The Product Life Cycle..what is happening? 747 Development

Starter In pairs think about products that have been successful but their sales have fallen, or the product was re-launched, re-branded, etc…and sales increased again. ILLNESS SPORT DRINK TRASHFASHIONABLE

Product Life Cycle Product life Cycle = ‘Shows the sale of a product over time’ Launch Growth Maturity SaturationDeclineDevelopment

Product Life Cycle – Mini Sales Launch Growth Maturity Saturation Decline Development

Product Life Cycle Stages… Launch = Product will need heavy investment in promotional activities. In this time there is no positive cashflow. Companies must manage their liquidity. Research & Development = Researching and developing the product. This may takes weeks, months or years. In this time there is no positive cashflow. Companies must manage their liquidity.

Product Life Cycle Stages… Growth = Sales and profit rise. Cashflow becomes positive. Maturity = Peak of sales. Positive cashflow which can pay for further product developments. Saturation = No further sales are likely. Decline = Product sales fall as it is less popular or the competition are taking over.

Product Life Cycle & Cash Flow Cashflow Development Negative Cashflow due to Research & Development cost Negative Cashflow at launch due to Promotion cost Positive Cashflow in Growth, Maturity & Saturation Cashflow positive but falling as sales decline

Product Life Cycle Stages & Marketing IntroductionGrowthMaturitySaturationDecline SalesLow sales because the product is new Sales rise sharplySales increase more slowly Sales level off as market saturation is reached Sales fall as new products become available or the product goes out of fashion Pricing Policy / Competition Promotion / Advertising Profits

Product Life Cycle Stages & Marketing IntroductionGrowthMaturitySaturationDecline SalesLow sales because the product is new Sales rise sharplySales increase more slowly Sales level off as market saturation is reached Sales fall as new products become available or the product goes out of fashion Pricing Policy / Competition Price skimming as few / no competitors Penetration pricing by competitors as a few competing products are introduced, small reduction in your prices to compete with these products Competitive pricing/promotional pricing as competition becomes intense Competitive pricing/prices are reduced to compete with existing competitors, no new competitors enter the market Price reductions to encourage sales as sales are falling. Some competitors stop making the product Promotion / Advertising Profits

Product Life Cycle Stages & Marketing IntroductionGrowthMaturitySaturationDecline SalesLow sales because the product is new Sales rise sharplySales increase more slowly Sales level off as market saturation is reached Sales fall as new products become available or the product goes out of fashion Pricing Policy / Competition Price skimming as few / no competitors Penetration pricing by competitors as a few competing products are introduced, small reduction in your prices to compete with these products Competitive pricing/promotional pricing as competition becomes intense Competitive pricing/prices are reduced to compete with existing competitors, no new competitors enter the market Price reductions to encourage sales as sales are falling. Some competitors stop making the product Promotion / Advertising Informative advertising as the product is new, free samples may be given out to get customers to try it A lot of advertising to encourage brand loyalty and to compete with other very competitive products A high and stable level of advertising, may be promoting new improved versions of the original product Advertising reduced or may stop altogether as sales fall Profits

Product Life Cycle Stages & Marketing IntroductionGrowthMaturitySaturationDecline SalesLow sales because the product is new Sales rise sharplySales increase more slowly Sales level off as market saturation is reached Sales fall as new products become available or the product goes out of fashion Pricing Policy / Competition Price skimming as few / no competitors Penetration pricing by competitors as a few competing products are introduced, small reduction in your prices to compete with these products Competitive pricing/promotional pricing as competition becomes intense Competitive pricing/prices are reduced to compete with existing competitors, no new competitors enter the market Price reductions to encourage sales as sales are falling. Some competitors stop making the product Promotion / Advertising Informative advertising as the product is new, free samples may be given out to get customers to try it A lot of advertising to encourage brand loyalty and to compete with other very competitive products A high and stable level of advertising, may be promoting new improved versions of the original product Advertising reduced or may stop altogether as sales fall ProfitsLoss made due to high development costs Profits start to be made after development costs have been covered Profits at their highest as sales growth is high Profits fall as sales fall

Product Extension Product Extension = ‘Aims to maintain or increase sales by modifying one or more elements of the marketing mix to extend a product’s life’ ProductPlace

EXTENDING THE LIFE OF THE PRODUCT New variation to original product; e.g. Diet Coke with lime Make small changes to the product Sell into new markets; e.g. Export What makes a successful product? New improved version of product New promotion campaign See through new places / distribution

Product Extension Launch Extension Saturation

Product Extension - Mini

Product Extension - iPod