KAUPENA SECONDARY SCHOOL

DEPARTMENT OF APPROPRIATE TECHNOLOGY

GRADE 11 BUSINESS STUDIES
UNIT 11.3 BUSINESS START UP & MANAGEMENT
TERM # 2, YEAR 2024, WEEK 8-10 NOTES

1. Business Idea

11.3.1.1 Analyze your business ideas

A business idea is a concept or though for a potential business venture that includes a product or service, target
market, and unique selling proposition. It is the foundation of a business and outlines the overall vision and
goals for the company. Business ideas can come from a variety of sources, such as personal interests, market
research, or identifying a gap in the market. They often require further planning and development to become a
successful business.

Apart, form creative thinking, finding a niche or a specific market for a product can itself generate successful
business ideas. Business ideas can range from a new product or service, to improving on what is already
available in the market place

Factors determine a Business Idea

1. Personal factors
Start by determining your interests, passion, experience, skills, abilities and future ambitions. You can also list
the products or services you use, where you obtain them, how accessible they are, and who sells them.

2. Environmental factors
Many successful entrepreneurs have started by patiently observing the environment, followed by careful
research and planning to come up with workable business ideas.

Developing a realistic business idea

After taking into account both personal and environmental factors, you would have narrowed down your ideas
list considerably.

Researching an idea

Primary research involves searching for new information through methods such as surveys, observations and
interviews.
Secondary research involves collecting information that is already available in libraries, the internet and other
places. Books provide a key source of secondary information.

Niche market

A niche market is a particular market of a specific product to selected group of people. It is a smaller segment
of a larger market that has distinct needs, preferences, or identity. Mainstream businesses often overlook niche
markets, but they can be highly profitable for businesses that cater to their specific needs. Niche markets can be
based on demographics, geography, values, economy or specific products or services. Examples of niche
markets include luxury products, fashion shops, clothes for kids, etc…

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Market Dimensions

A market dimension refers to a specific aspect or characteristic of a market that can be measured or analysed.
This can include factors such as the size of the market, its growth rate, its geographic scope, the number of
competitors, the target audience, consumer behaviour and preferences, and other relevant data points. Market
dimensions are used to understand and evaluate the dynamics of a market and inform business decisions and
strategies.

The four (4) main marketing dimensions that form part of the marketing survey are:

1. Geography -the place or location where customers live

2. Demographic-the personal details such as family size, income and education levels, occupation, age gender

3. Economic- a person's income level, standard of living, consumption patterns, and their needs and wants.

4. Behavioural-a person's activities, lifestyle, beliefs, values and personality The market is usually made up of
people of different backgrounds in terms of education level, income level, size, number of school aged
children, where they live and occupation. The questionnaire method is suitable to take these factors into
consideration.

CLASS ACTIVITY #2

1. Differentiate between primary research and secondary research

2. Provide 2 example each for primary and secondary research
3. What is market dimension

2. Business Plan

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11.3.2.1. Business Planning Process

Planning is the process of taking into account the future of a business in order to control its environments and prepare for
unexpected outcomes.

What is a business plan?

A business plan is like a road map that guides one to reach his or her destination.
Business planning is the responsibility of the business owner or manager. It is a written statement that outlines how the
business intends to organize itself to satisfy the demands of its clients and thereby develop its business.

A business plan is, therefore, essential for the reasons stated below.
1. The plan gives you a clear idea of the direction you are taking in a step by step manner.
2. A plan will always be required if you wish to borrow money or loan
3. The plan indicates whether a new business idea will work or not.
4. Guides the business in the use of resource

The Purpose of Planning in Business

A business must develop its plans continually for the future. It is through planning that the business knows its customers’
requirements, how customer needs and expectations are changing, which way technology is moving and how competitors
are serving their customers.

The business environment is always changing. Consumer tastes and requirements, competitor actions, technology and
legislation are constantly changing. It is logical for every business to know what these changes are and act positively to
live with them. The future of the business lies in the hands of planners.

Business Plan Format

Business plans come in a variety of formats. The structure of the business plan can vary from one writer to another.

Title, executive summary and description

 Title and Executive summary
 Business description

Mission or vision statement

 Briefly states what the business is about.

SWOT Analysis

Marketing
 Market analysis
 Sales forecast
 Marketing strategies

Operations

 Description of the product

 Personnel requirements, acquisition and
development

Finance

 Requirements

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  Forecasts
 Records

Brief explanation of each section of a business plan format

1) Title page
All business plans should have a title page to show the name of the business and the owners, and provide contact details
(addresses, phone numbers and email addresses). This page must be neatly and logically laid out.

