3.1 - MARKETING
Lesson 7 – Product Life Cycle
Starter Activity
You are about to watch a short video about Fab lollies –
listen out for how long the product has been on the market
and what changes have been made in that time
Learning Outcomes
All
All
• Understand the
• Apply real-life
four phases of the
products to the
product life cycle
life cycle model
• Understand what
is meant by an
‘extension
strategy’
• Describe various
extension strategy
techniques that
have been
adopted by reallife businesses
Most
• Explain the link
between cash
flow and the
product life cycle
What is the ‘Product Life Cycle’?
• Businesses cannot expect a product to sell forever
• Just like human life, products progress through a life
cycle from introduction (birth) to withdrawal (death)
• The product life cycle shows the stages through
which, it is argued, a product passes over time
1959 - 2000
What is the ‘Product Life Cycle’?
• A product’s life cycle is the amount of time a
business expects the product to sell for
• Some products can have a short life cycle i.e.
technology or fashion items.
• Some products have had a long life cycle – Cadbury
Dairy Milk has been on sale in the UK since 1905 and
Kellogg’s Cornflakes since 1924
SALES REVENUE
What is the ‘Product Life Cycle’?
INTRODUCTION
0
GROWTH
MATURITY
TIME
DECLINE
Activity
You are going to be given a card that describes a feature of
one of the stages of the product life cycle.
You need to decide which stage that your feature is
referring to.
When you have decided, you need to come up to the front
and blu-tak your card onto the product life cycle diagram
that is on the next slide…
SALES REVENUE
INTRODUCTION
0
GROWTH
MATURITY
TIME
DECLINE
Task
1. Copy down the features of each stage of the product
life cycle onto your product life cycle.
2. Think of a product which is in each stage of the product
life cycle.
3. Extension task – for each product you have thought of
how can the business manipulate the marketing mix to
maximise sales during that stage of the product life
cycle?
What might an ‘Extension Strategy’
be?
• Manufacturers are likely to try to extend the maturity
stage of the product life cycle for as long as possible,
since this is usually the most profitable stage
• So they develop an extension strategy - a method used
to increase the life of a product and prevent it falling
into decline
• This involves slightly changing the product to give it a
fresh appeal to its target market, or changing it in such a
way that it appeals to a new segment of the market i.e.
changing the design or use of the product
SALES REVENUE
What is an ‘Extension Strategy’?
INTRODUCTION
0
GROWTH
MATURITY
TIME
DECLINE
What is an ‘Extension Strategy’?
• A good example of an extension strategy in use is the
Sony Playstation:
Think, Pair
Share
Take timed turns
listening, sharing
and responding
1. Using the list of extension strategies shown on page 236 of
the course textbook, can you think of some examples of
real-life products that have had their life cycles extended?
How were the extensions achieved?
2. Think time – 30 seconds
3. Who goes first - wait for start
4. In pairs, Partner A shares, Partner B listens
5. Time up
6. Class discussion
What is an ‘Extension Strategy’?
Write a paragraph in your book explaining one way
that one of the following businesses might extend it’s
product life cycle:
•
•
•
•
Cadbury
Playstation
Lego
Audi
Activity
Working as a pair, complete the table you have been given.
You need to consider what the cash flow situation might be
at each stage of the product life cycle.
For example, is cash flow positive (more money coming in
than going out) or negative (more money going out than
coming in) and by how much?
You will also need to consider the reason for the cash flow
situation. You should use the text book to to help you with
this.
Cash Flow and the Product Life Cycle
LIFE CYCLE STAGE
CASH FLOW SITUATION
REASON
DEVELOPMENT OF
THE PRODUCT
Negative – much more Money is being spent on research and
money going out than is development, materials and paying workers. No
coming in.
money coming in from sales.
INTRODUCTION
Negative – money starting Money is being spent on launching the product
to come in but still more i.e. advertising and other promotion costs. Not
going out.
much money coming in from sales.
GROWTH
Sales are growing so money coming in is
Positive – but only by a
increasing. However, promotion and production
small amount.
costs are high as the business produces more.
MATURITY
Positive – much more All of the start-up and development costs have
money coming in than is been paid. The value of sales is much higher than
going out.
the costs of production.
DECLINE
Sales are declining and selling prices have to be
Negative – but only by a
reduced. If an extension strategy is used, this will
small amount.
cost money to put in place.
Learning Outcomes
All
All
• Understand the
• Apply real-life
four phases of the
products to the
product life cycle
life cycle model
• Understand what
is meant by an
‘extension
strategy’
• Describe various
extension strategy
techniques that
have been
adopted by reallife businesses
Most
• Explain the link
between cash
flow and the
product life cycle
Rally Robin
In pairs, take
turns to give
your answers
1. In pairs, take it in turns to suggest an example of a
product that fits into one of the stages of the product
life cycle
2. You should aim to think up 4 or 5 products for each stage
of the life cycle
3. Go on until the time is up