Post on 22-Jan-2018
Atul Fegade
Marketing Management Unit-1
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Digital Payments in India Rs. 34,00,000 Crores by 2020.
11% of GDP
By 2023 Non cash transactions > cash
transactions
Paytm (One97 Communications Ltd), Mobikwik
(One Mobikwik Systems Pvt Ltd), Oxigen
Services (India) Pvt. Ltd, Citrus Payment
Solutions Pvt. Ltd, Freecharge and others
Micro Transactions
Which Industry would benefit by it?
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World’s most innovative companies
Who are the competitors?
What is its core business (66%)?
much more than just an Internet search and advertising company
Mission is “to organize the world’s information and make it universally accessible and useful.”
Freewheeling new-product development process
lightning-quick development of iGoogle
Google Labs
Gmail, Blog, Checkout, Picasa, Android, Chrome, Google Maps & Earth,
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Google engineers are encouraged to spend 20
percent of their time developing their own new-product
ideas.
Google Doodles
Gmail – automatic separation of mails into promotions
/social feeds
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In dynamic markets companies must constantly introducenew products and services to keep up with changingconsumer wants and needs.
Consumer "Needs and Wants" Change, Diet Coke
Product Reaches The End Of Its Product Life Cycle – Xbox360 (Shorter PLC)
Environmental Changes – ICICI Bank delivers e statementsfor saving accounts.
Competitors
Breakthrough Innovations – increasing technologicalcapabilities
Markets grow larger
Failure of previous products
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New product line
(New-to-the-firm products, New category entry):
Includes new brands and brand extensions - Products
that take a firm into a category new to it.
Ex.: P&G brand shampoo or coffee, Hallmark gift items, Canon laser
printer, McDonald’s McCafe drinks (lattes, cappucinos, frappes,
smoothies, etc.), ITC Sunfeast biscuits
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New-to-the-world product
(Breakthrough product, Pioneering product, Revolutionary
product, “Really new” product, Radical innovation,
Discontinuous innovation, Disruptive innovation, New-new
product) - (10% of new products): Very new products &
technology that create a whole new market and change buyer
behavior. Ex.: Polaroid camera, Sony Walkman, Ipod
1. a. Revolutionize existing product categories (e.g., electronic
typewriters, electric cars, hybrid cars)
2. b. Create entirely new categories (e.g., Federal Express, dental
fillings)
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Improvements to existing Products
- Improvements/revisions/enhancements/upgrades to existing
products (26%): Current products made better. Ex.: P&G’s
continuing improvements to Tide detergent
Ex: 3rd-generation Amazon Kindle: lighter, thinner, faster page turns, sharper
display resolution, longer battery life, twice the storage E.g., iPod Touch
Reasons: Changes in consumer tastes, technology, and
competition
Quality modifications – Changes in material or production processes related to a product’s
dependability and durability
- Raise quality: To gain a competitive advantage
- Reduce quality: To offer a lower price
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Addition to existing product line: Includes product line extensions
and flankers (26%): Products that flesh out the product line in
current markets. Ex.: Tide Liquid, Apple’s iMac, HP LaserJet 7P.
1. A. (Product) line extension – Existing product line, existing brand
name: Derivatives of a company’s core (anchor, flagship, parent)
product – Additional colors, sizes, flavors, styles shapes, scents,
quality levels, features, package sizes, forms, etc.
Use if closely related items and for other reasons for using a
brand franchise extension strategy. E.g., iPhone, iPhone 3G,
iPhone 4 (video camera, faster processor); iPhone 5S (video calling,
better reception, longer battery life, new hardware design)
E.g., Pepsi & Coke
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2. Functional modifications – Changes affecting a
product’s versatility, effectiveness, convenience
or safety; usually requiring product redesign.
E.g., greener, more energy efficient, faster,
lighter, smaller
E.g., Amazon E-Kindle Reader 2.0, video
game consoles
3. Aesthetic/Form modifications – Changes in the
sensory appeal of a product such as altering taste,
texture, sound, smell, or appearance.
