Product-The-Product-Life-Cycle

This stage begins when the product is launched

It is characterised by slow sales growth as the product is still unknown to most consumers 

Cash flow is usually negative, as the business usually incurs high costs for promotion, advertising and distribution

Marketing efforts are focused on creating awareness and generating interest in the product

The product enters this stage when sales begin to increase rapidly

The business focus shifts to building market share and increasing production to meet this growing demand 

Cash flow usually turns positive during this stage as sales revenue increases and costs are spread out over a larger volume of production

Marketing strategy is used to differentiate the product from its competitors and build brand loyalty

This stage is characterised by high sales but slowing sales growth 

Market saturation is likely 

Cash flow is usually positive during this stage as sales revenue continues to come in and costs are reduced through economies of scale and efficient production processes

Marketing strategy aims to maintain market share and increase profitability by cutting costs and finding new markets

Decline starts when sales begin to fall as the product becomes obsolete or is replaced by newer products

The business’s focus shifts to managing the product’s decline and reducing costs

Cash flow usually turns negative as sales revenue declines and costs associated with the product’s decline increase 

Marketing strategy may involve discontinuing the product, reducing prices to clear stock or finding new uses for the product

Changing or modifying the product to make it more appealing to customers 

This could involve improving or adding features, increasing capacity or redesigning its appearance or packaging

Product-related extension strategies also involve targeting new markets with different product features

Product improvements e.g. Samsung releases new versions of its Galaxy Smartphone every year with upgraded features and improvements to the previous model

Line extensions e.g. Coca-Cola introduced Diet Coke and Coke Zero as line extensions of its original

Repositioning e.g. when IBM’s personal computer division started losing market share to other brands, it repositioned its products as high-end business machines and focused on the enterprise market
 

Changing promotional activity related to the product 

This could involve changes to advertising, different pricing tactics or attractive sales promotions

Promotion-related extension strategies may also be used to target new markets

Changes to advertising, e.g Kellogg’s continues to advertise its Corn Flakes which have been around since 1906

Price promotions, e.g. Cyber Monday occurs on the first Monday after Thanksgiving in the USA and electronic firms discount prices significantly in order to boost sales of their products

Sales promotions: e.g. many coffee shops offer a loyalty programme where customers can earn a free drink for every six drinks consumed