DEPARTMENT OF MARKETINMANAGEMENT

Program MBA in Marketing

COURSE TITLE: PRODUCT MANAGEMENT AND STRATEGY

Assignment of PRODUCT MANAGEMENT AND STRATEGY

Personal assignment

NAME ID NO

DESTA HUMO……………106/12

SUBMITED TO: yilma.assignments@gmail.com\yilma

SUBMITED DATE: JUNE 6, 2020

HAWASSA, ETHIOPIA

Table of content Pages

1|Page
1. INTRODUCTION-----------------------------------------------------------------------------------------------2

1.1. THE CONCEPT OF PRODUCT AND PRODUCT MANAGEMEN--------------------------------2

1.2. Product lines and attributes associated with product line management-------------------------------5

1.3. Think of three brands from the beverages industry --------------------------------------------------------12

1.4. Desirable results from the introduction of a new mobile phone, although it might --------------16

1.5. The most desirable results from the introduction of a new mobile phone? ------------------------16

1.6. THE CONCEPT OF PRODUCT LIFE CYCLE-----------------------------------------------------------------17

1.8. Criticisms of the Product Life Cycle (PLC) -------------------------------------------------------------------27

1.9. Examples related to five levels of product from fast food market-------------------------------------28

1.10. Sources of new product ideas------------------------------------------------------------------------------------29

1.11. Comparison between Convenience (sugar) and Specialty products ---------------------------------31

1.12. Criteria during idea screening----------------------------------------------------------------------------------32

1.14. Marketing strategy development and its appropriateness be for product ready-----------------34

1.15. Four products that I have used last month and their innovation types-----------------------------38

1.16. Fast-Moving Consumer Goods industry --------------------------------------------------------------------40

1.17. Examples of various types family brands in service industry-----------------------------------------42

1.18. Information required if I were using brand extension for convenience goods ------------------44

1.19. These three products I have lately purchased in relation to plc decision--------------------------45

1.21. Marketing strategy of leader differ from follower in plc----------------------------------------------47

1.22. A pension scheme is in a high growth rate market, ---------------------------------------------48

1.23. The alternative marketing strategies and tactics for this service--------------------------------------49

1.24. One tangible product and one intangible product--------------------------------------------------------52

1.25. What stage precedes the technical development of a new service? -----------------------------------53

2|Page
PRODUCT AND PRICING MANAGEMENT ASSYGMENT I

1. INTRODUCTION

Product management is the development, marketing and sale of a product to a customer.

Product management starts from when a product is merely just an idea and continues all the
way through the lifecycle of a product, including when the product arrives in the customer's
home. A product manager drives the strategy for a product or group of products. Product
managers are often responsible for educating the executive staff on the need for the product in
the market.

Product management differs based on the company and type of products. However one thing is
consistent, the product manager represents the customers' needs. The product manager is
responsible for bringing together the technology, business, and users. The technology includes
the actual product itself. The business represents those that have the ability to bring the
product to market, and the user is the customer that has a desire for this product. Other than
the chief executive officer (CEO), the product manager is the only other person in the company
who has a focus on bringing all the aspects of a product together.

A product manager is the product champion, meaning that they are the person who stands
behind all phases of the product from inception to development to release. Although the roles
vary by company the phases are similar for each product manager.

1.1. THE CONCEPT OF PRODUCT AND PRODUCT MANAGEMEN

Product Management can be defined as the general business structure within a company that
supports and manages all the activities related to developing, marketing and selling a product –
or even more than one all through its lifecycle. It’s usually a role inside the Development
department. Together with product lifecycle management, product management provides
information about a specific product to the entire company and its extended supply chain.

3|Page
Product management’s general businesses purposes are to make the product value for its
targeted customer (creating customer value) while producing measurable benefits that make
every business viable such as revenue, profit margins, etc. Since its goal is to deliver value to
the business, product management professionals play a strategic role in determining the
necessary actions for achieving these goals. Due to the complexity and amount of tasks
involved, product management can be broken down into two very different (but
complementary) areas: product development and product marketing. These two areas must
work together in order to maximize sales revenues and profit margins and, consequently, its
market share. Product Development consists mainly of all the steps you take from:
Conceptualizing, Designing, and Developing.

Marketing a new product or service

The ultimate goal when developing a new product is pretty clear: to maintain/increase your
company’s results by constantly satisfying your customer’s ever-changing demands. It’s
extremely important to clearly define your target market and your personas in order to identify
the customer base characteristics as well as defining the paths to follow when improving your
products/services. Knowing who you want to please and sell to is critical for defining your
development strategy. That’s why it’s so important to conduct both quantitative and qualitative
research all through the new product development process – from the concept to the launch.