E.g., New Coke
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Repositioning: (7%): Products that are
retargeted for a new use/application. Also
includes retargeting to new users/ new
target markets.
Can be physical or psychological
repositioning, often entailing a new brand image.
Ex.: Aspirin repositioned as a safeguard against
heart attacks; Coke retargeted as a Family product
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Cost Reduction (11%): New products
that provide the customer similar
performance but at a lower cost (better value).
May be more of a “new product” in terms of
design or production at the same or lower
price.
E.g., MacDonald's
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New Product Options Acquisition
Buy other companies, patents from other companies, license or franchise etc.
Reckitt Benckiser acquired Paras Pharma (Moov, Krack, D’Cold, Itchgaurd)
Tata Motors – Jaguar & Land Rover
Development (Organic Growth)
New variants of automobiles
New products in own laboratory/R&D
New Products
Colgate – Oral care (toothpaste, mouthwash, toothbrush), Personal Care (bodywash, liquid handwash, hair care, skincare, shave preps), Home Care(Dishwash), Professional Oral care (Sensitive, tooth whitening, specialty cleaning, fluoride therapy)
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Challenges in New Product
Development – some examples
Kodak – long time leader in film market vanished coz of digital photography.
Selco Solar Pvt. Ltd. – provides sustainable energy solutions and services to rural households & businesses. Photovoltaic solar modules, solar lighting systems, solar inverters, cookstoves
Incremental Innovation, disruptive innovation,
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New Product Failure Indian Context – (1994-95), 53% (Success rate new products)
Europe Context – 10%
US Context – 5%
Ignored or misinterpreted marketing research, overestimate of market size, high development costs, poor design or ineffectual performance, incorrect positioning, advertising, price, insufficient distribution support, intense competition, inadequate ROI or payback.
Shortage of important ideas in certain areas (Steel or detergent)
Fragmented markets (lower sales & profits)
Social, economic & governmental constraints (safety & environmental concerns)
Cost of development
Capital shortages
Shorter required development time
Poor launch timing
Shorter PLCs
Organizational Support
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Organizational Arrangements Customer driven engineering
Internal Changes
Budgeting for New-Product Development
As many projects, % of sales what competition spends, backward calculation
Organizing New Product Development
Product Managers, growth leaders, high-level management committee, new-product development dept
Cross functional teams – venture teams, intraprenuers (skunkworks)
Stage-Gate System – process in stage & gate is a checkpoint, Funnel, spiral development process.
New-Product Development Strategy
Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product
New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development
Two ways to obtain new products
New-Product Development Process
Major Stages in New-Product Development
Discussion Question
In groups of six come up with one idea for a
new product.
kitchen Appliances, office supplies, laptop
accessories, food products, bathroom
accessories, children’s toys, baby
products, gaming tablet for children,
energy efficient vehicle etc.
New-Product Development Process
Idea generation is the systematic search for new-product ideas
Sources of new-product ideas
Internal
External
Idea Generation
New-Product Development Process
Internal sources refer to the company’s own formal research and development, management and staff, and intrapreneurial programs
External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms
Idea Generation
Idea Generation
R&D
Employees, Cisco-Idea Zone/I-Zone
“intrapreneurial” programs, Samsung-value
innovation program (VIP)
TATA Nano
Internal Sources
Idea Generation
Distributors (consumer problems & new product possibilities) & Suppliers (new concepts, techniques & materials)
Competitors (ads, buy)
Trade magazine shows & seminars
Government agencies, advertising agencies, marketing research firms, university, commercial laboratories, & inventors.
New Product consultants & design firms
Online collaborative communities
Customers, Tata-Indica
Turn customers into co creators
External Sources
New-Product Development Process
Inviting broad communities of people—
customers, employees, independent
scientists and researchers, and even the
public at large—into the new-product
innovation process.
