Business Studies - Product Life Cycle The product life cycle stages are explained in depth along with advantages and disadvantages of the product life cycle, extension strategies and the uses. Each stage (development, introduction, growth, maturity and saturation, decline, rejuvenation and decline) are all explained in depth along with a chart and adv. and disadv.

1. Product Life Cycle
Business Studies
(A Level)

2. For marketing to be effective, a business must be aware of
it’s product life cycle. The cycle shows the stages that the
product will pass and the sales that can be expected.
Development Introduction Growth
Maturity
(and
Saturation)
Decline
Rejuvenatio
n or
Termination

3. The product is researched and designed.
Suitable ideas must be investigated,
developed and tested
A prototype or model of the product may be
produced
Decisions are made about the launch
A large number of the products fail and
don’t progress further, due to business being
reluctant to risks of new products
There are high costs and lots of spending
with no sales or revenue.

4. The product is launched.
As the product is new, sales are usually slow
There is a high cost of promotion and distribution to make consumers
aware of the product
Product may not be profitable
Prices may be set high to cover costs
Prices may be set low to break into the market
Sales may be restricted to early adopters, people will pay high prices
for new fashion trends and technology rather than when they’ve gone
out of fashion
Fast moving consumer goods may enjoy this type of start to the cycle

5. Sales begin to grow rapidly.
Repeat purchases
Customers are more aware of the product
Production increases, costs fail
Product becomes profitable
If it’s a new product, there are rapid growth sales
and competitors may launch their own versions of
the product (copycat products) which may slow down
sales
Price and promotion need to be considered

6. Growth in sales may start to level off
Product established with a stable market
share
Sales peaked
Competitors have entered the market to take
advantage of the product profits
New competitors
Some firms are forced out of the market

7. Sales start to decline.
Sales often decline due to change in
consumer tastes and/or new products
Products lose their appeal to consumers
Eventually, the product is withdrawn or sold
to another business

8. It would be sensible for a business to start to extend the product’s
life cycle in the maturity stage before sales fall into decline.
Successful extension strategies can transform the position in the
market place.
Rejuvenation – Extension strategies are
used
Termination – Product is taken off the
market

10. Firms may use extension
strategies to increase
product life cycle.
An extension strategy is a practice
used to increase the market share
for a given product or service and
thus keep it in the maturity stage
of the life cycle rather than going
into decline.
Repositioning
Relaunching
‘Now With’ policy
New version of the product
Develop new product range
Launch to new market
Updating appearance
New packaging
Change components or
ingredients
Encourage people to use the
product more
Advertising
Price reduction
New uses

11. Illustrate broad trends
Identify points to consider launching new
products, older ones are in decline
Identify points for extension strategies to be
introduced
Help identify if, when and where spending is
required
Identify when products should no longer be sold
Manage product portfolio
Indication of profitability at each stage
Plan different styles of marketing needed
Predict future sales
Determine decisions

12. Advantages Disadvantages
• Give managers the ability to
forecast product direction and
plan for timely execution of
relative competitive moves
• Difficult to foresee transitions
• Helps to formulate marketing mix
decisions
• Difficult to determine what stage
the product is in
• Explanatory tool • Not all products go through every
stage
• Determine when it’s reasonable to
eliminate declining products
• Products may remain in stage for a
long time
• Effectively, only one product per
diagram
• Inefficient when dealing with
Brands and/or services

13. Why is the product life cycle an
important concept in marketing?
The product life cycle is an important concept in marketing
because it describes the stages a product goes through
from when it was first thought of until it is finally removed
from the market. Not all products reach the final stage,
some continue and some rise and fall.