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Explain, using a diagram, the stages in the product life cycle - Leaving Cert Business - Question A (i) - 2007
Question A (i)
Explain, using a diagram, the stages in the product life cycle. The stages of the product life cycle can be divided into five main phases: 1. **Introduction**: Thi... show full transcript
Worked Solution & Example Answer:Explain, using a diagram, the stages in the product life cycle - Leaving Cert Business - Question A (i) - 2007
Step 1
In the case of each stage, describe the implications for the cash flow of a business.
Answer
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Introduction: During this stage, cash flow is typically negative as significant investments are made in marketing and production to promote the product while sales are initially low.
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Growth: Cash flow starts to become positive as sales grow rapidly, leading to increased revenue that can support further investments.
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Maturity: Cash flow may peak as the product is generating high sales; however, competition may pressure prices, which could affect margins.
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Saturation: Cash flow begins to slow as sales plateau, and the need for increased promotional expenses or discounts may arise to maintain market share.
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Decline: Cash flow is generally low as sales decrease significantly. The company may need to consider cost-cutting measures or withdrawing from the market.