2) The executive summary

This is a summarized version of the entire business plan. It summarizes the key features that are explained in more detail
later in the business plan. Typically, it discusses the following areas:
- Business ideas and goals.
- Marketing.
- Operations.
- Finances.

3) Business Description
A brief description of the business idea describes its name, its main activities, the location and layout of its facilities. Here
is an example of a business description:
Our business is a poultry project specialising in raising and selling live chicken at an affordable price. This business is
located at Boundary Road, Lae, Morobe Province.

4) The mission or vision statement

This statement simply is what the business is all about. The mission statement generally expresses the overall objectives
of the business. It also highlights the beliefs and values of the business.
Below is an example of a mission statement:

This business aims to sell a wide range of high quality and affordable agricultural supplies for the Papua New Guinea
market. It intends to have a well-trained sales team that is able to offer quality advice and identify developments in the
industry.

5) Product or service description

A product or service description gives details of what exactly the business is going to produce or sell. It also states how
the product will be produced or sold. The following is a good example of a service description for a Kai Bar outlet.
Wantok Price kai bar will cater for a wide range of customers by selling cooked food such as beef, lamp flaps,
sausages, chicken, vegetables, fried chips, kaukau and fried rice.

6) A SWOT analysis covers the strengths and weaknesses of a business and identifies opportunities and threats
present in a business environment.

Strengths and weaknesses always relate to the internal business environment. It may involve the market share, the quality
aspects of resources such as workers, location, finances and competition.

Opportunities and threats are linked to the external business environment. Opportunities may relate to the availability of
new technology, market expansion, product development and the general outlook of the economy. A careful analysis of
the environment would reveal new threats too. Threats can be any event which can have a negative impact on the business
and is brought upon by the external environment. For example, interest rates may rise, or government tax may increase.

CLASS ACTIVITY #3

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 1. Define business plan
2. List 2 things that are found in the title page
3. Explain executive summary
4. Name some of the items that found in the executive summary

11.3.3.2. Detailed planning

After doing a careful research on the potential of a business idea, it is now time to draw up a detailed plan. This will
include how the business idea will be actually put into practice. Before commencing the business the following factors
must be considered. The answers provided for the questions in each of the sections will help to put together a business
plan.

1. Start-up type
 Will the business be started from scratch, or will an existing business be bought?

2. Man-power or labour
 Will there be a need to employ other people in the business?
 If so, what kind of skills should they possess?
 Can the business afford to pay the wages?
 How about employing family members?

3. Equipment or resources
 What type of equipment will this business idea need?
 How much of these equipment will be needed, and where will they be obtained?
 How much will these equipment cost?

4. Organisation of the business

 How many sections will be created in the business?
 What will be the cost of each section or department?
 Who will take care of each section?
 What will be the tasks for each person?

5. Type of business control

 What type of business organisation is preferable?
 Who will be responsible in the business for management functions?

6. Location
 What is the most suitable area to locate the business?
 Can a suitable location be found within the local area?
 Do you still go ahead with your business idea, even if, the location is not suitable?

7. Finance
 Where will the money come from to start up your business idea?
 How much money is needed to start up or expand your business idea?
 What are the major costs involved in your business idea?
 Do you have enough money to start up your business idea?

8. Supplies
 Where will the business get its supplies such as raw materials?

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  Are there enough suppliers in the local area?
 How many suppliers are available for the business?

11.3.3.3. Resources

A business idea can only be put into practice if the required resources are available. These resources include money, tools,
building, vehicles and even workers. The amount of resources needed depends on the type and size of business.

Ways of acquiring resources.

i. Purchasing assets
Assets can be purchased outright if there is sufficient money available. However, you must be careful not to tie up all
your funds in one asset. Otherwise, there will be a shortage of funds to pay for other expenses.

ii. Borrowing to purchase assets

If you do not have enough money to buy your own assets then you can consider borrowing money from others. You can
borrow from your family members such as parents, uncles and cousins if they are willing to lend to you.

iii. Leasing
You can make an agreement with another person who has an asset such as a truck to use it in your business. In return for
using the asset you will pay the owner of the asset an agreed sum of money regularly. This is called leasing. Banks and
finance companies provide leasing finance to businesses.

iv. Hire purchase

This is a similar arrangement as leasing. Banks and finance companies provide hire purchase finance. However, the
purchaser must pay an initial deposit, usually equal to one third or a quarter of the total cost of the equipment value. The
balance is usually paid over a certain period of time in installments. The purchaser takes control of the equipment or asset
as soon as the initial deposit is paid. However, banks can take back or repossess the equipment if loan repayments are not
done.

