ZIMSEC O Level Business Studies Notes: Marketing: The Product Life Cycle

  • The term product life cycle is used to describe the phases through which a product passes from its introduction to decline
  • It is a basic fact in business that all products introduced go through a number of phases from their introduction to their eventual elimination
  • Generally a product goes through following stages:
  • Product Development phase
  • Launch or Introduction phase
  • The growth phase
  • Maturity phase
  • Saturation
  • Decline
  • Extension or Elimination
  • The four stages: introduction, growth, maturity, decline are deemed the most important at Ordinary level

Introduction

  • Is characterized by:
  • Low sales volumes
  • High costs due to for example high promotional costs
  • Heavy promotional spending
  • High risks of the product failing
  • Promotions aim mainly to create awareness e.g. informing the potential market that the product exists
  • During this stage only innovators are buying the product
  • The product is unlikely to be profitable at this stage
  • high production cost due to limited volumes being made

Growth

  • Higher sales volume
  • A rise in profits and sales volume
  • A fall in costs due to economies of scale resulting in increased profits
  • The product is bought by early adopters
  • Promotions are still aimed at creating awareness
  • Product penetrates the market

Maturity

  • Sales continue to rise but at a reduced rate when compared to the growth phase
  • The product is now being purchased by the majority
  • The business’s promotional strategy are aimed at creating brand preference
  • The business is also concerned with retaining its market share
  • Promotion is mainly persuasive and comparative

Saturation

  • Sales have leveled off rather than rise at rising at a slow rate as in the maturity phase
  • Most people in the potential market have already bought the product if its a one off product or if not people are buying it at a steady unchanging rate

Decline

  • Sales and profits decline
  • Substitutes appear and the product becomes obsolete
  • The firm can either eliminate the product or employ extension strategies

Extension

  • This where strategies meant to rejuvenate the product are employed
  • Popular extension strategies include:
  • Changes in the product itself e.g. add more Memory to a smartphone
  • Changing it’s packaging
  • Changing the way it is promoted
  • Changing the channels of distribution

Importance of the product life cycle

  • Enables the business to map out the performance of the product
  • Allows the business to anticipate and craft marketing strategy at each stage
  • Helps with creating promotional strategies
  • Helps the production department to determine the necessary production volumes

To access more topics go to the O Level Business Notes

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