Marketing Unit 2 - Product Life Cycle

Stage 1 — Development

• Development and research is carried out in order to develop an idea and turn it into a marketable product. It can involve scientific research that is often vital for product development. It is supposed to help the firm find the most cost-effective methods; of which they can use to produce the product and find the most cost-effective materials.

Stage 2 — Introduction

• Introduction is when the product is finally launched and put on sale for the first time. A lot of promoting and advertising is involved in the process to make customers aware of the product and place is key in this stage of the product cycle because a product wont make sales if it is being sold in a place where nobody has an interest in buying it.

Stage 3 — Growth

• This is when sales and profitability increases until the product becomes established.

Stage 4 — Maturity

• Sales are at their peak (highest) so promotion becomes less important at this stage as it is not really needed anymore but businesses will still continue to advertise the product however much less than at its launch ( introduction). As the products popularity grows, businesses may try to make the product more widely available.

Stage 5 — Decline

• Eventually the products sales begin to fall as rival products take over and the product becomes obsolete.

The life cycle is linked to a businesses cash flow during the life of one of their products.

Development & Introduction

> The firm spends money on research and promotion, but sales of the product are usually very few. The business will expect to make a loss during these stages.

Growth & Maturity

> Through this, the business will hope to earn back the money they lost due to investing in the product in the stages above (development and introduction) as well as make a proft.

Decline

> The firm will probably spend less money supporting the product as sales and as sales are falling, the business will begin to make a loss.