product life cycle and decisions about extension strategies

3.3 The Marketing Mix – Product‑Portfolio Analysis

Learning objectives

• Explain the Product‑Life‑Cycle (PLC) model and how each stage influences the 4 Ps.
• Analyse a company’s product portfolio using the Boston (Growth‑Share) Matrix.
• Identify and evaluate the main extension strategies that can be used to lengthen a product’s profitable life.
• Integrate PLC, portfolio analysis and extension decisions with the wider marketing‑mix.

1. The Product‑Life‑Cycle (PLC)

1.1 Stages of the PLC

1. Introduction – product is launched; sales are low, costs are high and profit is negative or very small.
2. Growth – rapid increase in sales and market acceptance; economies of scale appear and profit rises sharply.
3. Maturity – sales peak and then level off; the market becomes saturated, competition intensifies and profit stabilises or begins to fall.
4. Decline – sales and profit fall as the market contracts or is replaced by newer products.

1.2 Typical characteristics

1.3 How the PLC shapes the 4 Ps

• Product
  • Introduction – core features only.
  • Growth – add differentiators, improve quality.
  • Maturity – line extensions, variations, repositioning.
  • Decline – redesign, downgrade or withdraw.
• Price
  • Introduction – skimming or penetration pricing.
  • Growth – competitive pricing, occasional promotions.
  • Maturity – price promotions, value packs, bundling.
  • Decline – deep discounts, premium‑lite versions.
• Place (distribution)
  • Introduction – selective, limited channels.
  • Growth – expand to wider retail and online channels.
  • Maturity – intensive coverage, focus on most profitable outlets.
  • Decline – concentrate on core channels, reduce stock‑holding costs.
• Promotion
  • Introduction – heavy advertising to create awareness.
  • Growth – emphasise benefits, build brand preference.
  • Maturity – defensive advertising, loyalty programmes, price‑linked promotions.
  • Decline – reduced spend, targeted promotions, clearance campaigns.

2. Product‑Portfolio Analysis

2.1 The Boston (Growth‑Share) Matrix

The matrix helps managers decide where to invest, hold, harvest or divest within a product portfolio. It plots products on two dimensions:

• Market growth rate – high vs. low (vertical axis).
• Relative market share – high vs. low compared with the largest competitor (horizontal axis).

2.2 Linking the PLC to the Boston Matrix

• Products in the Introduction or early Growth stage usually appear as Question Marks – high market growth but low share.
• Products that have reached Maturity often become Cash Cows – low growth, high share.
• Products in Decline are typically placed in the Dogs quadrant unless a successful extension moves them to a more favourable position.
• A well‑planned extension can shift a product from Dog → Question Mark → Star → Cash Cow, extending its profitable life.

2.3 Product‑mix (product‑line) dimensions

• Width – number of different product lines (e.g., beverages, snacks, dairy).
• Length – total number of items across all lines.
• Depth – variations within a line (size, flavour, price).
• Consistency – how closely related the lines are in terms of end‑use, production, distribution.

When a product’s PLC stage changes, managers may adjust width, length or depth to keep the overall mix balanced and profitable.

3. Extension Strategies – Prolonging the PLC

3.1 Main types of extension

• Product‑related extensions
  • Improvement / modification (new features, better quality)
  • Re‑packaging or re‑branding
  • Line extensions – new sizes, flavours, models
  • Brand extensions – using an established brand name for a new product category
• Market‑related extensions
  • New geographic markets (e.g., entering Asia)
  • New demographic or psychographic segments
  • New uses or occasions (e.g., “cereal as a snack”)
• Pricing extensions
  • Premium version (price‑skimming)
  • Value‑priced or “lite” version (price‑penetration)
• Promotional extensions
  • New advertising, sponsorship, PR campaigns
  • Enhanced distribution – e‑commerce platforms, specialist retailers

3.2 Decision‑making framework for extensions

1. Identify the PLC stage and remaining market potential.
2. Estimate incremental revenue and costs – calculate net benefit.
3. Assess competitive reaction – likelihood of rivals copying or counter‑attacking.
4. Check brand equity – can the brand support a premium or value version without dilution?
5. Consider regulatory / legal constraints (patents, health standards, import rules).
6. Align with portfolio position – will the extension move the product to a more favourable Boston‑Matrix quadrant?
7. Plan the required changes to the 4 Ps and set measurable targets.

3.3 Example – Extension decision for a declining digital camera

Applying the framework, Option C gives the highest net benefit for the lowest cost and a clear route to a Cash‑Cow position, provided the brand‑dilution risk is mitigated (e.g., distinct packaging and separate sub‑brand).

3.4 Linking extensions to the 4 Ps (example of Option C)

• Product – introduce a simplified “Lite” camera with fewer features.
• Price – set a lower price point to attract price‑sensitive buyers.
• Place – sell through discount retailers and online marketplaces.
• Promotion – use value‑oriented advertising, influencer reviews, and bundle with memory cards.

4. Summary checklist for PLC & portfolio decisions

1. Identify the product’s current PLC stage.
2. Place the product on the Boston Matrix (Star, Cash Cow, Question Mark, Dog).
3. Analyse the overall product‑mix (width, length, depth, consistency).
4. Select the most appropriate extension type (product, market, price, promotion).
5. Complete a cost‑benefit and risk analysis using the decision‑making framework.
6. Check the impact on the portfolio – will the move improve the matrix position?
7. Plan the required adjustments to the 4 Ps and set measurable targets (sales, profit, market share).
8. Implement, monitor results and be ready to modify or withdraw the extension.

5. Quick revision questions

1. List the four stages of the product life‑cycle and give one key marketing focus for each stage.
2. Define the Boston (Growth‑Share) Matrix and state what each quadrant (Star, Cash Cow, Question Mark, Dog) represents.
3. Differentiate between a line extension and a brand extension with an example for each.
4. When evaluating a market‑extension strategy, name three factors that must be considered.
5. Using the example table above, which extension option yields the highest net benefit and what is its main risk?
6. Explain how a product in the “Maturity” stage that is a Cash Cow might be defended through the marketing‑mix.