Product Lifecycle Flashcards
1
Q
Definition of product lifecycle
A
Life of the product in the market with respect to sales, products pass through these stages at different speeds.
2
Q
Order of stages
A
Development, introduction, growth, maturity, saturation, decline.
3
Q
Why are extension strategies used?
A
- prolong lifecycle
- new market segments, updating designs and market repositioning.
4
Q
Development
A
- Research and design stage
- Negative cash flow due to high market research, design and production costs.
5
Q
Introduction
A
- Launch of product onto market.
- Low sales, initial losses.
- Focus on promotion and brand awareness.
6
Q
Growth
A
- Sales increase, some profit.
- Focus on strengthening brand.
7
Q
Maturity
A
- Sales and profit are maximized.
-Intense competition.
-Extension strategies and promotion may be necessary.
8
Q
Saturation
A
- Slower growth, reduced sales.
- New competition and products may be entering the market.
9
Q
Decline
A
- Sales fall.
- Discussions begin whether to support product or withdraw from market.
10
Q
Advantages of product lifecycle
A
-enables businesses to forecast sales
-aids decision making
-allows businesses to plan ahead e.g competition, changing trends
11
Q
Disadvantages of product lifecycle
A
-not applicable in all markets
-changing market conditions can cause variances in sales
-not all products follow the same product cycle at the ‘usual’ speed
