Product Life Cycle Year 11 GCSE Business Studies

Starter Name 3 groups that a market can be segmented into What is sampling? What are the 3 types of sample?

Learning Objectives To understand the stages of the product life cycle To appreciate what is meant by an extension strategy

Product Life Cycle Shows the stages through which a product passes over time From its development to being withdrawn from the market

Task Using the sheet in front of you, cut out the stages of the lifestyles and put them in the places you think they should go Do not use glue yet!

Product Life Cycle

Example of how the Product Life Cycle works with celebrities…

Activity… As we learn about the different stages you are going to, on your own, make a note of which celebrity you would place at that stage. Once we have learnt all the stages we will discuss as a class where you believe each celebrity goes.

The Development Stage Product starts life Research & development to come up with a saleable product Scientific and technological research Development of findings Negative cash flow, more money is going out of the business than coming in as there are no sales

Introduction Launching the product Launched onto the market Advertising & promotion Sales are low, profit will be negative Cash flow is still negative, cost of the launch outweigh any money coming in

Growth Popularity for the product grows Sales increase rapidly Profits will reach their highest point at the end of this stage Cash flow is positive but small, more sales means more costs of production and promotion

Maturity & Saturation Sales reach their highest point Businesses try to extend this maturity point as long as possible, often introducing EXTENSION STRATEGIES Market becomes saturated with competitors, difficult to grow sales Profits will begin to fall as competition increases Cash flow will be positive more money from sales coming in than costs going out

Decline Sales are falling Profits begin to fall and may become negative The product may be withdrawn from the market Cash flow is negative, as there is a lack of sales

So which celebrity goes where?

Product Life Cycle

Ipod – Classic Product Lifecycle

But what about Take That? ? Why do you think we have not placed Take That on the Product Life Cycle?

Extension Strategies Method used to increase the life of a product and stop it going into decline

Types of extension strategy Advertising ◦ To gain a new audience Price reduction ◦ More attractive to customers Adding value ◦ Adding new features New markets ◦ Going abroad New packaging ◦ Foil crisps

Games Consoles

Task Draw an axis for the product life cycle Label the axis Draw on the stages of the product life cycle Cut out from the internet pictures of products/games/TV Programmes/Celebrities you feel should belong to each stage Minimum of 3 pictures per category, per stage Include the cash flow at each stage

Homework Read pages 18 – 21 Answer Questions 1 – 3 p 21

Video http: //news. bbc. co. uk/1/hi/uk/7814502. stm Why is the standard bulb being phased out? Why are customers prepared to pay a higher price for energy saving bulbs?