product life cycles

Question 1

demand for a product…

Answer 1

changes over time

Question 2

research and development

Answer 2

develop an idea and turn it into a marketable product
e.g - scientific research, no commercial aim
most cost effective materials and methods

expect to make a loss as firm spends money on research and promotion and sales are low

Question 3

introduction

Answer 3

launched and put on sale - advertising and sales promotions - place is important here

expect to make a loss as firm spends money on research and promotion and sales are low

Question 4

growth

Answer 4

demand increases until the product becomes established - pay back initial investments hopefully and make a profit

Question 5

maturity

Answer 5

demand reaches its peak - promo becomes less important
businesses will try and make the product more widely available - pay back initial investments hopefully and make a profit

Question 6

decline

Answer 6

demand falls as rival products take over - less money supporting the product - being to make a loss

Question 7

life cycle is linked to

Answer 7

cash flow

Question 8

extension strats

Answer 8

product can make a profit for longer but will have to invest more money - firms have to strike a balance between investing money in old products and developing new ones

Question 9

different extension strats

Answer 9

adding more or diff features - may increase demand by making it more useful or appealing
using new packaging - new design may make it more eye - catching, possibly attracting a new target market and customers are more likely to chose over competitors
lowering price - special offers or competitions