Crowdsourcing
Idea Generation
7 ways to draw new ideas from your customers
Observe how customers are using your product
Ask customers about their problems with your product
Ask customers about their dream product
Use customer advisory board to comment on your company’s ideas
Use web sites for new ideas
Form brand community of enthusiasts who discuss your product
Encourage or challenge your customers to change or improve your product
Idea Generation
Lateral Marketing
Petrol Station stores = Petrol + food
Cyber Cafes = cafeteria + internet
Sony Walkman = audio + portable
Shopping Malls = merchandise + food + cinema + fun
places
New-Product Development Process
Identify good ideas and drop poor ideas Standard format – describe the product, customer value
proposition, the target market & competition, rough estimations of market size, price, development time & costs, manufacturing costs & rate of return.
R-W-W Screening Framework:
Is it real? (real need)
Can we win?
Is it worth doing?
A Drop-error Go-error
Idea Screening
New-Product Development Process
Product idea is an idea for a possible product that the company can see itself offering to the market
Product concept is a detailed version of the idea stated in meaningful consumer terms
Product image is the way consumers perceive an actual or potential product
Concept development
Concept 1 (family car)
Concept 2 (sporty compact)
Concept 3 (green car)
Concept 4 (MUV)
Concept Development and Testing
New-Product Development Process
Concept testing refers to testing new-product concepts with groups of target consumers
A word or picture description or physical presentation
Concept Development and Testing
New-Product Development Process
Marketing strategy development refers to the initial marketing strategy for introducing the product to the market
Marketing strategy statement includes:
Description of the target market
Value proposition – planned price, distribution & marketing budget
Sales and profit goals – planned long run sales, profit & marketing strategy.
Marketing Strategy Development
New-Product Development Process
Business Attractiveness of proposal
Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives
Sales history of similar products & conduct market surveys
Expected costs & profits – marketing, R&D, operations, accounting & finance costs
Financial attractiveness
Marketing Strategy Development
New-Product Development Process
Involves the creation and testing ofone or more physical versions by theR&D or engineering departments
Requires an increase in investment Shows whether the product idea
can be turned into a workableproduct.
Product prototype, safety &effectiveness
Each morning in Reading, England, up to 80men shave at the Gillette® testing centerfor a total of 20,000 shaves a year. The menshave in front of a two-way mirror, and areobserved, filmed and interviewed. Thecondition of their skin is a measurement forkey learnings used as the basis ofdevelopment for new razors and skinproducts.
Product development
New-Product Development Process
Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings
Provides the marketer with experience in testing the product and entire marketing program before full introduction
Company tests – STP, 4Ps & budgetsTest marketing costs are high but
preferable than cost of making a major mistake
Test Marketing
New-Product Development ProcessTypes of Test Markets
Standard test markets
Controlled test markets
Simulated test markets
New-Product Development Process
Advantages of simulated test markets
Less expensive than other test methods
Faster
Restricts access by competitors
Disadvantages
Not considered as reliable and accurate due to the controlled setting
Marketing Strategy Development
New-Product Development ProcessMarketing Strategy Development
When firms test market
• New product with large investment
• Uncertainty about product or marketing program
When firms may not test market
• Simple line extension
• Copy of competitor product
• Low costs
• Management confidence
New-Product Development Process
Commercialization is the introduction
of the new product
When to launch
Where to launch
Planned market
rollout
Marketing Strategy Development
Managing New-Product Development
Successful new-product development should be:
Customer centered
Team-based
Systematic
Managing New-Product Development
Customer-centered new product development new ways to solve customer problems and create more customer satisfying experiences
New-Product Development Strategies
Managing New-Product Development
Sequential new-product development company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage
Increased control in risky or complex projects but may be slow
New-Product Development Strategies
Managing New-Product Development
Team-based new-product development Company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness
New-Product Development Strategies
Managing New-Product Development
Systematic new-product development
innovative development approach that collects, reviews, evaluates, and manages new-product ideas
Creates an innovation-oriented culture
Yields a large number of new-product ideas
New-Product Development Strategies
Branding48
Branding
“A name, term, sign, symbol, or design, or a
combination of them, intended to identify the
goods or services of one seller or group of
sellers and to differentiate them from those of
competitors.”