CLASS ACTIVITY #4

1. Why is choosing a right location is very important for the new business
2. List and explain two methods of acquiring resource

11.3.4. Elements of a Business Plan – Executive Summary

The aim of writing an executive summary is to give a brief but complete picture of the contents of the business plan. It
influences a reader’s judgment of the whole document. The summary should contain the key points of the plan. It should
be accurate and complete. If appealing, the reader will take time to read the whole document.

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11.3.5. Elements of a Business Plan – Operations

Operations relate to the daily activities of the business as well as the management of these activities. An operational plan
should be developed which should include business goals as well as the organizational structure and the specific roles and
responsibilities of every staff of the organization.

Components of operation plans

This part of the business plan deals with the day-to-day operations and other issues as described below.
i. Legal and licensing requirements - the business name and the legal structure of the business must be covered
here. The cost of obtaining them must also be estimated and included.

ii. Management details – includes the background details about the owners/ managers, their full name, residential
address, phone number, date of birth, qualifications, special skills, and job history. Other information about past
business experiences, business failure and other information can also be included.

iii. Organizational structure and staffing - the structure will show various areas of responsibilities. Skills and
qualifications needed should be decided beforehand. Workers pay and other benefits should be planned for as
well. If possible, include an organizational chart for the business.

iv. Insurance and security needs - it is important to decide on insurance cover for the business. The cost involved
and other security precautions should also be covered.

v. Business premises - involves explaining all issues related to: location, where the business will be based,
accessibility and convenience, rent or lease terms and other conditions. Specifications for any special facilities
such as building size.

vi. Plant and equipment required - this section lists the likely plant and equipment needed, the type and model
required, cost, life expectancy, running costs, and service/maintenance requirements.

vii. Production processes - this section briefly explains how the product will be made, including the supply of any
raw materials or trading stock and the production processes.

viii. Implementation schedule

An implementation schedule is a useful tool that is often found in a business plan. It outlines the activities required to set
up and run the business. The schedule below provides a good example of a timeframe for a small business.

Sample of an operational plan

Product description
E-Tech is currently involved in the trading of computers and related IT accessories to the public; including education
institutions, individuals, corporate clients, NGOs and Churches.

The main computer brands E-Tech sells include: ACER, Toshiba, HP, and other lesser known but durable and quality
brands. Accessories include: printers, papers, printing ink cartridges, scanners, external hard drives, flash drives, CDs and
memory cards.

BUSINESS ORGANISATION
Staff employed by E Tech is as follows:

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CLASS ACTIVITY #5

1. State the main components of the operational section of the business plan.
___________________________________________________________________________
___________________________________________________________________________
2. Why is an implementation schedule needed in a business plan?
___________________________________________________________________________
___________________________________________________________________________

11.3.6. Elements of a Business Plan – Finance

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What is finance?
This refers to money or funds for a business. Finance can also cover the activities involved in earning and spending
money in a business. It is an asset of the business.

Importance of finance in business planning

Every business needs finance for their operations. Finance is needed to start the business. Once started, finance is needed
to continue the business operations. Finance is like the oil that lubricates the part of a machine so it continues to operate.
A business will progress further with finance. Business plans need money in order for the business to be implemented.
Without finance or money plans will never be implemented at all.

Financial plan
This section involves the financial information that supports the financial forecasts. Financial planning can be defined
generally as a systematic process of selecting an organization’s financial objectives and the means of achieving those
objectives. Its main purpose is:

(i) To bridge the gap between the existing and the desired financial positions.
(ii) To make it possible for appropriate financial decisions to be taken.

Financial forecasts
Financial forecasting is an important tool for financial management in any business. Sales mix forecast, cash flow
forecast, projected profit and loss statement and the balance sheet are all covered in the financial forecasts. Data from
market research and/or past performance is used to determine the likely sales revenue for at least the first 12 months.

Cash Flow

Cash flow in business studies refers to the movement of cash into and out of a business over a specific period of time. It is
a crucial aspect of a business's financial health and indicates the amount of money the business has available to cover its
expenses and investments. Positive cash flow means the business has more cash coming in than going out, while negative
cash flow means the business is spending more than it earns. Monitoring and managing cash flow is essential for
businesses to maintain stability and make informed financial decisions.

