This video explains the various stages that a typical product will go through and what a business can do to increase demand during each stage, using coca-cola and Apple's iPhone as real-life examples. The product life cycle is an important concept in marketing it describes the stages the product goes through, right from the point that the product is just an initial design idea in the research and development stage, until the point that the product is finally removed from the market at the end of its life. However, it's important to note that not all products reached this final stage, some continue to grow while others rise and fall very quickly. Ultimately, it is critical that marketers understand the lifecycle of their product and business executives should have a plan for dealing with products at every stage of their lifecycle. So, first of all the product life cycle starts at the research and development stage, this tends to be very time consuming and costly as the product has been designed and isn't yet produced. Therefore, there are no sales, so cashflow is negative at this stage.The next stage is introduction which is when the product is launched to the market. Typically the business would invest heavily in marketing and promotion of the product and cashflow would usually be negative at this stage. Pricing strategies are important at this stage and both penetration pricing and price skimming are common strategies used to attract those early adopters or loyal fans to purchase the product and get the ball rolling. Following the introduction of the product sales will typically start to grow, Therefore the growth stage comes next and is where sales start to increase rapidly alongside demand for the product, also competitors may appear with similar products as they try to replicate the businesses success. This is typically the stage in which cash flow starts to turn positive and the business starts to see a profit from the product. The next stage is maturity which is when demand for the product starts to stagnate, although the product is typically well established and well-known at this stage it tends to stagnate as there will also be high competition in the market. However, a key positive for the business is that the product is well established so cost of production and investment in marketing is typically much lower, therefore cash flow tends to still be positive during this stage. Common strategies during the maturity stage include managing production levels to ensure the business doesn't over produce whilst distributing the product to more businesses and retailers to reach a wider audience commonly with a lower price tag following the maturity of the product it enters the decline stage within which sales start to decrease and the market is oversaturated with both competition and availability of products. This leads to supply being higher than demand which is commonly influenced by advancements in technology and changes in consumer buying behaviour, therefore it is typical for a business to experience negative cash flow within this stage, which eventually leads to the production and marketing of the product being stopped to minimise costs whilst the price is cut to clearance to sell off the final batch of units. Now it's very important to understand that a business can actually prolong the life cycle before it enters the decline stage through product extension strategies. If you consider the life cycle of Coca Cola when their original product Coca Cola classic hit the maturity stage they have had many strategies over the years to extend their brand and their core product. This is typically through something called a line extension examples of this include diet coke which is one of the most famous line extensions for the company mainly targeting females to purchase the famous soft drink. Then as a trend grew and health concerns around sugar became much more serious they tried to attract males to a sugar-free alternative by introducing coca cola zero. Other line extensions include cherry coke and more recently in 2014 Coca Cola life, which had a very short life cycle and was taken off sale in 2017 just three years after its release so Coca Cola could simplify the choice between sugar and sugar-free options in the UK. Another extension strategy would be brand extension an example of this would be Coca Cola using their brand to expand into a new market for example selling a range of chewing gum, essentially using the brand of coca-cola to help the product become established in a new market much quicker. Other examples of common extension strategies include advertising with the aim of gaining and new audience or reminding the current audience of the product. You've then got price reduction to make the product more attractive to customers. You've then got adding value to the product such as adding new features to the current product for example improving the specifications on a smart phone. Exploring new markets such as selling the products in new geographical areas or creating a version targeted at different segments of the market is also quite a commonly used product extension strategy and one final strategy is new packaging which is used to generate interest and attract people to the product. Just have a think have you experienced any of these product extension strategies in your lifetime have you seen any products that you've been buying for years and all of a sudden they've had a change whether that's a change in packaging the way they have been advertised to you or are you getting more of the added value, just have a think whether you've ever experienced that, it's most likely that you have. So now we will have a look at the product lifecycle of Apple's iPhone. The iPhone was introduced to the market in 2007 reporting 1.39 million sales, they hit the Growth stage fairly quickly increasing from 1.39 million sales in their first year to 11.63 million sales in 2008 that's an increase of 736 %. Apple's iPhone sales continued to grow for 8 years from 2008 to 2015 surprisingly having their biggest growth in the final year of this stage of the product life cycle. A staggering increase of 62 million sales on top of 2014's 169 million sales. However, what you can clearly see from 2016 onwards is the iPhone hitting the maturity stage within which sales actually decrease for the first time ever a 19.3 million decrease in unit sales in comparison to the previous year as you can see sales in 2016 to 2018 have actually plateaued, a clear indicator that the iPhone is currently in the maturity stage, so the question is after a very strong first decade what's left for the Apple iPhone will the product remain in the maturity stage for the next decade or will Apple actually innovate a brand new concept which will cause the iPhone to enter the decline stage just like the iPhone did to the iPod. So to finish off, we're just going to look at a few key advantages and important limitations that should be considered when making business decisions using the product life cycle. First of all the product life cycle helps the business to forecast sales trends over their lifetime, during a products life it allows the business to assess which stage the product is in which helps the business to adapt their strategy to increase sales and importantly to minimise the likelihood of it entering the decline stage. It also allows a business to view its whole product portfolio across the product life cycle to assess where their next investment is best spent and it is a very simple tool for a business to use with the more data a business has the more accurate it becomes. Now moving on to the limitations that the business should consider when making investment decisions after using the product lifecycle model, first of all not all products will follow the typical shape of the life cycle whilst it is common that all products go for each stage it cannot be assumed that they will, for example some products may excel through the growth stage for years before hitting the maturity stage, whilst others made quickly move from the growth stage straight into decline and miss the maturity stage completely which can happen in instances such as being replaced by innovation from competitors or demand in the market overall declines quickly. However, a key consideration for a business is that the product life cycle is only a prediction, a theory, not an exact science if you like. Therefore, the product life cycle model should not be used in isolation to make investment decisions hopefully that's helped you to get to grips with the product life cycle. 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