Product Life Cycle

• What is the product life cycle?

  The time a product is available to customers
• What does the product life cycle start with?

  Introduction of a product to the market
• What is product life cycle management?

  Strategizing to support and maintain a product
• What are the four stages of the product life cycle?

  • Introduction
  • Growth
  • Maturity
  • Decline
• What happens during the introduction stage of a product?

  High investment in advertising and low sales
• Why might a company experience negative financial results during the introduction stage?

  High marketing spending and low sales
• What characterizes the growth stage of a product life cycle?

  Growing demand and increased production
• How does a company respond to competition during the growth stage?

  Invest heavily in advertising and differentiation
• What is the most profitable stage of the product life cycle?

  The maturity stage
• What happens to profit margins during the maturity stage?

  Profit margins start to shrink
• What is the decline stage characterized by?

  Decreasing sales and market saturation
• What might a company do if a product enters the decline stage?

  Revamp the product or phase it out
• What is a benefit of using the product life cycle?

  Clarifies portfolio of offerings
• What is a drawback of the product life cycle?

  Not suitable for every industry or product
• How does the product life cycle impact economic growth?

  Promotes innovation and resource allocation
• What is the BCG Matrix used for?

  Determining market positioning of products
• How does the BCG Matrix differ from the product life cycle?

  BCG does not show product flow direction
• What did Theodore Levitt state about innovators in 1965?

  They have the most to lose from failures
• What can successful companies do with the product life cycle stages?

  Increase profitability and maximize returns
• What are the special considerations in the product life cycle?

  • Impact on innovation
  • Stages within an industry
  • Prolonging the mature stage
• What is an example of a product in decline?

  Videocassette
• How do companies prolong the mature stage of a product?

  By making minor updates and redesigns