Price, product, promotion and place (4Ps): product life cycle.

The idea

The product life cycle describes the stages a product passes through over time: development, introduction, growth, maturity and decline. In development, costs are incurred before any sales revenue arrives. At introduction, sales are low and promotion is heavy, so profit may be negative. During growth, sales rise quickly as customers adopt the product and competitors may enter. At maturity, sales peak and competition is strongest, so the business may extend the cycle through updates, new packaging or new markets. In decline, sales fall as tastes, technology or substitutes change, so the business may withdraw the product. The cycle helps a business plan its marketing mix at each stage, for example charging a higher price at introduction and reviewing price at maturity.

What earns the marks

• Identifies the stages of the product life cycle: development, introduction, growth, maturity and decline.
• Explains that sales and profit behave differently at each stage, for example profit may be negative at introduction because of high launch costs.
• Explains how the marketing mix may change across stages, such as heavy promotion at introduction and price review at maturity.
• Explains extension strategies, such as product updates, new packaging or targeting new markets, used when sales approach maturity.
• Applies the model to a given business or product to explain a decision, for example withdrawing a product in decline.

Common mistakes and how to put them right

• Treating the product life cycle as a guarantee that every product follows the same timescale.

  Put it right by explaining that stage length varies between products and markets.

• Confusing sales with profit at every stage.

  Put it right by explaining that profit depends on costs as well as revenue, so a product can have rising sales but falling profit.

• Assuming decline always means immediate withdrawal.

  Put it right by explaining that extension strategies may be used before withdrawal is considered.

Exam tips

• Link each stage to a specific element of the marketing mix rather than describing the stages in isolation.
• Use the context of the case study product when explaining why a stage matters to the business.
• When recommending an extension strategy, justify it with reference to the product and its customers.