PLC

1. www.hoddereducation.co.uk/businessreview
Product life cycle
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2. The product life cycle (1)
All products will have a time span over which consumers will want them.
This time span is called the product life cycle.
Each product has a life, and this is represented by the graph on the next
slide that tracks time and the level of sales.
It is wise to consider the profit levels these stages will create for
businesses.
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3. The product life cycle (2)
Development Introduction Growth Maturity Saturation Decline
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4. Sales/profits
Time
Product life cycle
Losses
Breakeven
Profits
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The product life cycle and profit

5. What are the implications?
The stage of the life cycle will impact the decision making for a business
and it is important that you clearly understand these implications. Each
stage will have different strategic considerations.
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6. Research and development
This is an expensive time for the business, as money is spent designing the
product and conducting market research. The business makes a loss at this
stage, which can add to financial pressures.
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7. Introduction
This is where the product is launched or first put on sale. At this stage the
product is unknown and the business needs to advertise it. The business
still makes a loss, as the small number of sales do not yet cover the money
spent on research and development.
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8. Growth
This is where sales show their most rapid growth. The product is still new
and is in great demand. The business now breaks even and some
successful products (e.g. Apple iPad or Dyson vacuum cleaner) would be
making profits. Copycat competitors start to launch similar products.
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9. Maturity
The product reaches its peak sales and is at its most profitable point for the
company. Competitors have now entered the market, which starts to slow
sales.
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10. Saturation
At this point sales stop growing, although sales are still high. The business
might start to think about new offers to try and keep sales high.
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11. Decline
The final stage in the life cycle. Sales start falling as consumers see the
product as old. The business needs to make a key decision:
 Does it replace the product before it starts losing money?
 Does it try to extend the life of the product?
 Does it cease production immediately?
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12. Extension strategies
Businesses try to keep the sales of a product at the highest possible level
for as long as they can, as this will increase their profits.
A good extension strategy can extend the product for some time.
They can include:
 sales promotions
 product modifications
 special offers
 new recipe
 discounts
 loyalty cards
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