Unlock the Potential of Full Life Cycle Sales for Research and Development

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hello and welcome to this video on the product lifecycle now many products go through various stages from their development until when they finally are ceased to be sold the box wagon golf is a good example of a product that's had a long life with many different versions likewise coca-cola though some products have much shortened lifespans and it's useful for the marketing department to understand where a product is within its lifecycle and also how they can extend the life of a product so in this video we're going to look at the product lifecycle diagram look at each stage included in the diagram and then find anyone to something called extension strategies I'm also going to assess the usefulness of the product life cycle model so let's start off what is the product Micra cycle on the private life cycle model is a theoretical model which describes the stages a product goes through over its lifetime and here is our diagram we have five stages that this product typically goes through development introduction growth maturity and decline and we would represent those looking at possibly sales revenue and profit and what we can see is that during the period of development there are no sales and then sales revenue starts to rise as we go through the different phases of the product life cycle and then begin to decline again in terms of profit profit is revenue minus costs so at the start we have a period where we have a loss we're expending money building up costs associated with developing the product and then once we start to get revenue coming in then the product market starts to make us a profit and eventually make breakeven when it crosses the line and then goes on to make as our maximum profit at this stage so the product I stopped was useful because we can use it to help forecast sales manage cash flow optimize the marketing of each and managed the range of products that have business offers so let's now go through the stages what happens during the development stage at the product lifecycle we're doing this early stage the businesswoman when we carry out market research about the product possibly design and test the prototype during this stage we tend to get high costs and we can see those costs being built up by the negative profit or the loss that's being accumulated associated with the product at this stage there we know revenue from the product we haven't released the product to the public we're just developing it to know revenue and this is where we kind of have a cash flow issue in that we need cash to develop products before we can then get the money back later now it's worth knowing that many products them move beyond this phase very problem its successful there's at least one or two possibly that have incurred cost that never made it to the introduction stage our next phase is introduction this will involve the launch of the product so actually introducing the product and making it available for customers to buy now during only during this phase we have quite high costs because we'll be spending heavily on promotion and we won't be making that many items our capacity utilization will be low revenue is also likely to be low at this stage while again we gain traction in the market so again there might be some potential cash flow issues in this stage we might consider at this stage perhaps a price skimming strategy to recover early research and development costs which again might lead to possibly lower levels of sales in the initial stages what we really hope is that the business or the product reaches the growth stage and this is where our product really takes off will experience fast output growth and a high level of revenue now during this phase as we sell more and more we can benefit from economies of scale buying in bulk and things like this so we expect the unit costs to form the stage that product might become more profitable although we also might attract more competition to the market which may involve changing perhaps the promotional mix or other elements of the marketing mix maybe in a price skimming strategy here we start to lower the price on the price penetration structure maybe we start to raise the price okay the next phase here is maturity and this is where sales start to level out but it should be noted that we have quite a high level of sales here it's also when the product becomes most profitable so in this stage the product should be generating a lot of cash we sometimes call it a cash cow at this stage cost should be quite low we've got large-scale production we might be attracting some competitors into the market now we probably have a stable market share potentially hopefully quite a high market share at this stage the final stage is decline and that's where we experienced a fall in sales as the product comes towards the end of its life maybe consumers chase a taste change in identity products come onto the market if we see profits starting to fall or cumulative profit started to fall we might consider stopping this product so if we look at some real life examples here we can see Apple iPod sales from the 2006 to 2014 and we can see the introduction period happened here and after introduction period sales are quite low the release of iTunes really helped iPod sales and at that point we can see there's a real growth in sales here then we have a maturity phase high levels of sales before eventually iPod sales start to decline before the end so we say that I put here koalas a fairly classic product life cycle schedule so we've looked at the product life cycle diagram and looked at the different stages now if we have a look a bit more detail of Apple iPod sales we can say yes there was introduction and then we saw some growth and then we saw maturity before eventually into climb now let's think about this a bit more carefully to trump what we want as a business is we want products to stay and the maturity phase for as long as possible and what you can see is that maturity phase wasn't quite short and then we had a decline actually Apple were quite clever here and they managed to maximise the maturity phase now if we look at this diagram or the data here what we can see is that bringing out lots of different versions everytime they manage to bring out our version would just prolong the life of the iPod in terms of its sales so they were quite clever here with adapting the product try and extend the maturity phase and we call these extension strategies an extension strategy is a method used to extend the life of a product to prolong the prematurity stage of the product life cycle and halt decline so effectively what we're trying to do is adjust our diagram here so the maturity phase is always being extended how might we do this or we might change the products for example with iPods the Nano the mini developments from the classic iPod we might extend the product range for example bring out different flavors we might target a new market segment so children scooters we might target maybe commuters look for alternative distribution channels for example selling coffee in petrol stations we might consider adjusting the price we might consider trying to change the way that we promote the products all of these might be extension strategies we would use to prolong the maturity phase on the product so in this video we've looked at the product life cycle diagram we look at the stages and we've written some examples of extension strategies now why is it useful this model is because if we can understand the shape and duration the cycle we can better understand how we should be marketing or how it should be changing the marketing mix for a product now it is potentially quite difficult sometimes we'll use this model because we don't necessarily know the exact shape of and duration of the cycle from product to product decisions we make might change the traditional shape of the life cycle sometimes hard to know exactly where a product is in its life cycle and the length of each stage cannot be reliably predicted and for some products decline is not inevitable house could curl enter decline you might argue probably not so a problem is that a product life cycle might look different for different types of products here we can see quite a faddish product that's over quite quickly here maybe kind of like coca-cola a classic product we have quite a long maturity period so some are some issues with this model as well so again we've looked at the product life cycle diagram here with the different stages extension strategies and then we've also said some reasons why actually this might not be as useful and approached us to look at how we might change the marketing mix of our product that's it thank you so much for listening