Product Life Cycle is the process a product would undergo during their existence in the market. It starts with;
Launch
Growth
Maturity
Decline
Extension
Launch
This is the stage where a product is first introduced to the market. During this period, the product will likely experience slow sales. As such, a significant cost would be incurred from promotion of the product to create awareness.
Growth
Sales would pick up at this stage as promotion during launch increase acceptance of the product. Persuasive advertising will help further boost sales as brand loyalty develops. The product would start to generate profits for the firm and competition will increase as more firms join the market.
Maturity
At this stage, product sales would have peaked and experience a decline in sales growth. The product would have generated its maximum profit for the firm and largest market share possible. The market may also be saturated from intense promotion and competition between firms. This would discourage new firms from entering the market.
Decline
Sales are expected to decline rapidly at this stage as most consumers in the target market would have already purchased the product. Some firms may leave the market or develop new versions of existing products with improvements from feedback of customers.
Extension
Firms may adopt promotional strategies with price cut to persuade customers to repeat purchase of existing product, prolonging sales. A new product version with improvements would rely on brand loyalty as it relaunches.
RELEVANT CONCEPTS
Product
Price
Promotion
Revenue / Sales
Profit
Market Share
PAST YEAR QUESTIONS
Identify and explain two benefits to a firm developing new products. (6 marks) Oct/Nov 2018/13
Identify and explain two problems for a firm having a wide range of products available to customers. (4 marks) Oct/Nov 2019/12
Identify two stages of the product life cycle. (2 marks) May/June 2020/13