Product

Question 1

Product Life Cycle

Answer 1

Products go through distinct phases or stages. Together these are known as the
product life cycle.
The no. of sales and length of a
product life cycle may be different for different products but all share a general pattern of growth and decline.
Many businesses record and track sales information like this to help know when to adjust costs and price, to boost sales and to extend the life of the product.

Question 2

Stages of Product Life Cycle

Answer 2

RESEARCH AND DEVELOPMENT:
- product not on the market yet
- r&d and testing take place
- prototypes built and modified before product is ready for launch
- no sales made
- development costs need to be recovered later
INTRODUCTION:
- product launched on the market
- advertising costs will be high in order for product to get noticed
GROWTH:
- sales begin to rise
- advertising costs still high
- a profit may be made, if all r&d and advertising costs have been recouped.
MATURITY AND SATURATION:
- sales at their peak
- advertising reduced as product is now well known
DECLINE:
- sales begin to fall

Question 3

Extending a Product Life Cycle Strategies

Answer 3

• make changes to products
• change price (lower)
• change place products can be sold
• change promotion
• change packaging
• change usage
• change name (if suffered bad publicity)

Question 4

Product Portfolio

Answer 4

A product portfolio is the range of items sold by a business.
A company like Sony has a product portfolio that includes computers, cameras, televisions and games.

Question 5

Costs of maintaining a large Product Portfolio

Answer 5

• increased research and development costs due to multiple products being produced
• marketing and advertising costs may be high due to the promotion of a large range of products
• bad publicity incurred by one product may affect sales of all products within the portfolio
• resources may be spread too thin and this could affect the performance of existing cash cow products

Question 6

Benefits of maintaining a large Product Portfolio

Answer 6

• having different products can spread risk between markets meaning there is less chance of a company making losses
  having a range of products can lead to greater brand awareness.
• can encourage customer loyalty as customers are more likely to buy multiple products from the same brand
• easier to launch new products due to greater brand awareness
• can meet the needs of different market segments
• can allow for seasonal fluctuations
• allows for new products to replace products at the end of the product life cycle
• can increase profits from selling a range of different products

Question 7

Boston Matrix

Answer 7

Star products have a high market share in a fast growing market.

Cash cows have a high market share in a slow growing market.

Question marks or Problem children products have a low market share in fast growing markets.

Dogs are products with a low market share in slow growing markets.