Different Phases of Product Life Cycle

Marketing Mix: Introductory Stage

Stage Characteristics

Introduction

Growth

Shakeout

Mature Decline

Strategic Marketing Objectives

Stimulate Primary Demand

Build Share

Build Share

Hold Share

Harvest

Product Quality Continual Quality Improvements

Rationalize

Concentrate on features

No change

Product Line Narrow Broad Rationalize

Hold Length of Line

Reduce Length of line

Price Skimming Or Penetration

Reduce Reduce Hold or reduce selectively

Reduce

Channels Selective Intensive

Intensive Intensive Selective

Communication

High High High High to Declining

Reduce

Strategic Implications of PLCStage Strategic

marketing Objectives

Investments

Profits Cash Flow

Introduction Accelerate market growth and prod. acceptance through trial and availability

Moderate to high for R&D, working capital and Marketing

Highly negative

Highly Negative

Growth Increase Competitive position

High to very high

High Negative

Shakeout Solidify Position

Moderate Low to Moderate

Low to Moderate

Mature Maintain position

Low High Moderate

Potential Advantages Of Pioneer And Follower Strategies

Pioneer FollowerEconomies of Scale and

ExperienceHigh Switching cost for

early adoptersDefines the rules of the

gameDistribution

AdvantagesPossibility of

preempting scarce resources

Take advantage of pioneers positioning mistakes

Take advantage of pioneer’s product mistakes

Take advantage of latest technology

Take advantage of pioneer’s limited resources.

Alternative Marketing StrategiesSituational Variables

Mass Market Penetration

Niche penetration

Skimming: Early Withdrawal

Primary Objective

Maximize no. of triers and adopters.

Lead market share

Maximize no. of triers in the Target Segment

Lead market share in the Target Segment

Recoup development and commercialization costs quickly

Withdraw when competition increases

Market Characteristics

Large potential demand

Homogeneous needs

Large potential demand

Fragmented Market

Limited potential demand

Short adoption process

Alternative Marketing StrategiesSituational variables

Mass market penetration

Niche Penetration

Skimming: Early Withdrawal

Product Characteristics

Technology patentable or superior

Value increase with number of customers

Little patent protection

No network effects

Many sources of supply

Little patent protection

Little development or additional investment required

Competitor Characteristics

Few potential Competitors

Most competitors have limited resources

Many potential competitors

Several have substantial resources and competencies

Many potential competitors

Possible sources of differential advantages

Alternative Marketing Strategies

Situational Variables

Mass-Market Penetration

Niche penetration

Skimming: Early withdrawal

Firm Characteristics

Strong product development skills

Strong marketing resources, ability to identify multiple segments

Sufficient financial resources

Limited product engineering skills

Limited marketing skills

Limited financial resources to build capacity in advance of growing demand

Strong R&D, a prospector with capabilities for continued product innovation

Good sales and promotional skills

Limited financial resources.

XEROX:BOMBED BY CANONProduct: Low Cost personal copiers for

small businesses.Price: Lower price, lower margins.Channel: Retail channel rather than sales

agent who were used by Xerox.Promotion: Xerox was leasing their copiers,

canon used third party dealers to sell them and used extensive advertisements.

Nokia: India Calling!Invested before every other player in

brand, people and distribution.Distribution : 50,000 out of total 95,000

outlets sell Nokia.Addressed the affordability issue in rural

India.High focus on R&D and building India

specific products.Continuously bringing out new products in

the market as the market evolves.

Strategies For Growth Markets

Opportunities and risks in growth marketsIt is easier to gain share when market is

growingShare gains are worth more in a growth

market than in a mature marketPrice competition is likely to be less intenseEarly participation in a growth market is

necessary to make sure that the firm keeps pace with technology

Market shares of leaders and followers over the life cycle of a hypothetical market

$ s

ale

s volu

me

maturityIntroduction growth Early maturity

Late entrants (20% share)

Follower(30% share)

Leader/pioneer (50%share)

Growth market strategies for market leaders

• Market objectives1. Retaining customers2. Stimulate selective demand

among later adapters3. Stimulate demand to increase

market size

LuxEnjoys status of market leader for its

unique positioning of a beauty soap.New variants are being launched from time

to time to attract new consumers and increase the market size

New variants were also helpful in retaining customers who were looking for new variety of soaps

late entrants were mainly from rural areas and tier three cities, it ensured that these customers try it by ensuring the reach of soap.

