4.5a -

• Product

  is any good or service that serves to satisfy the needs or wants of customers. They can be tangible or intangible. They can be sold to private individuals, to other businesses or to governments.
• Tangible = physical products, such as computers 

  Intangible = services such as education
• Products can be classified as consumer or producer goods. 

  • Consumer products = are those purchased by private individuals for their own personal use. 

  Producer products = are those purchased for commercial use, rather than for private consumption.
• The Product Life Cycle 


  Shows the different stages that a product is likely to go through from its initial design and launch to its decline and eventual withdrawal from the market (in most cases).
• The Product Life Cycle

  • Measured over time in terms of sales revenue. 
  • PLC model allows managers to identify any necessary changes and to take appropriate action as part of an improved marketing strategy.
  • They can have long or short life cycles
• the 5 stages of the Product life cycle

  (i) research and development, (ii) launch (introduction), (iii) growth, (iv) maturity and (v) decline as shown in the image on the side. 
• Stage 1 Research and Development (R&D)

   involves the R&D department of an organisation developing the ideas for a new product, as well as the marketing department conducting thorough market research. 

  • Activities - idea generation, screening, market research, market analyses, product development, testing of prototypes and test marketing.
• within Research and development stage they conduct Test Marketing, define this term

  • Test marketing = enables final products to be tested with a focus group (representative of target market) in a small geographical area in order to gather meaningful consumer feedback and adjustments to be made prior to the full launch of the product 
• Stage 2 Launch (introduction)

  • At the stage, the product is introduced to the market 
  • Promotion is likely required - in order to raise awareness and to encourage sales. 
  • Can be achieved through a combination of persuasive and informative advertising so that potential customers are aware of the product's benefits. 
  • The price may be high if the product has a first-mover advantage (first product of its kind in the market) or a unique sign point (such as new tech and functionality).  
• stage 3 - Growth

  • During this stage of the product life cycle, the product enjoys sales growth and brand recognition.
  • Promotional techniques may include: use of persuasive advertising so that customers understand why the product is better than its competitors. 
  • Can help to establish brand loyalty 
  • Marketing activities = focused on fainting higher market share, such as broadening distribution channels
• Stage 4 -  Maturity

  • This stage, the rate of growth in sales slows down, although the firm has significant market share. 
  • Combination of high sales and low unit costs (due to economies of scale due to the firms growth) 
  • Leads to higher profits = can be used to support the development of other products in the firm's portfolio. 
  • Activities - focus on reminding customers about the product and its benefits
  • Due to competition that exists in the market, the pricing of the product is likely to change
• stage 5 - Decline

  • Final stage, sales revenue and profit fall
  • Cost cutting becomes inevitable as there is no longer the need to use as many human and financial resources to support the product.
  • Promotion and advertising are likely to be cut or even eliminated at some point
  • Extension strategies may be to be used to prolong the product's life cycle, 
  • If this doesn't work, products are removed from market 
  • Businesses need additional products in its portfolio to be launched in order to generate sales and profit for its survival 
• Product portfolio

  refers to the collection of all the products owned by a business at a point in time

  • Enables a firm to have better control over its sales, revenues, costs, profits and operational risks. 
• Boston Consulting Group matrix

  is the most popular marketing planning tool that helps managers to plan for a balanced product portfolio 

  • Looks at products from 2 perspectives: market share and market growth 
  • Allows marketers and managers to assess new and existing products in terms of their market potential 
  • Allows a business to decide which products need more or less financial support and investments
  •  Products that doubt have high market share may be withdrawn or remarketed. 
  • Allows business to develop appropriate growth strategies by adding new products to an existing or new product range. 
• The Boston Consulting Group matrix shows that there are four categories of products in a firm's product portfolio:

  • Dogs
  • Question marks
  • Stars
  • Cash cows =
• Boston Consulting group matrix - Dogs

  • are products with low market share operating in a low growth market.
  • Don't generate much cash, as the market is stagnant or in decline,
  • So businesses need to use extension strategies or withdraw such products from the market
• Boston Consulting group matrix - question mark

  • are products that operate in a high market growth sector but have low market share 
• Boson consulting group matrix - star 


  are products that operate in high growth markets and have high market share 
• Boston consulting group matrix - cash cows

  are products with high market share operating in a low-growth (mature) market
• Extension strategies are any means of prolonging a product's lids cycle and delaying a decline in its sales revenue. 
• Extension strategies

  • Price reductions
  • Advertising additional and new promotional campaigns
  • Redesigning
  • Repackaging
  • New Markets
  • Brand extension
  • Product differentiation
  • Change brand name
  • Reposition the product
• Price reductions


  Tend to increase the demand for a product, especially if the price is elastic in demand due to the wide availability of substitutes. Businesses can also use price cuts to get rid of excess stock before they become obsolete
• Advertising additional and new promotional campaigns

  Can help attract new customers, remind previous customers that the product still exists and persuade or encourage them to purchase more of the product
• Redesigning

  Involves introducing special features or 'limited edition' to current products. Entices more customers to purchase the product as there is additional value added in the product process
• Repackaging


  Involves changing the packaging of a product to help revive demand, by perhaps using more attractive colour or materials
• New Markets


  Entering into a new market for a current product can also extend its life cycle, such as trying to sell the existing product in a new retail outlet, different regions or overseas markers
• Brand extension


  Refers to the use of an existing and successful brand name to launch a modified or new version of the existing product
• Product differentiation


  Refers to any marketing strategy that involves making a product stand out from others offered by rival businesses
• Change brand name


  This is used when a product has a negative publicity and falling sales
• Reposition the product


  Involves business exploring new markets for the product
• The PLC, investment, profit, and cash flow 


  The phase of a product in its life cycle will have a direct impact on the firms' investment, profit and cash flow.
• Consumer goods

  • Perishable goods
  • Durables goods
  • Speciality goods
  • Fast moving good