Capital is the initial investment made by an entrepreneur or business owner. It includes money, motor vehlcles, land and
buildings, technology and human resources. The initial contributlon made by the owner is also known as ‘owner's
equity’.

Cash flow means cash inflows and outflows, The cash coming into the business Is called Cash inflow and cash going out
from an entity is called Cash outflow. It will exactly show where cash surplus or deficit is coming from. A plan is also
called a Budget. A budget is a written plan on how income Is to be used. In a budget, we include expected income and|
expenditure for a certain period of time. Therefore, Cash flow plan is a plan showing how cash will be coming in and
giving out of the business. The two types of outflows are;

1. Positive cash flow-is when the total cash receipts (inflows) are greater than the total cash payments (outflows).
2. Negatlve cash flow- is when the total cash receipts (inflows) are lesser than the total cash payments (outflows)

Cash Flow Budget

In business planning, it is important to write up a cashflow budget. A cash flow budget is a forecast of the future cash
position of a business. Forecast - predlct or estimote(a future event or trend). . The information for a cash flow budget

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comes from a firm's bookkeeping records. By studying what has happened in the past, a business can forecast what may
happen in the future.
Cash flow budgets are also necessary when requesting bank loan.

The two (2) main transactions in a Cash flow statement are; Caşh inflow and Cash Outflow.

Cash flow is essential to small business survival

CLASS ACTIVITY

1. Define cash flow

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Define balance sheet
3. List and explain two main component of a cash flow
4. Differentiate between assets and liability

A cash flow statement is needed to indicate cash movement and the resulting cash balances. Cash flow is an important
indicator of liquidity – the availability of cash in the business.

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Source of finance
An evaluation of the possible means of financing the start-up costs is also needed. For a small business, the owner’s
contribution will form the major source of funding. If there are other sources then those have to be shown, including the
amount contributed. For the purpose of a bank loan details including; amount of loan, annual interest rate, loan term,
annual principal repayment and the grace period should be included.

Cash flow statement – 3 Months

Basic evaluation of financial statements

1. Cash Flow
a. Cash flow for each month is positive which is good.
b. Liquidity is good.

CLASS ACTIVITY #6

Refer back to the cash flow statement below and answer the question

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a. Which sector is the business mainly involve in?
b. What is the start-up capital for the business?
c. Find the total expenditure in the 2nd Quarter.
d. What is the cash balance in the beginning of the 2nd Quarter?
e. Find the total cash inflow in the 3rd Quarter.

11.3.6. Elements of a Business Plan – Marketing

Marketing

Every business plan must include a comprehensive marketing plan that will help promote sales. The marketing plan
should identify the business’ target market, pricing policy, sales targets, promotion and advertising policy, and
distribution methods. It should also state if market research was done, what exactly will be sold by the firm and the
intended customers.

i. Market research
This segment should make known the details of the market research which supports the business plan. The type of
research, primary or secondary and the data reliability should be mentioned in the plan.

Market research is the process of systematically collecting, recording and analyzing information concerning a specific
problem. -it’s the process of gathering information to help entrepreneurs or business people make informed decisions
about their marketing of their product or service.

Market research is valuable for finding out the level of demand for a product in a particular place /area, and the type of
product that people want to buy.

The main purpose of market research is to gather information. Being well informed about all aspects of the market,
especially the buying behavior of existing and potential customers, place the business in a stronger position,

Releasing a new product onto the market is risky. Working to minimize the risk is the main purpose of market research.
By collecting and assessing information about the needs and wants of consumers, a more accurate and responsive
marketing plan can be designed and, therefore, reduce the risk of market failure. Market research attempts to Identify and
outline marketing opportunities and problems, as well as evaluating the implementation of the marketing plan and

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assessing information about the needs and wants of consumers, a more accurate. Without adequate, reliable and correct
information, businesses expose themselves to market embarrassments which could result in the product failing to sell.

Reasons why business conduct market research;

(i) To check market viability (ii) customer demand (iii) profitability

Methods of conducting market researches;

(i) Survey conducted with the help of questionnaire

(ii) Questionnaires- well thought out questions written
(iii) Opinion Poll ; Observation

ii. Market analysis

Market analysis is a quantitative and qualitative assessment of the market. It looks at the size of the market both in
volume and value, the various customer segments and buying pattern, the competition and economic environment.

Trademarks

 A Trademark is a sign, logo or word put on a product to show who made it.
 A symbol, word or words legally registered or established by use as representing a company or product.
Synonyms; logo, stamp, symbol, marks, graphics.

