(2) Unit 3.1 - Product Life Cycle

The Boston matrix
1. Dog
  1. Low market share
  2. Low market growth
  3. unsuccessful product
  4. profitable, small positive cash flow
    1. still on sale
  5. unprofitable, negative cash flow
    1. taken off sale
  6. no point of investments
2. Problem child/ question marks
  1. fast market growth
    1. the market for the product may be growing fast. however the product may or may not mean the success of the product.
  2. Low market share
  3. small net cash flow
  4. decision.
    1. get rid of the product.
    2. invest more in the product in the hope of a star outcome.
      1. e.g. bring out another version of the product
        this version may be successful.
      2. more advertising
      3. other promotion
3. Cash cow
  1. Low market growth
  2. High market share
  3. a product is a cash cow in the Saturation pat of its life
    1. the product is well established on the market and has continuous sales. this means it has a high market share as people are buying the product instead of other similar products available. - strong market share
    2. similarly the product has stopped growing, so has a low market growth.
  4. Maturity
    1. cash cows are found at the maturity stage of life.
    2. at the start of decline in sales
  5. these products return a lot profit.
  6. strong positive cash flow
  7. little need for investments
4. Star
  1. High market share
  2. High market growth
  3. growth stage of the product life cycle.
    1. the product is still increasing sales. s has a high market growth
  4. stars are very successful products
  5. sales and profits will be growing
    1. growth stage
  6. spending money on new equipment and machinery to make the extra products
  7. small positive cash flow as large income but also heavy costs
  8. spending heavily on promotions (advertising) to increase customer sales
5. a model which analyses a product portfolio according to the growth rate of the whole market and the relative market of a product within the market; a product is placed in one of four categories- star, cash cow, problem child or dog
6. a type of this is
definition
1. Stages of the product life cycle
  1. decline
    1. positive - negative cash flow
    2. use of extension strategies to boost sales
      1. introduce a new prduct range to boost sales
      2. advertise more to increase customer awareness of the product
        promotion.
      3. definition
        method used to increase the life of a product and prevent it falling into decline
  2. saturation
    1. possitive cash flow
  3. maturity
    1. positive cash flow
    2. cash cow
  4. growth
    1. problem child
    2. sometimes positive or negative cash flow
      1. depends on how many products have been sold, and how much money had been spent
  5. introduction/launching the product.
    1. negative cash flow
    2. money used for promotion/advertisement
  6. development
    1. uses market research to develop the product.
    2. negative cash flow
      1. money needed for market research and the product development, but no products are being sold.
    3. Dog
definition
1. the product life cycle shows the stages that a product goes through during its life
product portfolio or product mix
1. the combination or range of products that a business sells
2. businesses need to manage their products and continully bring out new or updated products to keep up sales
product portfolio analysis
1. investigation of the combination of products sold by a business
  1. answers questions like:
    1. which products are doing well?
    2. should a product be taken off the market?
    3. What can be done to increase sales?
      1. Will advertising improve sales?
Liz Simpson

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(2) Unit 3.1 - Product Life Cycle

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