Product Marketing Definition

Product Marketing can be defined as the intersection of Product, Sales and Marketing. It’s
basically the role of communicating the product, features, benefits, etc. for all the company’s
stakeholders. The main responsibility of the Product Marketing department is to have a deep
knowledge of the product they are positioning and messaging. That’s why Product Marketing

4|Page
and Product Development are complementary departments and must have efficient
communication.

Summing up, a product marketer needs to know the answer for five simple questions

 How the product fits into the target audience needs?

 How the current customers feel about other products?
 How the product stand out from the competitors
 The unique features the product has?
 The main problems the product solves?

It’s obviously not simple, but with a good communication channel between Product, Marketing
and Sales, this role starts to get easier.

The Product Manager (PM) Role

The person in charge of managing a product is normally called the Product Manager. These
people are normally responsible for coordinating multiple teams that operationalize the
aforementioned tasks such as keeping close track of the market conditions to guide the
definition of new features to be developed as well as overseeing the production of said
product.

Product Managers also have the responsibility of being always alert observing the market for
new development opportunities to cater to new customer’s needs and help the company stay
ahead of its competition. Here, the product manager is responsible for coordinating (and
negotiating with) the design and development teams to prioritize their efforts towards
developing new features that’ll cater to our users’ direct needs.

Our PM is also responsible for communicating directly with our marketing and customer
success teams, to coordinate marketing efforts for new features and keep close track of the
users’ opinions and requests. Even though the product manager’s attentions must be divided
among all stages of the product lifecycle, it’s normally focused mainly on new product

5|Page
development (NPD). The market is always evolving and, with it, the customer’s perception of
value. Support team investigating and solving bugs.

Core Functions of a Successful Product Management Routine

There are actions that every product manager must do and most are developed through
experience, good role models, and mentoring. Some examples of the routine of a PM are:

 Conducting customer interviews and user testing

 Running design sprints
 Feature prioritization and roadmap planning
 The art of resource allocation
 Performing market assessments
 Translating business-to-technical requirements, and vice versa
 Pricing and revenue modeling
 Defining and tracking success metrics

The product manager’s role goes beyond only strategizing. More often than not, these
professionals adopt a hands-on approach to promote and improve collaboration among many
other roles. As in the already mentioned example here at Pipefy, the product manager role is
often inter-disciplinary and focused on bridging the gap and coordinating many different roles,
such as development, design, marketing, customer success, etc. And to manage all functions
within the Product Management role, it’s essential to define what to prioritize, how to
communicate with other teams and standardize the process. You can count on Pipefy to help
you with organizing and controlling your daily work.

1.2. Describe the types of product and its levels and hierarchy

Product types

These all products are purchased by either industrial buyer or final consumer. The consumer
products are purchased by final consumers for personal consumption. The industrial products

6|Page
are purchased by the organizations for their usage in the processing operations &
administration. Moreover the industrial products are used mostly which includes consumables
like raw materials or paper clips that can be transformed into finished products.

Product Classification – Types of Products

Product classification that is also known as different types of products. These types of products
or product classification are as below in three different forms.

1. Consumer Products

2. Industrial Products

3. Persons, Organizations, Ideas & Places

1. Consumer Products

Those products that are purchased by final consumers for personal consumption are called
consumer products. The way of purchasing these products provides the basis for the marketer
to further classify these products. The following is an important classification of these consumer
products on the basis of the manner of purchase & manner of marketing.

•Convenience Products

Those consumer products that are purchased immediately & frequently with little efforts and
comparison are called convenience products. Examples of convenience products include the
following: Candy, Newspapers, Soap, and Fast Food etc.

The convenience products are placed at the front locations of the stores in abundance quantity
so that they are easily available to the customers. The price of these products is kept lower.

•Shopping Products:

7|Page
This type of product is purchased less frequently & careful comparison is made by the customer
on the price, quality, sustainability & style. In case of purchase of shopping products, increased
time & effort is made by the customers in collection of information & comparison making.
Following are some of examples of shopping products: Clothing, Furniture, Major Appliances,
Used Cars and Hotel & Motel Services.

These products are distributed in fewer outlets by the marketer along with the strong sales
support services that assist customers in their comparison making.

•Specialty Products:

Specialty products are those consumer products that have brand identification or unique
characteristics and an important group of customers are happy to purchase these products.
Following are some of examples of specialty products. The customers of such products can
make enough effort with them for reaching relevant dealers. However, they do not compare
the specialty products normally.

•Unsought Products:

Those consumer products that are either not known to the customers or they are known, but
customers do not usually consider them to purchase. The important innovations are usually
included in the category of unsought products because the customers get the awareness
through advertisement. Following are the examples of unsought products.

•Life Insurance

•Blood donation to Red Cross

A lot of personal selling, advertising & marketing efforts are required for unsought products.