 Is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprise.

Example: Cold Power 200g manufactured by Colgate -Palmolive Company (PNG) Pty Ltd but infringement
one was made in Malaysia and Colgate -Palmolive Company (PNG) Pty Ltd identified that and advertise that
on the media.

There are some examples of the useful information that should be written on packaging or labels that a wise
Consumer will carefully look at;

 Weight /volume/quality
 Use-by date/expiry date
 Directions
 Nutritional information
Slogan - catch words or phrases used to differentiate one business from another.

iii. Marketing plan

A marketing plan typically deals with four key marketing concepts, usually referred to as the Marketing Mix or four Ps of
marketing. (you have learnt in grade 10)
 Product - means the main product that a business will produce or sell.
 Place - involves the channels or means to be used to distribute the product or service.
 Promotion - covers how the business’ goods and services will be advertised and promoted.
 Pricing - pricing plan should show how prices will be charged and managed.

TT

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Tapping into Market Gap

A market gap, or business opportunity, is a demand for a particular product or service by a particular group of
consumers. This is sometimes referred to as ‘niche market'. Niche market- small markets for products that only appeal to
only some people/specific group of people .eg. Setting a private clinic in Walum Distric. Mass market - a market for
products that are needed or wanted by most people

Promotion and Advertising

In order to influence consumers, business must communicate the availability, description and benefits of their products to
potential buyers. The most common methods of communication are personal selling, advertising. Visual merchandising,
sales promotion and public relations. Businesses combine these methods to create a promotional mix,

Advertisement - is to make (something for sale) known to people Media refers to the type of communication used to get
the message across.
Advertising is any paid form of promotion done through a mass medium such as radio, TV and newspapers. Advertising
is different from other forms of promotion because it is non-personal and is meant for a larger audience. It is also paid for
by the advertiser.

There are two types of advertisement

Persuasive Advertisement -it is designed in a way to persuade the public to buy a particular product.
Information advertisement -advertisement that tells or inform public what is available. Eg position vacant.

ACTIVITY #7

1. List all the component that comes under the marketing section of a business plan
2. explain the following terms
i. Market research
ii. Niche market
iii. Mass market
iv. Slogan
v. Trade mark
vi. Marketing plan

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Assessing the Market

The term 'market' is often used in business to describe the demand or need for a particular product. Demand levels can be
high or low depending on people's choices.
A market can be:
 Monopoly- there is only one provider orsupplier of a product. Consumers have no choice but to buy from that one
producer or supplier at the price that is charged.

 An oligopoly - there are only a few suppliers or producers of a particular product. The level of competition is not very
high. Each supplier or producer enjoys some level of control over their consumers. a mixed market -- there is a
combination of government control and free competition. The government controls or provides vital goods and
services and private business provides other products.

 A free market- there is true competition. The government has very minimal control over the buying and selling except
through taxation and basic consumer and competition laws.

Papua New Guinea has a mixed market economy. There is some control from the government over things like products,
price, and supply production distribution and marketing.

Observation
Observation is one way of exploring the market place to learn more about your business idea. By closely watching a
business in operation, you can determine if there is a market for it or not. A specific market, also known as niche, can be
identified through observation.

Questionnaires and surveys

Questionnaires and surveys can help you find out more details about your target market. A questionnaire contains specific
questions under different subheadings. These questions can be open ended or closed.
Open-ended questions are those that require a wide range of answers, e.g. why do you think people will like this
product?" There is no particular correct answer. Close ended questions require only one definite or specific answer, e.g. Is
John your name?" The answer is either yes or no.

Understanding the consumer

A business must know how its consumers behave when making purchase decisions. This will ensure that the right
products are sold to meet specific customer needs. This is sometimes called 'needs satisfaction ' marketing. The idea of
marketing is to ensure that the product targets a particular customer need. Therefore, when a customer recognises this
product, they will buy it to satisfy this need.

Consumer decision-making process

The consumer decision-making process involves five distinct stages.

1. Problem recognition the consumer tries to recognise the problem or need independently. The need could be part of
everyday problem or a one-off situation.

2. Information search -This search aims at finding out what purchase will solve the problem and where to obtain the
product. Information comes from various sources such as the media, previous knowledge Experience and advice
from friends.

3. Information evaluation- the consumer identifies which information is useful. A short list of likely solutions
(sometimes called the 'evoked set' in marketing) is made for serious consideration. After evaluation of the
information, the consumer will use some form of guide or criteria to choose a particular product from within the
evoked set.

