4.5 The Four PS 2022
4.5 The Four PS 2022
4.5 The Four PS 2022
? Note 2 take: During this stage, the R&D costs are VERY HIGH as a lot of time, money
and effort is invested in developing the product. No profit is experienced and cash
flow is also NEGATIVE.
THE PRODUCT LIFE CYCLE
Stage 2: Introduction
? Sales are low because most consumers are not yet aware of the product’s existence.
? Cost incurred in the launch are high, therefore no profits are normal on this stage. Cash flow is
negative.
Stage 3: Growth
? Sales volume and value start increasing significantly. Therefore, profits are rising and cash flow
becomes positive.
? Product is well established with a stable and significant market share with positive cash flow.
Sales revenue is at its peak and profit is high.
? Competitors want to take part of the market share, while the business starts thinking about
introducing extension strategies.
Stage 5: Saturation
? By this time, competitors have entered the market and saturated it.
? Sales are at their highest point and begin to fall. Cash flow is still positive.
? Some businesses were forced out of the market as a result of stiff competitions.
? The steady drop in sales begin and, through this, the profits of a product.
? Product may have lost its appeal in the eyes of the consumers because new models of product
have been introduced to replace old model.
? If sales become too low, the product is slowly withdrawn from the market.
? Prices are lowered in most cases to sell off any existing stock. (Stock Liquidation)
THE PRODUCT LIFE CYCLE /
EXTENSION STRATEGIES
? These are attempts by firms to stop
sales from falling by lengthening or
extending the product’s life cycle.
This is normally done in the maturity
or saturation stage.
? Sell existing products to new
markets.
? Find new uses for products. i.e.
cellphones.
? Change product packaging (new
design, appearance, color to
stimulate interest in customers).
? Develop new promotional
strategies. In simple terms, they
could create new advertising
campaigns to encourage consumers
to continue using heir products).
? Target to different market segments.
WRAPPING UP PRODUCT LIFE CYCLE
Stars
? A question mark product has low market share and high market growth.
? Businesses should think hard and be very selective about which problem
children they should develop. If they invest money and succeed at
developing an increased level of market share, these problem children will
become stars.
THE BCG MATRIX
Dogs
? A product classified as a dog has low market share and low market growth.
? Very few businesses want to have dogs in their portfolios.
? These products generate low income for the business and also their
chances of them to gain market share are very limited as the market itself is
not growing.
? If a business has many “dog” products may face cash-flow problems.
? Businesses tend to get rid of dogs unless the products have secondary
benefits, such as being a necessary part of product line that is profitable
overall.
THE BCG MATRIX
Source: http://dunkindonutsnews.blogspot.com/2014/01/boston-matrix.html
FLASH ACTIVITY
? Branding is a marketing
technique used to give a
product or business a unique
name or identity.
The role, or purpose, of branding includes:
MAZDA LAPUTA?
SOME EPIC FAILS ON BRANDS
SOME EPIC FAILS ON BRANDS
MITSUBISHI PAJERO?
Did you know?
?
IMPORTANCE OF PACKAGING