Market actions to achieve share maintenance objectives

• Retain customers by1. Managing/improving satisfaction and loyalty.2. Encouraging/simplifying repeat purchase.3. Reducing attractiveness of switching.• Stimulate selective demand among late

adopters by1. Head to head positioning against competitive

offerings or potential offerings.2. Differentiated positioning against competitive

offerings or potential offerings.

Competitor or

potential competit

or

Contraction or strategic withdrawl

Confrontation strategy proactive strategy

Fortress or

position

defense

strategy

market expansion

Flanker Strategy: Proactive, Reactive

Target competitor

Guerilla

attacks

challengerFrontal attack

Flanking Strategy

Leapfrog Strategy

Encirclement Strategy

Marketing actions to achieve share growth objectives

Capture repeat purchases from current customers of the leaders or other competitors by

1. Head to head positioning against competitor’s offering in primary target market.

2. Technological differentiation from target competitor’s offering in his primary target market.

Dettol and Savalon

Marketing actions to achieve share growth objectives Stimulate selective demand among late

adopters by1. Head to head positioning against competitor’s

offering in established market segments.2. Differentiated positioning focused on

untapped or underdeveloped segments . Virgin Mobile Targeted youth New schemes like paying for incoming Flashy image in contrast to all other major

players in market

Strategies for Mature And Declining Markets

Mature MarketsHalf of potential customers have adopted the

product. (approx)Replacement purchases rather than first time

buyers – vast majority (term not defined)Over estimate future sales vol->over capacity.Competitive turbulence leading to

Weaker businesses failWithdraw from industryAcquired by other firms

Common strategic traps to avoidFailure to recognise events signalling the beginning of

‘shake out’ period.Get caught in the middle without any strategic

advantage.Declining importance of prod differentiation and

increasing importance of price or service.Not responding to more aggressive pricing/marketing

actions of competitors Amritanjan Vicks differentiated itself on the basis of use in cold

and cough Also Vicks hit emotional cord by showing children in

advertisements

Strategic Actions for Success

Success

Competitive advantage

Pursue growth or profit

opportunities

Competitive Advantage

Analyser

Product/Mkt Dev

Dev industries with technology

Methods of Differentiation

Differentiation Method

sProduct Quality

Service Quality

Dimensions to Product Quality

Performance

Durability

Conformance to specs

Features

Reliability

Serviceability

Fit and Finish

Brand Name

Dimensions to Service Quality

Tangibles

Reliability

Responsiveness

Assurance

Empathy

Methods for Low Cost Position

No Frills Product

Innovative Product Design

Cheaper Raw Materials

Innovative Production Processes

Low Cost Distribution

Reductions in Overhead

Tata Nano

All the processes were centralized and scale of

production was made so large that the costs come down

to a drastic level.

Marketing Strategies for Mature MarketsMaintaining current market shareExtending Volume GrowthIncreased Penetration StrategyExtended use strategyMarket Expansion StrategyGlobal Market Expansion-Sequential Strategies Consumer durable markets consumer durable markets offering various

schemes like exchange schemes, new product development etc.

Strategies for Declining Markets

Conditions of Demand – Technological reasons,

demographic shifts, costs of inputs/complementary

products

Exit barriers

Intensity of Future Competitive Rivalry

Divestment or Liquidation

T-series

came up with series of cassettes having old songs or

some other featured albums when CD market started

hitting cassette market.

Strategies for Remaining Competitors

Strategy & Objectives

Possible Marketing Actions

Harvesting – Maximise short term cash flow

•Eliminate R&D exp, cap investment•Reduce Mktg & Sales Budgets•Reduce prod costs/Raise price for margins

Maintenance – Maintain market share for short term even at expense of margins

•Serv progs to reduce perceived risk of trial/solve unique problems (systems engg, operator training, extd warranties)•Focus sales force efforts on repeat purchases•Prod & process R&D in short term for impr/maint prod quality•Continue maint levels of advt & sales promotion targeted at current users•Continue trade promotion at levels sufficient to avoid reduction in distribution coverage•Lower prices if necessary to maintain share even at expense of reduced margins

Strategies for Remaining Competitors

Strategy and Objectives

Possible Marketing Actions

Profitable Survivor – Increase share of declining mkt, encourage weaker competitors to exit

•Maintain or increase advt & sales promotion budgets•Introduce line extensions to appeal to remaining segments•Maintain or increase distribution coverage•Agreements to produce replacement parts or private labels for smaller competitors considering getting out of production

Niche-Strengthen share position in one or a few segments with potential for continued profit

•Continued prod and process R&D•Private labels supply to hold down unit costs•Focussed advt, sales promotion, personal selling to target cust•Maintain distribution channels for specific segments•Service programs to address unique concerns of customers in target segment