1.3.5 Marketing Strategy
Lesson Objectives Understand the product life cycle Understand apply extension strategies to products Understand the meaning of a product portfolio and the boston matrix.
The product life cycle The product lifecycle visualises the different stages that a product will pass through over time. Put the following terms in the order a product will go through Decline Growth Product development Introduction Saturation Maturity
How will the graph look? Plot a graph on your whiteboard indicating how each stage will look in a line graph.
Product development The product is being researched and designed. Ideas are developed, prototypes are made and tested. Many products never make it past this stage. Too risky Lack of confidence in product Expensive This stage makes no revenue as no product has been sold
Introduction Here the product will be launched, sales are often slow Can be very expensive depending upon scale of production, promotion etc Product is likely to still not be profitable. Price could be set to skim or penetrate the market, dependant upon the product. Some products will be an instant success.
Growth Consumers are now aware of the product, sales may grow rapidly New customers and enticed and there is repeat business Production costs may decrease due to economies of scale. Copycats may appear if sufficient protection is not in place, due to this price and promotion may need to alter
Maturity/Saturation Growth of sales will level off. The product is established in the market place, with stable market share. Sales will have peaked and competitors will have entered the market, making it saturated. Some businesses may leave the market, others may use extension strategies.
Decline For most products sales will decline, due to changing consumer tastes. Companies often are sold or stop making the product.
Extending the life cycle Sales Time Introduction Growth Maturity Saturation Decline
Extension Strategies Find new uses for the products
Finding new markets for existing products
Develop a wider product range
Aiming the product towards specific target markets
Changing appearance or packaging
Update the product
Where do the following go on the product life cycle?