Product lifecycle elements

1. Draw and describe the offer life-cycle analysis model?


1. Development: It is the phase of creating the value offer. The company design its product in this part, so its all the investment of time, money and knowledge before the production starts.
2. Introduction: The phase to create awareness. In this stage the usually the followings happen: production capacity expansion is slow, fixing the technical problems of the first series of the product and production, delay to make the value offering available.
3. Growth: Introduction is survived, production and sales is growing, profit is generated, product or brand image is getting stronger.
4. Maturity: Production, sales and profit reached its maximum, and no further improvements can be achieved, except if new elements are brought in sales competition.
5. Saturation: This is the advanced stage of maturity, market is covered by 3-5 major products or brands, and several niche providers.
6. Decline: Sales volume decreases significantly, and the weakest marketers disappear first, and than slowly some more other, the strongest lasts last.
7. Elimination: The withdrawing stage of the value offering. Need to close a business, if no more profit can be achieved.


2. What are the differing strategies for the differing stages of the OLC/PLC?

Differing strategies can be a special product with something different than the competitors, faster development than the others. At the introduction interesting media plan, sth surprising or funny can provide an advantage. At the growth phase a good tactic can be to cover as much portion of the market as possible, but needs lots of investment. At maturity stage its also important to make it easy for costumers, to identify somehow our product, as easy knowing in what are we better. At decline stage special offers, concessions, or innovative refreshments can help to keep sales at a higher level. Elimination can be quick or slow, with special pricing.



3. What trends should we consider in market dynamics and trend analysis?

• Social trends: For example the population is ageing in western countries, so it is worth to consider how to fit needs of people, who are older in average. Might need to publish all websites and printed media in Arial 14, instead of 12. Product ranges can be extended to more easy to use products.
• Fashion: Almost everyone is following the actual fashion, or at least tends not to behave like someone outside the society. So all the products needs to follow the changes, because out of date products are not much needed.
• Popular culture: same as fashion.
• Popular value offerings: Has to have the same as the competitors, just better if we have even better deals, if we recognise special needs first, if we have sth differing from others also.


4. Describe benchmarking

A continuous process, when we look at all the best practices of other organisations, and we are investigate what can be useful for us, and so through learning we can achieve more, while applying those best practices. Solutions can come from competitors, but even from completely different business fields.



5. What is portfolio analysis? What are the two best-known models?

It is a graphic model, which is displaying the relationship between two or more main variables in a given strategic planning context
The two best-known models are the “BCG growth-share (Boston) matrix” and the “Directional policy (GE/Shell) matrix”.



6. Draw and label the BCG growth-share matrix

STAR Question mark
High Cash generated +++ or
Market growth annual rate in constant $ relative to GNP growth Cash use --- Problem child
Cash generated +
Cash use ---
Cash cow Dog
Low Cash generated +++ Cash generated +
Cash use - Cash use -
High Low
Relative market share








7. Describe each of the following

• Question mark: Small market share at high growth market.To improve would need lot of investment, but result is not guaranteed.
• Star: Big market share when fast growing market. Lot of result for lot of investment, which is needed because fast market growth. Equal to “growth” in PLC model.
• Cash cow: High market share on a slowly growing market. No much more investment needed, but profit is generated.
• Dog: Low market share on a slowly growing market. Equals to decline in OLC model.



8. Draw and explain the directional policy matrix


This tool is used to develop long-term value offering portfolio. Similar to the BCG matrix in terms of comparing investments and businesses, but here are more criteria in use.
The basic 2 main parameters: the organisation’s competitive capabilities and the prospects for sector profitability. In this matrix we consider market growth rate only one of many factors for attractiveness, and market share for competitive strength.