Product Life Cycle and Extension Strategies

Marketing Mix

  • The marketing mix consists of four key elements:
    • Product
    • Price
    • Place
    • Promotion

Product Life Cycle: Main Phases and Extension Strategies

  • Lesson objectives focus on understanding the product life cycle's main phases and extension strategies.

Starter Activity

  • Group activity: Categorizing products into "old" and "new" groups.

Discussion

  • Discussion: Exploring reasons behind the disappearance of some products while others remain popular.

Product Life Cycle

  • The product life cycle consists of four main stages:
    • Introduction
    • Growth
    • Maturity
    • Decline

1. Introduction Stage

  • Definition: The initial stage after a product is developed, tested, and launched into the market.
  • Challenges:
    • Low sales volume.
    • High costs.
    • Focus on advertising and awareness.
    • Typically low or negative profit.

2. Growth Stage

  • Define: The product gains market acceptance, leading to rapid sales increase.
  • Significance: Critical period for businesses to capitalize on initial success and establish a strong market position.
  • Challenges:
    • Increased competition.
    • Supply chain pressure.
    • Quality control issues.
    • Cash flow management.

3. Maturity Stage

  • Define: The product achieves widespread market acceptance.
  • Characteristic: Sales growth slows as the market becomes saturated.
  • Challenges:
    • Increased competition.
    • Changes in customer preferences and standards.

4. Decline Stage

  • Define: A mature product experiences a loss of customer interest, leading to a downward drift in sales.
  • Reasons:
    • Market saturation.
    • Changing consumer preferences.
    • Technological advancements.
    • Increased competition.

Product Life Cycle Examples

  • Examples of products in different lifecycle stages (iPod, Vinyl, Camera).

Extension Strategies

  • Purpose: Used to prolong the life of a product before it enters decline.
  • Benefit: Preferred by businesses as product redevelopment costs are high; extension strategies help generate more cash.
  • Impact: If a product is refreshed, sales and revenue can recover or even grow.
  • Example: The return of Vinyl records.

Group Discussion: Vinyl's Comeback

  • Discussion: What strategies did Vinyl employ to achieve its comeback?

Product Extension on Graph

  • Graphical representation of product extension impact on sales over time, showing recovered sales after the extension.

Coca-Cola Decline Scenario

  • Hypothetical: CEO of Coca-Cola scenario where the fizzy drink is in decline.
  • Task: Determine strategies to achieve product extension and refresh sales.

Extension Strategies: Definition and Examples

  • Illustrating extension strategies with examples on a graph.
  • Examples of extension strategies:
    • Finding new markets (selling abroad).
    • Finding new uses for a product (e.g., Ralph Lauren extending Polo brand to towels and bedding).
    • Modifying the product (e.g., Volkswagen with the Golf GTI).
    • Developing the product range (e.g., crisp manufacturer introducing new flavors).
    • Changing appearance or packaging (e.g., Coca-Cola selling coke in cans, glass bottles, and different sized plastic bottles).
    • Encouraging more frequent use (e.g., Kellogg's promoting Corn Flakes for supper).