1. Product life cycle
Hodder & Stoughton © 2017

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.
Hodder & Stoughton © 2017

3. The product life cycle (2)
Development
Introduction
Growth
Maturity
Saturation
Decline
Hodder & Stoughton © 2017

4. The product life cycle and profit
Sales/profits
Product life cycle
Profits
Time
Losses
Breakeven
Hodder & Stoughton © 2017

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.
Hodder & Stoughton © 2017

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.
Hodder & Stoughton © 2017

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.
Hodder & Stoughton © 2017

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.
Hodder & Stoughton © 2017

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.
Hodder & Stoughton © 2017

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.
Hodder & Stoughton © 2017

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?
Hodder & Stoughton © 2017

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
Hodder & Stoughton © 2017