2. Industrial Products:

8|Page
Those products that are purchased that are buying for further processing or for use in operating
a business are called industrial products. So the main difference between industrial and
consumer product is based on the purpose of purchase of the product. For example, if a lawn
mower product is purchased for use around the house, then this lawn mower is categorized in
the consumer product. But if the same lawn mower is purchased for use in landscaping
business, then this is categorized as an industrial product. Following are some of the three
product classification of industrial products.

•Material & Parts:

Raw materials, natural products & manufactured materials are included in the category of
material & parts. Farm products & natural products are included in raw material part like
cotton, wheat, vegetables, fruits, fish, crude petroleum, iron etc. Component materials &
component parts are included in the manufactured area like yarn, wires, cement, iron, tires,
small motors etc. Manufactured material & parts are mostly sold to the industrial users directly.
Major marketing factors employed in this category are price & service. The advertising &
branding is not so much important. Also the demand of the industrial products is derived
demand, which is derived from the consumer demand.

•Capital Items:

Those industrial products that assist the production & operation of customer are called capital
items like accessory equipment’s & installations. Building & fixed equipment’s are included in
the installations. Office equipment & portable factory equipment are included in the accessory
equipment. Accessory equipment’s have much shorter lifetimes & they are only helpful in the
process of production.

•Supplies & Services:

Supplies contain repair & maintenance items and operating supplies like nails, paint, lubricants,
pencil, paper, coal etc. The supplies are regarded as the industrial convenience products

9|Page
because they are purchased with little effort & time. Business advisory services and repair &
maintenance services are included in business services category. These services are given under
some contract.

3. Persons, Organizations, Ideas & Places:

Product Levels:

Theodore Levitt proposes that in planning its market offering, the marketer needs to think
through 5 levels of the product. Each level adds more customer value and taken together forms
Customer Value Hierarchy.

i. Core Benefit or Product:

This is the most fundamental level. This includes the fundamental service or benefit that the
customer is really buying. For example, a hotel customer is actually buying the concept of “rest
and sleep”

ii. Basic or Generic Product:

The marketer at this level has to turn the core benefit to a basic product. The basic product for
hotel may include bed, toilet, and towels.

iii. Expected Product:

At this level, the marketer prepares an expected product by incorporating a set of attributes
and conditions, which buyers normally expect they purchase this product. For instance, hotel
customers expect clean bed, fresh towel and a degree of quietness.

iv. Augmented product:

10 | P a g e
At this level, the marketer prepares an augmented product that exceeds customer
expectations. For example, the hotel can include remote-control TV, fresh, flower room service
and prompt check-in and checkout. Today’s competition essentially takes place at the product-
augmentation level. Product augmentation leads the marketer to look at the user’s total
consumption system i.e. the way the user performs the tasks of getting, using fixing and
disposing of the product. Theodore Levitt pointed out that the real competition is not what the
companies have manufactured in the factories, but between what they add to their factory
output in the form of packaging, services, advertising, customer advice, financing, delivery
arrangements, warehousing and other things that people value.

Some things should be considered in case of product-augmentation strategy.

i Each augmentation adds cost. The extra benefits available in hotels add cost

ii. Augmented benefits soon become expected benefits. The unexpected additions like flower,
remote-controlled TV soon become very much expected by the customers from the hotel.

iii. As companies raise the price of their augmented product, some companies may offer a
stripped- down” i.e. no-augmented product version at much lower price. There are always a set
of low- cost hotel are available among the 5-star hotels.

v. Potential Product:

This level takes into care of all the possible augmentations and transformations the product
might undergo in the future. This level prompts the companies to search for new ways to satisfy
the customers and distinguish their offer. Successful companies add benefits to their offering
that not only satisfy customers, but also surprise and delight them. Delighting is a matter of
exceeding expectations.

Product Hierarchy:

11 | P a g e
Each product is related to certain other products. The product hierarchy stretches from basic
needs to particular items that satisfy those needs. There are 7 levels of the product hierarchy:

1. Need family:

The core need that underlines the existence of a product family. Let us consider computation as
one of needs.

2. Product family:

All the product classes that can satisfy a core need with reasonable effectiveness. For example,
all of the products like computer, calculator or abacus can do computation.

3. Product class:

A group of products within the product family recognised as having a certain functional
coherence. For instance, personal computer (PC) is one product class.

4. Product line:

A group of products within a product class that are closely related because they perform a
similar function, are sold to the same customer groups, are marketed through the same
channels or fall within given price range. For instance, portable wire-less PC is one product line.

5. Product type:

A group of items within a product line that share one of several possible forms of the product.
For instance, palm top is one product type.

6. Brand:

The name associated with one or more items in the product line that is used to identify the
source or character of the items. For example, Palm Pilot is one brand of palmtop.

