Lena's crackers: Lena's crackers show the path a product takes, from first recipe to falling sales.
| Year | What happened |
|---|---|
| 2021 | Priti, the head baker, spent six months testing a cracker recipe. Nothing was sold that year; the bakery only spent. |
| 2022 | The first packets went to the cafés Lena's already supplied with bread. |
| 2022 to 2024 | Sales climbed for three years. |
| 2025 | Sales stopped climbing. |
| 2026 | Marco's forecast is a little lower. |
Almost every product follows that path. It is born, it catches on, it settles, and one day it fades. The path, drawn as sales over time, is the product life cycle (PLC): the stages a product goes through from its first idea to the day it is withdrawn.
Sales over time: nothing during development, a slow start, a fast rise, a plateau, then a fall.
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The crackers, stage by stage
Development (2021)
The product is designed and tested. Priti tries recipes, Lena pays for a packet design and a cutting machine. There are no sales at all, only costs.
Introduction (2022)
The product is launched. 4,000 packets: few buyers yet, because few cafés have heard of it. Spending on samples and visits is high.
Growth (2023 and 2024)
Sales rise fast: 12,000 packets, then 16,000. Café owners recommend it to each other, and two hotels start buying.
Maturity (2025)
Sales level off at their peak: 18,000 packets. Most cafés that want crackers already buy them, and rivals have noticed.
Decline (ahead?)
Sales fall year after year, because tastes move on or a rival does it better or cheaper. The 2026 forecast of 17,500 packets is the first warning.
The stage changes what the business does with the product's marketing mix: the decisions about the product itself, its price, how it is promoted and where it is sold. Here is what Lena's did with the crackers.
| Stage | Product | Price | Promotion | Where it is sold |
|---|---|---|---|---|
| Introduction | One flavour, sea salt, in a plain packet | $2.50 a packet, set so cafés will try it | Free sample boxes, tasting days, Marco visits each café; unsold packets taken back for three months | Only the cafés that already bought Lena's bread |
| Growth | A bigger box of 30 packets for the busiest cafés | Held at $2.50: demand is rising | The name on the packet and café owners' word of mouth do most of the work | More cafés and two hotels |
| Maturity | Small changes to keep it fresh | Under pressure: rivals offer cheaper crackers | Reminders and deals for loyal cafés | Every café in reach that will take it |
| Decline | Cut to the best-selling version, or withdrawn | Lowered, or held while spending stops | Little or none | Fewer outlets |
A shape, not a timetable: The PLC shows a typical path, not a schedule. Some products stay mature for decades; some fade months after launch. You only know which stage a product is in by reading its sales.
Its main weakness for decisions: A dip may be the start of decline, or a bad month.
Withdraw the crackers too early
- Lena's loses a product that still pays.
Keep spending too long
- The money is wasted.
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Marco keeps a record of every dollar the crackers have brought in and paid out.
The cracker numbers
- Price: each packet sells to a café for $2.50.
- Cost: each packet costs $1.00 to make.
- The money spent before and around the launch is investment: spending now in the hope of returns later.
| Year | Stage | Packets | Money in | Money out | Net cash flow | Running total |
|---|---|---|---|---|---|---|
| 2021 | Development | 0 | $0 | $12,000: recipes, packet design, cutting machine | -$12,000 | -$12,000 |
| 2022 | Introduction | 4,000 | $10,000 | $13,000: making $4,000, launch $9,000 | -$3,000 | -$15,000 |
| 2023 | Growth | 12,000 | $30,000 | $24,000: making $12,000, promotion $6,000, second machine $6,000 | +$6,000 | -$9,000 |
| 2024 | Growth | 16,000 | $40,000 | $22,000: making $16,000, promotion $6,000 | +$18,000 | +$9,000 |
| 2025 | Maturity | 18,000 | $45,000 | $21,000: making $18,000, promotion $3,000 | +$24,000 | +$33,000 |
Money goes out before it comes in: The crackers took $15,000 out of the bakery before they paid back a dollar. The running total only turned positive during 2024, three years after the first recipe trial.
The pattern is the same for most products: cash flow is negative while the product is developed and launched, turns positive in growth, is strongest in maturity, and shrinks in decline.
Development and introduction
- Investment is highest: design, equipment, launch promotion
- Losses: few or no sales to cover the costs
- Cash flow negative, so the money must come from somewhere else
Growth and maturity
- Growth may still need investment in more capacity, like the second machine
- Profit rises with sales and peaks in maturity
- Cash flow turns positive and is strongest in maturity, when little new spending is needed
Decline
- Little new investment, unless the business tries to revive the product
- Profit falls with sales and prices
- Cash flow shrinks and may turn negative if the product is kept too long
Profit and cash are not the same thing: In 2023 the crackers made more profit than the $6,000 of cash the year shows. The second cutting machine cost $6,000 in cash that year, but in the profit figures its cost is spread over the years it is used (depreciation, from unit 3).
So a growing product can be short of cash: A growing product can be profitable and still short of cash, because it keeps needing new equipment.
This is why a business cannot live on new products alone. Every new product needs cash before it earns any, and that cash has to come from products that are already mature.
