Product life cycle and extension strategies

Overview

Research and development, introduction, growth, maturity and decline, a games console across its life, and extending a product's life through packaging, features, new markets, advertising or price cuts.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is the product life cycle?

   Model answer

   The product life cycle shows the stages a product goes through from its development to its withdrawal. Sales change at each stage.

2. 2

   What happens during the research and development stage?

   Model answer

   The product is designed, tested and refined before launch. The business spends money but earns no revenue from the product.

3. 3

   What happens to sales and profit at the introduction stage?

   Model answer

   Sales are low and grow slowly as customers learn about the product. The business usually makes a loss because of high launch and promotion costs.

4. 4

   What happens at the growth stage of the product life cycle?

   Model answer

   Sales rise quickly as more customers buy the product. Profits begin to be made, and competitors may start to enter the market.

5. 5

   What happens at the maturity stage of the product life cycle?

   Model answer

   Sales reach their peak and level off as the market becomes saturated. Competition is strongest, so prices may be cut.

6. 6

   What happens at the decline stage of the product life cycle?

   Model answer

   Sales and profits fall as customers switch to newer or rival products. The business may withdraw the product or use an extension strategy.

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