Product: The Product Life Cycle (Cambridge (CIE) IGCSE Business): Revision Note

The focus is on designing and developing the product

The business usually incurs high costs for research and development, market research, and product testing

Cash flow is usually negative during this stage, as the company is investing heavily in the product without generating any revenue

The marketing strategy during this stage is focused on creating awareness and generating interest in the product

The stage begins when the product is launched

Characterised by slow sales growth as the product is still new and 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

The marketing strategy is to differentiate the product from its competitors and build brand loyalty

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

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

Starts when sales begin to decline as the product becomes obsolete or is replaced by newer products

The business 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

The 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

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 Coca-Col

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

Changes to advertising e.g Kellogg's continues to recreate adverts for its Corn Flakes cereal which has 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 consumed