U2 AOS2 KK6 Product Life Cycle Flashcards
What is the product life cycle?
The length of time from when a product is first introduced to consumers until it is removed from the market.
Identify the six stages of the product life cycle.
- Development
- Introduction
- Growth
- Maturity
- Saturation
- Decline
In the Development stage, market research is carried out, the idea for the product is developed and prototypes are produced.
This is an expensive period for the company as no sales are made because the product is not yet available.
Outline what would be happening with regard to:
Sales
Marketing
Market Share
Costs
Sales = none
Marketing: None/low
Market Share: None
Costs = Very high
In the Introduction (launch) stage, sales begin and start slowly as consumers are getting to know the product. This stage will involve a lot of expenditure on promotion and publicity.
The firm will need to convince their distributors to stock the new product. (For example, PlayStation 5 in 2019)
Outline what would be happening with regard to:
Sales
Marketing
Market Share
Costs
Sales = growing slowly
Marketing = growing slowly
Market Share = small
Costs = very high due to promotional costs
In the Growth stage sales are accelerating (if it is well advertised).
People are beginning to buy more of it and it is becoming successful. More outlets for the product need to be found.
The firm should start to break even on costs and begin making a profit.
Outline what would be happening with regard to:
Sales
Marketing
Market Share
Costs
Sales = Growing at fastest rate
Marketing = Increasing rapidly
Market Share = Increasing rapidly
Costs = Starting to level out, business might begin to turn a profit.