Introduction
Role of Brands Consumer
Benefits
Brands:
• Identify source/maker
• Simplifies decision making
• Reduces risk
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Role of Brands
Brands:
• Simplify product handling
• Protect unique features
• Create loyalty
• Establish barriers to entry
Marketer Benefits
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Scope of Branding
Creating difference between
products
Brand
•Marketers need to teach
consumers who the
product is – by giving it a
name & other brand
elements to identify it- as
well as what the product
does.
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Brand Promise
What the brand must
be and do for
consumers.
A brand promise is the marketers
vision of what the brand must be
and do for consumers. Customers
will decide, based on what they
think and feel about the brand, if
they will accept any marketing
action or program.
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Mercedes promises well-built, prestigious, safety, performance.
Co branding/Dual branding: "Intel inside."
Product vs. Brand
A product is something that is
made in a factory A brand is something that is bought
by a customer.
A product can be copied or
replaced by a competitor.
A brand is unique.
A product can be quickly
outdated.
A successful brand is
timeless.
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Service – P – Hotel, Brand -
Convenience Product – P – Salt, Brand –
Shopping Product – P – Furniture, Brand –
Specialty Product – P – Professional Digital Camera, Brand -
Unsought Product – P – Life Insurance, Brand –
Private Brand –
National Brand –
Industrial Brand -
Brands Vs Products
A brand is more than a product, because it can have
dimensions that differentiate it in some way from other
products designed to satisfy the same need.
Some brand create competitive advantages with
product performance. Gillette
Other brands create competitive advantage through
non product related items. Coca-Cola.
Brands carry different types of associations.
Brands are most valuable assets (intangible)
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Brands – meaning
Derived from old Norse word brandr which means “to burn” (Owners of livestock used to mark their animals to identify them)
AMA definition
Variety of brand name strategy. Samsung, P&G, Retailers
Brand names on people’s name RPG, based on places (British Airways), Animals or birds names (Dove soap, Kingfisher), Others (Apple, Shell)
Use of word with inherent product meaning (Bookmyshow), important attributes (Duracell)
Prefixes & Suffixes that sound scientific, natural, or prestigious (intel, Lexus)
Logos & symbols can be based upon people, places, things & abstract images
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The added value endowed on products and services because of the brand.
Reflected in the way consumers think, feel, & act wrt to brand as well as in the prices, market share, & profitability.
Brand Equity
Customer-based Brand Equity
Differences in consumer response
Consumers’ brand knowledge
(thoughts, feelings, images, experiences, and beliefs).
Perceptions,
preferences, and
behaviors
Customer-based brand equity is the differential effect brand knowledge
has on consumer response to the marketing of the brand. Can be positive
and negative.
Three key ingredients of customer-based brand equity are:
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Definitions of Brand Equity
“Brand equity is the set of brand assets and liabilities linked to the brand, its name, and symbol, that adds or subtracts value to a product or service for a firm/ or its customers” (David Aaker).
“Brand equity is the set of associations that permits the brand to earn greater volume than it would without the brand name” (Marketing Science Institute).
“Brand equity is everything the customer walks into the store with” (Peter Farquhar).
“A set of associations which are most strongly linked to a brand name” (Andrea Dunham).
