ACCA SBL Syllabus C. Strategy - Lifecycle and Competition - Notes 8 / 8
Lifecycle and Competition
Lifecycle
At the Intro stage = Few Competitors
At the Growth stage = Fight for market share is strong
At the Maturity stage = The weakest competitors die /Price-cutting for volume then emphasis on low costs
At the Decline stage = The exit of some competitors
Lifecycle Model & Costing implications
At each phase, the sales and costs spent will be different, both in terms of volume and price
| Stage | Cost Type |
| Development | R&D and set-up |
| Introduction | Marketing and Advertising |
| Growth | Costs to increase capacity; Learning effect and Economies of Scale; Working capital increases |
| Maturity | Marketing and product enhancement |
| Decline | Restructuring costs |
The product lifecycle will help:
Decide when to enter / leave market
New products - see costs and sales over all its life
Existing products - assess where it is in the lifecycle and what the future prospects are
Cycle of Competition
This again tries to help understand competitors behaviour
“New initiative - copied and bettered by competition expected”Effect
In a growing market - prices fall and quality improves
In the maturity phase - lower prices only at expense of quality (so lower quality)
In the decline phase - lower prices to the point of no profitability