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4. Decision- The consumer finalises their purchase decision. The consumer is satisfied that the decision is the most
logical one. Complex purchase decisions require further negotiation on the finer details such as credit terms, trade-in
policy, delivery dates and warranty or guarantee details.

5. Post purchase evaluations- This is an important stage in the decision-making process. Many consumers evaluate their
purchase decision after a purchase has been made. Consumers try to determine if the supplier or the seller lived up to
promises.

Product
A product can be more than a physical object such as a television or radio, where consumers need to consider tangible or
physical attributes such as size, content, shape or colour. Products can also include intangible or non-physical attributes
such as price, brand, manufacturer's reputation, installation and warranty.

Product mix
Most businesses offer a variety of goods and services that make up the firm's product mix. A business has the flexibility
to alter its product mix at any time. A product line refers to the group of products a business sells. These products are
generally designed for similar uses by the same target group and are of a similar price range. For example, Stop N Shop
supermarket sells the latest sporting gear to mainly sports lovers at basically the same price range. All types of sporting
gear are part of one product line. Product breadth refers to the number of product lines a business carries. For example,
Stop N Shop might have a good product breadth if it also sells sporting accessories such as caps, handbags and first aid
kits.
Product depth refers to the total number of items within a product line. For example, Stop N Shop might have a varying
assortment of sires, brands, colours and models for its range of sporting gear and accessory lines. Businesses can alter
their product mix by expanding the number of product lines or by adding depth within a particular product line.

Consumer and business product

There are many ways of categorising products. One way is on the basis of the end users or consumer groups. Business
products are used specifically by businesses; for example, raw materials needed to produce finished products, and
products that are needed to maintain machines in a factory, such as machine parts and accessories. Business products are
also referred to as B2B (business to business) products. Consumer products are those that are needed by individual
consumers. Many of these products are also non-durable. That means they do not last for a long time. For example, food
is stored for a short while before being eaten. Consumer products are varied and come in a range of brands and names.
These are also referred to as B2C (business to consumer) products. Specialised businesses deal separately with these
groups of products. For example, hardware stores sell products that are not for ordinary consumption. They would
generally sell

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The product

Every business has a product to sell. A product can be either a good or a service. Goods are tangible- we can physically
touch, feel and see them. Services are non-tangible. They cannot be touched or seen because they don't have the physical
characteristics of a good. Services are usually performed for a fee. A fee is the price tag placed on a service.

Product Life Cycle

The product life cycle is a concept that describes the stages a product goes through from its introduction to the market
until its eventual decline or discontinuation. This cycle is typically divided into four main stages: introduction, growth,
maturity, and decline.

This is illustrated by the following diagram.

1. Introduction: This is the first stage of the product life cycle, where the product is introduced to the market. This
stage involves heavy investment in research and development, marketing, and production, as the product is still new
and needs to gain consumer awareness and acceptance.

2. Growth: As the product gains acceptance in the market, it moves into the growth stage. Sales and profits increase at
faster rate as more consumers become aware of and purchase the product. This is also the stage where competitors
may enter the market with similar products, leading to increased competition. Sales are increasing at their fastest rate.
Much sales revenue is earned here.

3. Maturity: In the maturity stage, the product reaches its peak in terms of sales and market saturation. Sales may start
to stabilize, and the competition may become more intense. Companies may focus on differentiating their product
from competitors to maintain sales. Sales are near their highest, but the rate of growth is slowing down.

4. Decline: In the decline stage, sales and profits start to decline as the market becomes saturated, and consumer
preferences shift towards newer products. Companies may choose to discontinue the product or revamp it to re-
introduce it into the market. Sales begin to fall.

The product life cycle is important for companies to understand as it helps them make strategic decisions about their
product, such as when to invest in marketing and when to introduce new features or discontinue the product. It also
highlights the need for continuous innovation and adaptation to stay competitive in the market.

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Activity

Q1. What is a ‘Market’?

Q2. Differentiate between Oligopoly and Monopoly Market?
Q3. What is Product Mix?
Q4. Explain the three (3) categories of product Mix

i. Product line
ii. Product breadth
iii. Product depth

Q5. Differentiate between Business to Business Product (B2B Product) and Business to Consumer Product (B2C Product)
Q6. What is a Product?
Q7. Explain Product Life Cycle?
Q8.Draw diagram showing Product Life Cycle

18 | P a g e U P P E R S E C O N D A R Y S C H O O L 1 1 B U S I N E S STUDIES