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Extension strategies

  • /
  • Unit 4 - Marketing/
  • 4.5 The seven Ps of the marketing mix/
  • 4.5.1 Product/
  • Extension strategies

Extension strategies (AO3)

"Watch the product life cycle; but more important, watch the market life cycle."
- Philip Kotler (b. 1931), Professor of International Marketing at the Kellogg School of Management

Extension strategies and the product life cycle

Extension strategies are marketing approaches used to lengthen the product life cycle. They are used as a product enters or is in the decline stage of its life cycle product because the market is saturated. Essentially, extending a mature product’s life cycle can be more financially rewarding than allowing it to enter the decline stage. Examples of interrelated extension strategies include:

  • Reducing the price to encourage more customers to buy the product (assuming the price elasticity of demand for the product is elastic, i.e., responsive to changes in price).

  • New promotional strategies to reinvigorate interest and purchases of the product.

  • Product enhancements or modification in order to attract more customers, such as: special features, limited editions, repacking, repositioning strategies, or improved versions of the existing product to reinvigorate appeal.

  • Expansion into new markets, such as exporting the product to international markets or entering new markets overseas.

  • Product differentiation strategies help to make a product stand out from its competitors in the market, such as establishing a clear unique selling point (USP).

Businesses weigh up the financial costs and benefits of spending money on extension strategies before making a decision. They will only implement the plans if the expected benefits outweigh the forecast costs. For example, it would not be financially viable to spend money on extending the life cycle of products such as paper maps, public pay phones, VHS video recorders, cassette tapes, dot matrix printers, typewriters, and movie rental stores.

Not all products can have their life cycle extended

Strategies used to develop brand loyalty, such as customer reward programmes, can help to retain customers. This is important for the continued revenue streams and longevity of a business.

However, the product life cycle model is somewhat simplistic. It is used to predict the likely pattern of sales growth for a typical product but there is no "norm" for any particular product or market. Whilst many products do follow the pattern shown in the model, it is not inevitable that this will happen to a firm's sales revenue. For example, Coca-Cola (as the market leader in the carbonated drinks market) has been in the maturity phase for a very long time! HSBC, a world-leading commercial bank was established in 1886, the same year as Johnson & Johnson as well as Coca-Cola.

Another limitation of the product life cycle model is that it only examines the sales revenues of a single product over time. This is of limited use to a multi-product business which might prefer to use models such as the Boston Consulting Group matrix to support its product portfolio management.

 Watch this 15 minutes video to review and enhance your understanding of the product life cycle (there are some really useful real-world  examples included in the video):

 ATL Activity 1 (Research and Communication skills)

Investigate examples of products at various stages of the product life cycle. Be prepared to share your findings with the rest of the class.

 ATL Activity 2 - Dead Brands Graveyard

For this activity, students work in pairs to contribute to the ‘Dead Brands Graveyard’ classroom wall display.

  • Each pair selects a brand that no longer exists (reached the end of its product life cycle).

  • RIP (Research In Progress) - Investigate the main reasons why the brand no longer exists.

  • Use one of the templates from your teacher to decorate the tombstone for your chosen brand. Feel free to decorate the tombstone.

  • Include a concise paragraph or bullet points underneath to inform the reader why that brand died.

  • Present your findings to the rest of the class prior to placing your tombstone in the graveyard (the classroom wall display).

 Teacher only box

There are numerous aspects of the syllabus that connect with this activity, such as:

  • Acquisitions

  • Branding

  • Brand value

  • Change, creativity, and sustainability (key concepts)

  • Efficiency ratio analysis (HL only)

  • Innovation

  • Insolvency vs bankruptcy (HL only)

  • Investment appraisal

  • Market research

  • Product extension strategies

  • Product life cycle

Download a tombstone template here, or ask students to create their own. You can use A4 or A3 sized tombstones.

Here's an example of a tombstone for Blockbuster Video.

 Business Management Toolkit

"Design is not just what it looks like and feels like. Design is how it works."
- Steve Jobs (1955 - 2011), co-founder and former CEO of Apple 

Discuss how knowledge of the Ansoff matrix and Porter's generic strategies (HL only) can help marketing managers with extension strategies.

Key terms

  • Differentiation is the process of distinguishing a firm’s product from those of competitors in the same industry. It can be used as a form of extension strategy to prolong a product's life cycle.

  • Extension strategies are marketing approaches used to lengthen the product life cycle. They are used as a product enters or is in the decline stage of its life cycle product because the market is saturated.

True or False Quiz

To test your understanding of this topic in the syllabus, have a go at the following true or false questions.

No.StatementTrue or false?
1.Maturity is the most profitable stage in the product life cycle.

True

2.Decline is the last phase in the product life cycle when sales fall to a level that eventually leads to the product being removed from the market.

True

3.Research and development is the phase in the product life cycle that involves investing in  marketing campaigns that make sure that people become aware of the new product.

False - this occurs at the introduction phase

4.A key aim of the growth phase in the product life cycle is to increase profits.

True

5.Product modification is the process of enhancing an existing product so as to attract more customers and to extend the product's life cycle.

True

6.Establishing a unique selling point (USP) can help to prolong the life cycle of a product.

True

7.If a product fails to attract sufficient customers, it will fail to enter the growth phase of the product life cycle.

True

8.An extension strategy is usually used during the growth phase in order to prolong the longevity of the product's life cycle.

False - it is used during the maturity stage

9.Price reductions can be used as an extension strategy to attract more customers.

True

10.All products go through the typical model of the product life cycle, from its launch (introduction) to eventual withdrawal from the market.

False

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