Long term maintenance of a classic brand name
A Nestlé case study

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Page 3: Product life-cycle

Nestle 4 Image 3Business theory suggests that products follow a life cycle, going through phases of development as follows:

  • the conception of an idea/product
  • research and development
  • introduction to the market.

A period of growth then follows as consumers become increasingly aware of the product and, if successful, it becomes profitable. Eventually, the growth of sales will level off - this is the mature phase and is usually the result of increased competition.

The theory predicts that sales will gradually decline as the market becomes saturated and consumer tastes change. However, it would be wrong to assume that after the uphill struggles of the development and growth phases, life becomes easier on the level. It is a considerable challenge to the marketers to prolong the profitable mature phase for as long as possible, using a range of extension strategies.

Nestle 4 Diagram 1A major drawback with the product life cycle theory is that it cannot be used as a predictor. Firms may be able to identify some of the stages of development from historical sales data, but they cannot know their exact position on the cycle, nor in which direction they might be heading. In addition, some products seem to enjoy very long maturity, if not immortality, with no signs of decline. Extending the product life span is the goal of many firms, but achieving this requires careful co-ordination of corporate and marketing objectives and strategies.

Nestlé | Long term maintenance of a classic brand name
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