The concept of brand equity
Brand Equity
Mental Brand
Equity
Behavioural Brand
Equity
Financial/Economical
Brand Equity
Mental Brand
response
Brand behavioural
response
Market response
Building Brand Equity
Brand Equity
Brand Elements
Marketing Activities
Secondary Associations
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Brand Elements
• Brand Names
• URLs
• Logos
• Symbols
• Characters
• Spokespeople
• Slogans
• Jingles
• Packages
• Signage
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Brand Element
Criteria1. Memorabiltiy
2. Meaningfulness
3. Likability
4. Transferability
5. Adaptability
6. Protectability
Criteria
Memorable
Easily recognized
Easily recalled
Meaningful
Descriptive
Persuasive
Criteria
Likable
Fun & Interesting
Rich visual & verbal imagery
Aesthetically pleasing
Criteria
Transferable
Within & across product boundaries
Across geographic boundaries & cultures
Criteria
Adaptable
Flexible
Updateable
Criteria
Protectable
Legally – registered trade mark
Competitively
Brand Elements
Brand Names & URLs
Logos & Symbols
Characters
Slogans & Jingles
Packaging & Signage
Brand Linguistics
Phonics
alliteration (Coca-Cola)
Orthographic
spelling (Kool); abbreviation (7 Up, IBM)
Morphologic
compound (Janitor-in-a-drum)
Semantic
Metaphor (Arrid)
Brand Names & URLs
Useful for Brand Awareness & Brand Associations –
Compaq, Yahoo, Tide, Dove
Descriptive – Singapore Airlines, Hit, Gati, Ivory
Suggestive – suggests a benefit or function –
Colorstay lipsticks, Head & Shoulders, Mop & Glo,
Aquaguard, Eveready, Sugar Free
Classical – based on Greek, Latin or Sanskrit words
Arbitrary – no relationship with the company/Product
– Apple Computers, Camel
Brand Names
Compound
RedHat
PriceWaterhouse
Coopers
Classical
Vedanta
Balaji Telefilms
Fanciful (imaginative words)
Vodafone
Wochardt
Arbitary (real words
without direct connection)
Apple
Orange
Mango
URLs
Keep it as simple as possible
Avoid Clichés
Avoid the .com
Brand v/s description – helps only short term
Unique personality
Unexpected combination (motley fool)
Reinvent a real word
Make new words
Logos & Symbols1. Corporate names & Trademarks – Coca-
Cola, Nestle, Tata, Maruti, Johnson & Johnson
2. Abstract or non-word mark logos are also known as symbols- Mercedes star, Rolex crown, Nike swoosh, Olympic rings
3. Many logos fall between these 2 extremes –Ralph Lauren’s polo player, Playboy’s Bunny, McDonald’s Golden Arch, Apple Logo
Benefits
Visual nature of logos & symbols – easy
recognition & recall
Versatile- can be updated transferred across
cultures
Can be appropriate for a range of product
categories-Surf, Dettol, Lux
CharactersA symbol that takes on human or real life
characteristicsMcDonald’s RonaldDisney Characters –Asian Paints – GattuPillsbury DoughboyKellogg's Bear Frosted Flakes -Tony the TigerDuracell BunniesHush Puppies
Benefits
Enhance brand personality & build
relationship with customers – Disney for kids
Valuable Licensing properties – Barbie dolls,
Spiderman, Superman etc., All Disney
Characters
Can be updated to suit the changing times
Slogans Short phrases that contain descriptive or
persuasive information Adds verbal reinforcement Design of slogans
TO build awareness and image Product sense and beyond (zindagi ke saath bhi .. Ke
baad bhi)
Updation of slogans Find out contribution of existing slogan Find out what more you wish to enhance Retain good qualities of earlier slogan and build up on
that
Slogans
Just Do it
When it absolutely positively has to be there
overnite
No more tears
Diamonds are forever
We try harder
Pal banaye magical
Benefits
Often rich and colorful – attention getting and
help in creating brand awareness
Help Brands in breaking through the “clutter”
in the market
Communicate a key product benefit –
reliability, speed – Sprint telecom
Jingles
Musical – easy recall - Airtel
Reinforce brand positioning and enhance
POD’s or POP’s
Useful when designing Ad campaigns
“Desert rose” – jaguar
The axe song
Helps in repetitive reminding
Packaging
Identify the brand – strong brand association
with packaging style of company
Convey descriptive & persuasive information
Facilitate product transportation & protection
& storage
Assist at-home storage (bottles and refill)
Packaging
Aid Product consumption (screw-on cap in
soft drink)
“Color vocabulary” (product and category)
Innovations can boost sales – Soft drink cans,
2 litre bottles, chocolates in smaller packs,
shampoos and hair oils in sachets – enhance
product usage & consumption
Packaging
Heineken beer – green bottle
Cadbury- purple
Kit-Kat – red
Kodak films – yellow
Pepsi - blue
Packaging Essentials
Know your consumer
Take the big-picture approach
Aesthetics + Function
Know your distribution channels
Educate Management
All activities of designing and producing the
container for a product.
