Product Life Cycle

The product life cycle shows the sales of a product over time. It's useful for planning marketing strategies and changing the marketing mix.

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What are the five stages of the product life cycle?
The five stages are development, introduction, growth, maturity and decline.
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What happens at the development stage of the PLC?
This department develop the product. Market research is carried out and costs will be high as currently there are no sales to cover the costs. There is a high failure rate due to lack of demand.
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What happens at the introduction stage of the PLC?
The product is launched, either in one or several markets. It is sometimes launched with complimentary products to boost sales. An example of this was when the PlayStation was launched with games.
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What needs to happen at the introduction stage to ensure sales are met?
Promotion of the product is key to heavilly build sales. A business needs to make sure they have the capacity to meet the demand that may come through promotion. Price skimming of penetration pricing may also be needed to cover costs or get started.
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What happens at the growth stage of the PLC?
Sales grow fast and there are both new and repeat customers. Profits are likely to rise and pricing strategies are likely to change to meet this new demand.
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Name one benefit of the growth stage of the PLC?
Sales grow fast, Profits are likely to rise and it may encourage more outlets to stock the product.
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Name one negative of the growth stage of the PLC?
Competitors may be attracted to the market!
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What happens at the maturity stage of the PLC?
Sales have reached a peak and profitability increases because fixed and development costs have been paid for. There aren't many new customers but other products may be forced out the market which is beneficial.
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What happens at the decline stage of the PLC?
The product no longer appeals to customers and sales will therefore fall and profits decrease. Products are likely after a while to be withdrawn or sold to another business. Which is divestment.
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Cash flow is the difference between money coming in and money going out. What happens to cash flow during the introduction stage of the PLC?
The cash flow is still negative as the product is likely to cost more than it makes in sales. Penetration pricing keeps cash flow down, however skimming may improve cash flow.
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What happens to cash flow during the maturity stage of the PLC?
Cash flow is positive, sales are high and unit costs are low.
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What is capacity?
It is the maximum amount of a product that a business can produce at a particular point in time.
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What is capacity utilisation?
This is how much of the capacity a business a business is using?
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With this in mind, what will the capacity utilisation be like at the introduction stage?
Capacity utilisation will be low as people may not be familiar with the product and therefore a business will be wary of making too many products.
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In contrast what will the capacity utilisation be like at the maturiy stage?
This will be at it's highest as sales will be at the peak.
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What is an extension strategy?
They try to prolonge the life of a product by changing the marketing mix.
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Name two types of marketing strategies?
Product and market development
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What is product development?
Businesses improve or redesgin a product. Making it look more up to date and current to increase sales.
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What is market development?
Businesses can look for new markets or new uses for existing products. An example of this was when baby oil was sold to adults to make their skin softer too.
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To conclude what is the product life cycle and how is it beneficial to any business.
It shows the sales of a product over time. It is beneficial as you can plan marketing strategies and change the marketing mix to make sure your product achieves the most amount of success possible.
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Other cards in this set

Card 2

Front

What happens at the development stage of the PLC?

Back

This department develop the product. Market research is carried out and costs will be high as currently there are no sales to cover the costs. There is a high failure rate due to lack of demand.

Card 3

Front

What happens at the introduction stage of the PLC?

Back

Preview of the front of card 3

Card 4

Front

What needs to happen at the introduction stage to ensure sales are met?

Back

Preview of the front of card 4

Card 5

Front

What happens at the growth stage of the PLC?

Back

Preview of the front of card 5
View more cards

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