Chapter 36 Product Review (Product life cycle (Growth (Sales are growing…
Chapter 36 Product Review
Difference of the goods and services
Consumer service: holidays, health care, financial advice etc.
Producer goods: machines, tools, equipment etc.
Consumer goods: clothes, food, mobile phones etc.
Producer service: maintenance, auditing, engineering etc.
Product life cycle
Sales are growing sharply and the business starts to make a profit. At the end of this stage, competitors will enter the market.
Maturity and Saturation
Sales will start to level off. Now the business's cash flow is improved, price is likely to fall, promotion will be changed.
Why? The business can generate more cash; Competitors will find it difficult to enter the market so less competition.
Ways: find new markets/ new uses; encourage more uses; change the appearance of packaging; develop the product range
The product is officially launched. Businesses may choose different pricing for the product.
The product is being researched, designed and tested. Lots of cost are spent, the cash flow is damaged.
Consumer taste changes, technology changes, new products appear in the market so the sales decreases.
The BCG Matrix
Cash cow: High market share and low market growth
Dog: Low market share and growth
They are at the end of the life cycle. They will be soon replaced by other products.
Star: High market share and growth
They are valuable products, are likely to be profitable.
Question mark: Low market share and high market growth
They have potential, if the marketing actions taken are right they can also do well
The role of packaging
Packaging is vital:
Some customers often link the quality of packaging to the quality of product itself.
Packaging also helps customers to recognize this brand when it is placing next to rivals