Packaging
Packaging has been defined as “ an activity which is concerned with protection, economy, convenience and promotional consideration.”
According to William J Stanton,“Packaging may be defined as the general group of activities in product planning which involves designing and producing the container or wrapper of product.”
Cool Water cologne comes in bottle (Primary package) in a cardboard box (secondary package) in a corrugated box (shipping package) containing six
dozen of bottles in cardboxes
Packaging
Colour, functional & structural design imp
aspects
Which chip stacks up better?
Packaging and Labeling
Identify the brand
Convey descriptive and persuasive information
Facilitate product transportation and protection
Assist at-home storage
Aid product consumption
Packaging Objectives
Types of
Packaging
Consumer
Packaging
Family Package
Re-use Package
Multiple Packages
Transit Packaging.
New Trends in
Packaging
Plastic a new Trends in
Packaging.
Squeeze Bottles.
Tubes.
Sheet Formed
Containers.
Skin Packaging.
Blister Packaging
Semi Rigid Packaging
Sachets
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Labeling “Label is a part of product, which carries verbal
information about the product or seller. It may be a
small slip or printed statement .”
It may be a part a package or it may be attached to the
product.
It convey verbal information about the product and
seller.
According to William J Stanton,“ The label is the part
of the product which carries verbal information about
the product or the seller (manufacturer or middlemen).
A label may be part of the package or it may be a tag
attached directly to the product.”
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Identifies
Grades
Describes
Promotes
Functions of Labels
Classification of Labels Brand Labels
Grade Labels
Descriptive
Illustrative Label.
Product Transportation and
Protection
Product Life-Cycle StrategiesProduct Life Cycle
Online Movie Viewing Software
Phablets
bottled water
soda
VCRs
Sales and Product Life Cycle
Product development Develops a new product idea
Sales are zero and investment costs mount
Introduction Slow sales growth and profits are nonexistent
Heavy expenses of product introduction
Growth Rapid market acceptance and increasing profits.
Maturity Slowdown in sales growth and profits level off or
decline
Decline Sales fall off and profits drop
Product Life-Cycle Strategies104
Product Life Cycle
Do all products follow PLC?
Coca-cola, Gillette, American Express,
Lifebuoy, Lux, Dalda, Lipton, TATA etc.
Product class – longest life cycle, stays longer
in mature stage
Product form – standard PLC shape, manual
typewriters, dial telephones
Brand – can quickly change because of
changing competitive attacks & responses
(Surf, Tide, Nirma, Wheel and Sunlight, 501
bars)
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Style, Fashion, and Fad Life Cycles
A basic &
distinctive mode of
expression
Home, clothing
(formal, casual)
Lasts for
generations
Renewed interest
Currently accepted or
popular style in a
given field
Formal business
attire in 1990s to
business casual
today
Grow slowly, remain
popular for a while
and then decline
slowly
Temporary periods of
unusually high sales
driven by consumer
enthusiasm &
immediate product or
brand popularity
Peak early & declines
very fast
Acceptance cycle is
very short
Product Life-Cycle Strategies
Slow sales growth
Little or no profit
High distribution and promotion expense
Firms focus on those buyers who are the most ready to buy, higher income groups
Prices are higher
To be first can be rewarding but risky & expensive
Introduction Stage
Introduction Stage Pioneer Brands
Adv – producer advantages, economies of scale, patents, technology leadership
What about pioneers like Reynolds & Netscape?
First movers & Second movers (Wikipedia & Google)
Imitators surpasses innovators (Manufacturers of PC, Dell & Compaq are they leaders today?)
Golder & Tellis (Pioneer advantage: marketing logic or marketing legend? JMM May 1992) – inventor, product pioneer & Market pioneer.
