Product Lifecycle PDF Quiz PDF

Definition of marketing and marketing strategy Marketing: The management process of identifying, anticipating and satisfying consumer demands for profit Marketing strategy: The methods used by a business to achieve their marketing objectives The product life cycle Product lifecycles Li...

Definition of marketing and marketing strategy Marketing: The management process of identifying, anticipating and satisfying consumer demands for profit Marketing strategy: The methods used by a business to achieve their marketing objectives The product life cycle Product lifecycles Like humans - products go through a lifecycle From research and development at the start to launch (birth) and through to decline (death) Some products take longer than others to go through the lifecycle The marketing mix will change depending on the stage of the lifecycle the product is at Draw a product lifecycle diagram volume Sales Time Product life cycle Development Introduction Growth Maturity Decline Volume Sales Time Product Development This is the first stage of the product lifecycle where a product is designed and market research is analysed to produce a product which will satisfy customer needs Cash flow at this point is tight, this is a very expensive phase and at this point the product is not making any revenue and therefore no profit All capital at this point will just be an investment, there is always a risk of the product not being a success Introduction of product to market The introduction phase will involve high costs in research and development and the product may have been test marketed before launching, so profits may be negative Sales will be low as customers may not yet be aware of the products Advertising will be informative to let customers know that the product has been launched Growth phase Growth phase products are enjoying rapid growth in sales and profits At this stage the customers are aware of the product and demand is high A business may advertise the product to take advantage of the high demand What other products do you think are in the growth phase?  Why are laptops in the Maturity phase maturity phase of the product lifecycle? Maturity phase products face intense competition now all the suppliers have joined the market Market is starting to be saturated – everyone has bought the product who is likely to buy Sales are high but profits are starting to fall Products have to be discounted to keep sales high – so prices may be lowered or the product may be put on sale Decline phase Decline phase products may be limited in production At this stage profits and sales have fallen and the product may be withdrawn from sale The business may decide to heavily discount to get any last sales before the product becomes obsolete There is a trend towards more disposable items rather than products What year was the Blackberry that can be fixed or repair – they are withdrawn? simply replaced with new ones, a) 2006 therefore repairable goods are in b) 2016 decline phase C) 2010 Extension strategies Product lifecycle extension strategies introduction There are lots of ways that a business can extend the lifecycle of a product rather than withdrawing it. This may be to use to a store of raw materials or to keep loyal customers happy. The five ways that your exam board would like you to be able to discuss are: 1. updating packaging 2. adding more or different features 3. changing target market 4. advertising 5. price reduction Product life cycle - extension Development Introduction Growth Maturity Decline Volume Sales Time Product Lifecycle extension strategies A. Change the product Development or modification of a product B. Change the promotion Rebranding or relaunching of products Product lifecycle extension– modification of the product Since its launch in 2007 the iPhone has been undergoing constant modification, adding new features and benefits to encourage consumers to buy the latest version. Which version do you have? Are the labels correct? iPhone XS Max £1099 iPhone XR £799 iPhone 8 £749 Product lifecycle extension: product modification Extension strategies are designed to extend the life of the product before it goes into decline One of the methods of extending the lifecycle is through product modification and a good example of this is cars, which retain the same engine but change the styling This strategy will either sell to a new market or remind the old market that its time to change the products to the new version Research: product lifecycle Find a car (or other product) you are interested in and create a visual timeline by printing out images Can you show how the product has been modified over the Your timeline years? could be Can you also explain on your horizontal or vertical timeline how the product lifecycle extension will enable a business to continue to see the product in its modified form? Product lifecycle extension - rebranding Many brands over the years have been rebranded. For example JIF to CIF is one of the most famous changes, others may be as simple as a pack or logo change, can you think of any other examples? Product lifecycle extension – relaunch product Just over 10 years ago, Burberry’s famous check design was banned in pubs and clubs from Aberdeen to Leicester for its association with hooliganism. Today, the company boasts brand ambassadors – can you name them? Product lifecycle extension – promotion The North Face has found a new target market in teenagers Daily Mail article – on colouring books for adults here Past paper Question Assess the usefulness of the product life cycle to Birkenstock when making business decisions (10) Benefits A benefit of using the product life cycle is that it can help devise promotional strategies. New shoes in the range, which are in the growth stage, will benefit from advertising and promotion The model will help make decisions on the established products. Those shoes in the maturity stage, such as Arizona may benefit from extension strategies to prolong the life of the sandals The product life cycle may help Birkenstock make decisions on those shoes with low sales in the decline stage. lt may help them to make decisions on which ranges to discontinue to maintain the reputation of the business Limitations/Drawbacks The product life cycle is a simplistic model. Whilst there are many products whose sales follow the classical shape of the model, many others do not. It is very difficult for Birkenstock to predict the life of a shoe due to changing fashions The model does not take account of competitors' actions. Some of the Birkenstock shoes may move into the decline stage quickly if competitors introduce a superior shoe or sandal Whilst the model is a good visual tool for analysing a portfolio of products, Birkenstock would need to take account of other research findings on competitors, the economy, changing trends etc before decisions were finalised on the product range