the product life cycle

the product life cycle

The Product Life Cycle charts the stages a product goes through over its lifetime and measures the sales that it is likely to have. The life cycle is generally divided into six stages: Research and Development, Introduction (Launch), Growth, Maturity, Saturation and Decline.

extension strategies

Extension strategies are methods used to prolong the life cycle of a product by preventing it or delaying it from reaching the decline stage of its product life cycle.

Product Modification. E.G. Limited editions of a product.

Product Adaptation. E.G. Finding new uses for a product

4. Repackaging

5. Rebranding. Selling a product under a new brand identity.

6. Reducing Price. This may entice consumers to continue to buy the

product/service.

7. Product Endorsement

8. Advertising. This may reinforce consumer awareness and develop customer

loyalty to the brand. It can be used to gain a new audience or remind the

current audience.

product differentiation

 It enables the product to be aimed at new market segments

 It can add something to improve on competitors’ products

 Expensive market research may be required which may not be successful

 Expensive to develop and test market the product

 No guarantee of success

 Depends on what competitors are doing

changing the way in which a product is promoted or advertised

Can change the brand image and appeal to new customers

 The business can target specific groups of new customers

 The business can build up its corporate image by continual advertising

 Advertising can be informative for customers

It can be very expensive depending on how the product is

promoted/advertised

 Customers may not like the new brand image

 It can take longer for this method to take effect

 Depends on what competitors are doing

extension strategies

 The business may target a completely new market segment which is a

considerable size

 The increased costs of prolonging a life cycle might not be as high as

developing an entirely new product

 May bring in extra sales revenue/profits for many years

 Less risk involved than with new products as the product has already been

proven to be popular

 The product may have now reached the end of its life cycle so trying to

prolong the cycle further is pointless

 It might be very expensive for a business to change elements of the marketing

mix, such as a new promotion campaign

 Such a focus on prolonging life cycles may prevent a business from

developing new products

 A business may fall behind competitors who bring out new products

using the product life cycle

• The model facilitates R&D activities and decisions at the introduction stage

enabling changes to product specification based on consumer feedback

• It allows the business to make more effective decisions regarding the

introduction of a new product

• It enables the business to maintain a balance of products at each stage

therefore facilitating production and sales strategies in order to maintain

market share.

• It enables managers to plan ahead and consider the timing and type of

extension strategy to be implemented in order to prolong the product life span

• The model is based on historical sales levels and therefore does not provide an accurate measurement of future market potential

• It is difficult to estimate the product’s current stage of the life cycle since demand may be subject to seasonal variations or changes in consumer tastes, therefore, a viable product may be withdrawn from the market unnecessarily resulting in lost revenues.

• Managers may make incorrect decisions regarding product introduction or withdrawal due to factors beyond their control. E.G. changes in consumer tastes.

• Timing is critical in decisions relating to the introduction and withdrawal of products yet it is difficult to be precise when dealing with product life cycle charts.

product portfolio analysis

For the continued success of a business, it is important that a firm has a good range of products. If it becomes too reliant on one product and then that product declines it will not have others to fall back on. The BOSTON MATRIX examines the range and types of products that a firm has within their portfolio.