the decline stage?

Answer 8

Replace the product with a new one
Brand extension

Question 9

Define the term ‘brand extension’.

Answer 9

Prolonging the life of the existing product

Question 10

What are the different strategies for brand extension?

Answer 10

Find new uses for the product
Finding new markets
Develop of wider product range
Aiming the product towards a specific target market
Changing appearance or packaging