First Year Program Advisor

Ms. Bobbi
McFarlane

sam.mcfarlane@utoronto.ca

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 MGTA05 – Week 3 – September 21

Announcements:
1st Term Test – October 5 (2 weeks)
Practice Test – Available at 4 p.m.

Today’s Agenda:
Finish Chap. 2: Product Life Cycle
Begin Chap. 3: Factors of Production

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 Reminder - 1st Test in 2 Weeks

1st test (15%) on Tuesday, October 5th

In class - 1st hour (1 p.m.)

Probable coverage: Chapters 1 – 4

To help you prepare: Practice Test

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 Taking On-Line Tests
Open “Quizzes” section of Quercus

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This Week’s Practice Test
Available later today (4 p.m.)

You can “practice” for a week

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 Practice Test
Test has 11 MCQs, 4 fill-in-blanks,
1 calculation question + 1 short answer

Time limit = 30 minutes

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MGTA05 – Week 3 – Sept 21

Products:
The Product Life Cycle

continue to read chapter 2

from p. 36
Last update: September 19
10.00 am
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 Product - Life Cycle Model

Products, technologies, industries –

like people - have finite lives:
they begin small and weak
they grow quickly
they mature
and decline
Product - Life Cycle Model
The model has two-dimensions:
time
growth
Q: As time passes, what happens to a
new product’s (new industry’s) growth?
 Product - Life Cycle Model
Growth

Time
 Product - Life Cycle Model
Growth

Q: As time passes (moves left to right)

what happens to a new product’s
growth?

Time
Product Life Cycle - Time
“Time” can be measured in
weeks, months, years or decades

Some products have very short lives:

movies, fashions, technologies

Some products have very long lives:

coffee, bread, pencils
Product Life Cycle - Growth
“Growth” can be measured many ways

If you were running a business…

what measures would you look at

to judge if your business was
“growing”?
 Product Life Cycle - Growth
Possible measures of business “growth”
There are many...

$$ volume of sales
 Product Life Cycle - Growth
Possible measures of business “growth”:

$$ volume of sales
number of customers
Product Life Cycle - Growth
$$ volume of sales
number of customers
volume of production
number of units sold
number of stores/outlets
profits
Product Life Cycle – 4 Stages
GROWTH
 Introduction
Product or technology is brand new,
little known, expensive, hard to find

Sales: low (product not well known)

Price: high
Profits: not yet, i.e. loss
Customers: a few “innovators”
Competitors: very few or none
 Introduction
An example of a product, service or
technology which is:

brand new,
little known,
expensive,
hard to find
Smart glasses? Self-driving cars?
Commercial space travel?
 Product - Life Cycle Model
Growth

many (most?) new products fail

they never leave the introduction stage

Time
 Growth Stage
Some products do succeed
(TV replaced radio, colour TVs replaced black and white,
flat screen replaced square TVs, “smart” TVs allow streaming)

Because they have / they are:

Better functionality
More features
Cheaper
Faster
More stylish
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 Growth
Product or technology is better known,
more popular, more available
Sales: start to increase, then quickly
Price: beginning to fall
Profits: begin and rise
Customers: “early adopters”
Competitors: new competitors enter
 Growth
An example of a product or technology that
is relatively new but becoming:

better known,
more popular,
more available
sales rising
electric cars?
.
 Maturity
Product or technology is standard
Everyone has one (or two)
Market is “saturated”
Sales: peak and remain flat
Price: stable
Profits: maximum, no more growth
Customers: “middle majority”
Competitors: stable, no change
 Maturity
Example of product or technology that
everyone has one (or two)
Sales unlikely to grow much
Little new product development
Unlikely to be new market entrants
Customers switching

laptops?
 .
 Decline
Product or technology is old fashioned
Sales: declining
Profits: declining
Customers: laggards
Competitors: declining

Desk tops? Carbon engines?

 .
 Demand for Blackberry Devices
.
 Product Life Cycle

Q. How many of you have

never bought a music CD?
Product Life Cycle - Example
Technologies for playing music.
1930s, 40s and 50s – 78 rpm records
1950s, 60s, mid 70s – 33 rpm records
early- to mid- 70s – 8 track cassettes
mid-70s to 1990s – 16 track cassettes
1985s to 2005 (?) – CDs
2000 onwards – downloads?
Extending A Product’s Life
Q. What do you do when:
Everyone knows about your product
Everyone already buys your product
Extending A Product’s Life
Launch a new variation or an update
 Product Life Cycle Extension
…and again

Any effort to re-package, re-launch or

update a mature but well known product
 Life Cycle Extension
Product
Life Cycle
extension
GROWTH
Product Life Cycle Extension
 Product Life Cycle Extension
,
 Summary & Conclusion
• A “product” is a package of things to which
people ascribe value (function, features,
benefits)
• Different types of products appeal to
different customers for different reasons
• Products have finite lives, and follow a
well-known pattern
 Review: Product Life Cycle
A theory, based on observed evidence
Products, technologies, industries – like
people - have finite lives:
they begin small and weak
they grow quickly
they mature
and decline