Product Life-Cycle Strategies
Sales increase
New competitors enter the market
Price stability or decline to increase volume
Consumer education
Profits increase
Promotion and manufacturing costs gain economies of scale
Promotion expense-sales ration declines
The Men’s cosmetic market in South Asia (3800 Crores) growing by more than 21%
Fair & Handsome, Fair & Lovely Max
Fairness, Oxylife men creme bleach,
Garnier Men range, Amway India
Growth Stage
Marketing Strategies: Growth Stage
Improve product quality and add new product
features and improved styling
Add new models and flanker products
Enter new market segments
Increase distribution coverage and enter new
distribution channels
Shift from product-awareness advertising to
product-preference advertising
Lower prices to attract next layer of price-
sensitive buyers
Product Life-Cycle Strategies
Slowdown in sales, Many suppliers, Substitute products, Overcapacity leads to
competition, Increased promotion and R&D to support sales and profits
Divided into three phases –
Growth – sales growth rate starts to decline, no new distribution channels to fill in,
new competitors emerge
Stable – sales flatten because of market saturation, most potential have tried the
product
Decaying maturity – sales slowdown creates overcapacity in industry which leads
to intensified competition, frequent markdowns, increase advertising, trade &
consumer promotion, increase R&D budgets, Weaker competitors withdraw.
Leaders are giant firms, quality leaders, service leaders & cost leaders
Market specialists, product specialists & customizing firms
Some firms abandon weaker products, concentrates on more profitable products
Autos, Televisions, watches, cameras etc
Bajaj scooters & motorcycles
Maturity Stage
Marketing Strategies: Maturity Stage
Market Modification
Expand number of brand users by:1. Converting nonusers
2. Entering new market segments
3. Winning competitors’ customers
Convince current users to increase usage by:1. Using the product on more occasions
2. Using more of the product on each occasion
3. Using the product in new ways
Product Modification
Quality improvements – increase functional performance
Feature improvements – size, weight, materials, supplements,
& accessories
Style improvements – increase aesthetic appeal
Marketing Program modification
Modifying non product elements (price, distribution &
communication
Product Life-Cycle Strategies
Reasons
Technological advances, shift in consumer tastes, increased competition
Overcapacity, increased price cutting, & profit erosion
Eg Sewing machine, newspapers – slow decline
Eg Floppy discs, VCR – rapid decline
Maintain the product or reduce the no of products
Harvest the product (withdrawing from smaller segment, weaker trade channels, cutting marketing budgets, & reducing prices further)
Drop the product
Decline Stage
Marketing Strategies: Decline Stage
Identify ageing products
Establish a system for identifying them (Product-review committee)
Exit barriers in the industry (P&G stayed in declining liquid-soap
business)
Increase firm’s investment (to dominate the market and strengthen its
competitive position)
Maintain the firm’s investment level until the uncertainties about the
industry are resolved.
Decrease the firm’s investment level selectively by dropping
unprofitable customer groups, while simultaneously strengthening the
firm’s investment in lucrative niches
Product Life-Cycle Marketing Strategies
Product Life-Cycle Marketing Strategies
Marketing Strategies: Decline Stage
Harvesting (“milking”) the firm’s investment to recover cash
quickly. Reducing product costs or business’s costs gradually &
maintaining sales
Cut in R&D costs, plant & equipment costs. Reduce product quality,
sales force size, marginal services & advertising expenses. Without
letting know the customers, competitors & employees.
Difficult but can increase cash flow substantially.
Divesting the business quickly by disposing of its assets as
advantageously as possible.
How much inventory & service to maintain for past customers.
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r W
asso
n,
Dyn
am
ic C
om
pe
titive
Str
ate
gy &
PL
C,
(Au
stin
, T
X:A
ustin
Pre
ss. 1
97
8;
Jo
hn
We
be
r, P
lan
nin
g C
orp
ora
te
Gro
wth
with
in
ve
rte
d p
rod
uct
life
cycle
s,
Lo
ng
Ra
ng
e P
lan
nin
g (
Oct
19
76
); P
ete
r D
oyle
, T
he
re
alit
ies o
f P
LC
, Q
trly
revie
w o
f M
ark
etin
g
(Su
mm
er
19
76
)