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Product life cycle and extension strategies

Business Studies Notes and

Related Essays

Product Portfolio Analysis

 A Level/AS Level/O Level

Your Burning Questions Answered!

Discuss the role of product portfolio analysis in strategic decision-making, considering different portfolio models and their applications.

Analyze the stages of the product life cycle and explain how businesses can develop effective strategies for each stage to maximize the product's potential.

Evaluate the different product extension strategies available to businesses, including line extensions, product extensions, and multibranding. Discuss the advantages and disadvantages of each strategy.

Explain the concept of new product development and the key steps involved in the process. Discuss the role of market research and customer feedback in the development of successful products.

Examine the challenges and opportunities faced by businesses in the mature and decline stages of the product life cycle. Discuss strategies to extend the lifecycle and maintain product profitability.

Product Portfolio Analysis, Product Life Cycle, and Extension Strategies: A Guide for Young Business Minds

Imagine you're running a clothing store. You have a ton of different shirts, pants, shoes, and accessories. How do you know which ones are doing well and which ones are dragging you down? This is where Product Portfolio Analysis comes in.

1. Product Portfolio Analysis: Understanding Your Product Mix

Think of your product portfolio as a collection of all the products your company sells. Like a diverse collection of plants in a garden, you want to make sure each product plays a valuable role.

Boston Consulting Group (BCG) Matrix:

A popular tool for analyzing your product portfolio is the BCG Matrix. It categorizes products based on their market share (how much of the market your product owns) and market growth rate (how fast the market is expanding).

Stars:

Products with high market share and high market growth rate. Think of them as the rising stars of your portfolio, like a new iPhone model. They need a lot of investment to keep growing.

Cash Cows:

Products with high market share but low market growth rate. They generate a lot of cash and are mature, like classic Levi's jeans. They require less investment and can fund your other products.

Question Marks:

Products with low market share but high market growth rate. They have potential but require a lot of investment to see if they can become stars. Think of a new startup trying to break into the market.

Dogs:

Products with low market share and low market growth rate. They are not making much money and may not be worth keeping.

Using the BCG Matrix:

This matrix helps you understand where to invest your resources and where to cut back. For example, you might want to invest in question marks to see if they can become stars, or even withdraw from dogs that are dragging down your profits.

2. Product Life Cycle: The Journey of a Product

Every product has a life cycle, like a human being. It goes through stages of introduction, growth, maturity, and decline.

Introduction:

The product is new and unfamiliar to the market. Sales are low, and marketing is focused on creating awareness.

Growth:

Sales are increasing quickly, and competition is starting to emerge. The focus is on building brand recognition and securing market share.

Maturity:

Sales are slowing down, and the market is saturated. Competition is fierce, and prices may start to drop.

Decline:

Sales are falling, and the product is losing its appeal. The company may decide to discontinue the product or reduce its marketing efforts.

Real-World Examples:

Think of the smartphone market. The introduction of the first iPhone was a game-changer, followed by rapid growth and intense competition. Now, the market is mature, with declining growth rates as smartphones become ubiquitous.

3. Product Extension Strategies: Keeping Your Products Alive

Once a product enters the maturity phase, it's important to consider extension strategies to prolong its life. Think of it like keeping a plant alive for as long as possible!

Common Extension Strategies:

Product Improvement:

Upgrade features, improve quality, or add new functionalities. For example, adding a new camera feature to an existing smartphone.

Line Extension:

Introduce new variations of the product to appeal to different segments of the market. Think of a new flavor of a popular soda.

Market Extension:

Find new markets for your existing product. For example, selling a product in a different country.

Price Reduction:

Lowering the price to attract price-sensitive customers. This can stimulate sales, but it also reduces profit margins.

Repositioning:

Presenting the product in a new light to attract new customers. For example, rebranding a product for a different target audience.

Importance of Extension Strategies:

Extending the life of a product can help you continue to generate revenue and maintain brand loyalty. It's like giving your existing plants a boost so they can keep thriving!

Remember, analyzing your product portfolio, understanding the product life cycle, and employing extension strategies are essential for businesses to succeed in the competitive market. Keep these concepts in mind, and you'll be well on your way to making smart business decisions!

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