Product Life Cycle
Use the product life cycle to analyse introduction, growth, maturity and decline, then evaluate extension strategies and product-portfolio decisions.
- Syllabus
- First assessment 2019
- Course
- Business XBS11/YBS11
- Level
- AS
Exam points
- Apply life-cycle stages to sales, competition, cash flow and product-portfolio decisions.
- Evaluate extension strategies by considering costs, timing, market response and product maturity.
1.3.3.1b - Product life cycle question 1
[Maximum number: 8]
Source for use with Section B
Extract C
About Skechers
Skechers is a global footwear company that designs and develops shoes for men, women and children. It sells its products online and in more than 2,700 shops in 170 countries through its established distribution channels. The annual sales revenue of the business increased from $3.52bn in 2016 to $4.16bn in 2017.
Skechers' marketing department uses both primary and secondary market research. Focus groups and interviews are used during the design stage to collect opinions on new shoes before they are launched onto the market. Focus groups are also used to gain feedback on the performance and comfort of existing styles of shoes. Since 1992 when it launched its first shoe, the company has diversified into several new lines, targeting different market segments and different activities.
The range is updated regularly and includes shoes for walking, work and casual wear. The portfolio includes 3,000 different styles of footwear for all ages that offer quality and comfort. Its best-selling shoe is the Go-Walk brand, sold globally. More recently the company has designed and sold shoes for athletes and is now competing with companies such as Nike and Adidas.
Organisation of Skechers
Although Skechers has offices and shops globally it has maintained a centralised organisational structure. At the corporate headquarters in California, USA, Skechers research, design, and develop the shoes as well as controlling global marketing campaigns and operations. Offices based in South America, Europe and Asia oversee the regional operations.
David Weinberg is the Chief Operating Officer (COO) based in the USA head office. He is responsible for the day-to-day operations. These include planning Skechers policies and objectives and developing financial and distribution strategies to expand the business.
Discuss how the product life cycle may help Skechers develop its product portfolio.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with
the general marking guidance. The indicative content below exemplifies
some of the points that candidates may make but this does not imply that
any of these must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation – indicative content
• Product life cycle describes the stages that a product goes
through from introduction to decline.
• Skechers have 3,000 styles of shoe in their portfolio.
• A benefit of using the product life cycle is that it can help devise
promotional strategies. The model will help make decisions on the
established products.
• New shoes in the range, such as the shoes for athletes, which are in
the growth stage, will benefit from advertising and promotion.
• Those shoes in the maturity stage, such as Go-Walk may benefit from
extension strategies to prolong the life of the shoes.
• The life cycle may help Skechers make decisions on those products
with low sales in the decline stage. It may help them to make
decisions on which ranges to discontinue to maintain the reputation of
the business.
• However, the product life cycle is quite a simplistic model. Whilst
there are many products whose sales follow the classical shape
of the model, many others do not. It is very difficult for Skechers
to predict the life of a shoe due to changing fashions.
• The model does not take account of competitors actions. Some of
the Skechers shoes may move into the decline stage quickly if
competitors such as Nike introduce a superior product for golf
shoes for example.
• Whilst the model is a good visual tool for analysing a portfolio of
products, Skechers would need to take account of other research
findings on competitors, the economy, changing trends etc before
decisions were finalised on the product range.
Level
Descriptor
0
No rewardable material.
Level 1
1–2
Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2
3–5
Accurate knowledge and understanding.
Applied accurately to the business and its context.
Chains of reasoning are presented, showing cause(s) and/or effect(s)
but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced, and
unlikely to show the significance of competing arguments.
Level 3
6–8
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative and/or
qualitative information and shows an awareness of competing
arguments/factors.
All question bank results loaded