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The crackers are one product among many. All the products and services a business offers are its product portfolio. In 2025 Lena's Bakery Ltd took $1.6 million, and each line is at a different point in its life.
| Product line | 2025 revenue | Share of revenue | Stage of its life cycle |
|---|---|---|---|
| Bread in the shops | $960,000 | 60% | Maturity: the town eats about the same bread each year |
| Cakes and pastries | $240,000 | 15% | Maturity: still creeping up, slowly |
| Wholesale to cafés and hotels (crackers $45,000 of it) | $240,000 | 15% | Growth: sales have risen every year since 2019 |
| Lunches | $160,000 | 10% | Growth: office workers want more, and rivals know it |
| Breakfast range for Station Road (4.4.1) | $0 | 0% | Development: launches when the shop opens in September 2026 |
A balanced portfolio: Lena's has products at every stage. When one line fades, another is growing to take its place, so the bakery's sales do not depend on one product.
And the mature lines pay for the young ones: the cash from the shop loaves pays for Priti's breakfast range long before it sells a single roll.
One business tool sorts a portfolio with two questions. Is the product's market growing fast (market growth)? And does the product hold a big slice of that market (market share)? Both are measured as in 4.1.2. The tool is the Boston Consulting Group (BCG) matrix, and here it is used for one job only: sorting Lena's products into four boxes.
The BCG matrix: market growth up the side, market share along the bottom. A question mark is also called a problem child.
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Lena's products in the four boxes
Cash cow: the shop loaves
A slow-growing market in which Lena's is one of the biggest sellers in town. It brings in far more cash than it needs: keep it healthy and use its cash elsewhere.
Star: wholesale to cafés and hotels
A fast-growing market, and Lena's supplies most of the town's independent cafés. It earns well but needs investment to keep up, such as the second cutting machine.
Question mark: lunches and the breakfast range
Markets that are growing fast, where Lena's share is still small; Crumbline plc is the big name in lunches. Invest to win share, or pull out.
Dog: the white sliced loaf
A market that hardly grows, most of it taken by the supermarket's $1.20 loaf. Keep it only if customers expect it on the shelf; otherwise drop it.
What the matrix is for: The cash cows pay for the question marks, and the question marks that win share become the next stars. A portfolio of only cash cows has no future; one of only question marks runs out of cash.
The matrix is a snapshot: it says where each product is today, not what to do. That is still a judgement.
The crackers stop growing: Goldcrust has started selling its own crackers to cafés at $1.90 a packet, against Lena's $2.50. Marco forecasts 17,500 packets in 2026, down from 18,000.
Lena wants sales a fifth higher instead: 18,000 plus 20% is 21,600 packets.
When a mature product's sales stall, the business can try to give them a new push. An action that lengthens the maturity stage and puts off decline is an extension strategy. It does not create a new product; it gives an existing one a longer life.
Five ways to extend the crackers' life
Find new markets
Sell to people who have never bought it: put the crackers on the counters of Lena's three shops and the new Station Road shop, not just in the cafés.
Change the product
A new flavour, a new size or a better recipe: a rosemary cracker next to the sea salt one.
Change the packaging
A fresher look, or a practical change: a bag that reseals, so cafés waste fewer broken crackers.
Find new uses
Show buyers another way to use it: crackers served with soup on Lena's own lunch menu.
Change the price or the promotion
A lower price to win back cafés tempted by Goldcrust, or a new way of telling people about it.
| Strategy | Why it could work | Why it might not |
|---|---|---|
| Sell in Lena's shops | The shops already have the customers and the shelf space, so it costs almost nothing | Cafés may stop buying if shoppers can get the same packet round the corner |
| A rosemary flavour | Gives cafés something Goldcrust does not have, without a price war | Priti's time, a new packet design, and the risk that it only takes sales from sea salt |
| A resealable bag | Cheap, and solves a real complaint from cafés | On its own, few buyers would notice it |
| Cut the price to $2.25 | Closer to Goldcrust's $1.90, so fewer cafés switch | Each packet then leaves $1.25 instead of $1.50: 21,600 packets are needed just to earn the $27,000 that 18,000 earn now |
Extension delays decline; it does not stop it: Every extension strategy costs money, and each one buys time rather than a new life. Tastes and rivals keep moving. So the real question is whether the money would do more elsewhere, for example on the breakfast range, which could become the next star.
A strategy is judged on
- Its cost
- How fast it works
- The risk to the product's image
- What else the money could do
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How this comes up: Product questions come as long discussions for ten marks and short explanations for two.
The usual questions
- Ten marks. Using the information given, discuss two possible extension strategies a business could use to lift a mature product's sales by a stated amount.
- Ten marks. A case can also ask whether a business should change the product it offers at every site.
- Two marks each. Explain one reason for a product decision, such as offering a longer guarantee than rivals, or one advantage of launching a new product: the point, then what it means in the case.
The ten-mark pattern
- Name the stage. Show from the case that the product is mature or declining: sales flat or falling, rivals arriving, packaging or customers ageing.
- Strategy one, both ways. What it is, why it could lift sales in this case, and why it might not: cost, time, risk to the image. Use the case's numbers.
- Strategy two, both ways. A genuinely different strategy, argued the same way.
- A judgement. Which strategy, or which combination, is more likely to reach the target, and on what condition. Say what the case does not tell you.
Trap: one strategy, or four: The question asks for two. One strategy, however good, answers half of it; a list of four with a line each argues none of them.
Trap: only the good side: Every strategy needs its case against: a price cut shrinks what each sale leaves, new markets take time and money, new packaging alone may change little. Take the numbers from the case, not from memory.
Using the information in the case, discuss two possible extension strategies that Lena's Bakery could use to increase sales of its crackers by 20%.
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