12 | P a g e
7. Item/stock-keeping unit/product variant:

Some firms sell a single product; others sell a variety of products. A product item refers to a
unique version of a product that is distinct from the organizations other products. A distinct
unit within brand or product line distinguished by size, price, appearance or some other
attributes. For instance, LCD, CD- ROM drive and joystick are various items under palm top
product type.

1.3. PRODUCT LINES AND ATTRIBUTES ASSOCIATED WITH PRODUCT LINE MANAGEMENT

A product line is a group of products within the product mix that are closely related, either
because they function in a similar manner, are sold to the same customer groups, are marketed
through the same types of outlets or fall within given price ranges.

An individual product is a particular product within a product line. It is a distinct unit within the
product line that is distinguishable by size, price, appearance, or some other attribute. For
example, all the courses a university offers constitute its product mix, courses in the marketing
department constitute a product line, and the principle of marketing course is a product item.

Product Line Extensions

A product line extension is the use of an established product’s brand name for a new item in
the same product category. Line extensions occur when a company introduces additional items
in the same product category under the same brand name, such as new flavors, forms, colors,
added ingredients, or package sizes. The company can extend its product line down-market, up-
market, or in both directions.

Down-Market Stretch: a company positioned in the middle market may want to introduce a
lower-priced line for any of three reasons: (a) the company may notice strong growth

13 | P a g e
opportunities as mass retailers such as Wal-Mart attract a growing number of value-seeking
shoppers; (b) the company may wish to tie up lower-end competitors who might otherwise try
to move up-market; or (c) the company may find that the middle market is stagnating or
declining.

Up-Market Stretch: companies may wish to enter the high end of the market for more growth,
higher margins, or simply to position themselves as full-line manufacturers. Many markets have
spawned surprising upscale segments: Starbucks in coffee, Haagen-Dazs in ice cream, and Evian
in bottled water. Leading Japanese auto companies have each introduced an upscale
automobile: Toyota’s Lexus, Nissan’s Infiniti, and Honda’s Acura.

Product Line Breadth

The breadth of the product mix consists of all the product lines that the company has to offer to
its customers. Product marketers must decide what products will be offered (i.e., the breadth
and depth of the product line). The product line breadth is one of the four dimensions
associated with a company’s product mix.

The product line breadth is also referred to as the: product width, product assortment width
and merchandise breadth.

Product line breadth: The breadth of the product mix consists of all the product lines that the
company has to offer to its customers. The breadth of the product mix consists of all the
product lines that the company has to offer to its customers. If we take P&G, for example, the
breadth of the major product lines would consists of hair products, oral care, soaps and
detergents, baby care, and personal care.

Depth of the product line: Line depth refers to the number of subcategories a category has.
Companies employ different strategies to expand their product line depth, which refers to the
number of products in a specific product line.

14 | P a g e
Product mix: The complete set of all products a business offers to a market. The product mix is
made up of both product lines and individual products. Companies with full-line strategies
attempt to enhance product line depth through carrying a high number of variations on a
similar product in order to satisfy a wide range of different customer desires.

Companies with limited-line strategies will carry a select few product variations with the
highest impact, rather than carrying every conceivable variation of the product.

Line-filling and line-pruning strategies can take place, depending on whether there is a
perceived void in the product line, or whether an existing product in the line becomes obsolete
or unprofitable.

Line-filling Strategies

Line-filling strategies occur when a void in the existing product line has not been filled or a new
void has developed due to the activities of competitors or the request of consumers. Before
considering such a strategy, several key questions should be answered: Can the new product
support itself? Will it cannibalize existing products? Will existing outlets be willing to stock it?
Will competitors fill the gap if we do not? What will happen if we do not act?

Assuming that the company decides to fill out the product line further, there are several ways
of implementing this decision. Three are most common:

Product proliferation: the introduction of new varieties of the initial product or products that
are similar (e.g. a ketchup manufacturer introduces a hickory-flavored sauce, a pizza-flavored
barbecue sauce, and a special hot dog sauce)

15 | P a g e
Brand extension: strong brand preference allows the company to introduce the related product
under the brand umbrella (e.g. Jell-O introduces pie filling and diet desserts under the Jell-O
brand name)

Private branding: producing and distributing a related product under the brand of a distributor
or other producers (e.g. Firestone producing a less expensive tire for Kmart)

In addition to the demand of consumers or pressures from competitors, there are other
legitimate reasons to engage in these tactics. First, the additional products may have a greater
appeal and serve a greater customer base than did the original product. Second, the additional
product or brand can create excitement both for the manufacturer and distributor. Third, shelf
space taken by the new product means it cannot be used by competitors. Finally, the danger of
the original product becoming outmoded is hedged. Yet there is stil serious risk to consider:
unless there are markets for proliferation that will expand the brand’s share, the newer forms
will cannibalize the original product and depress profits.

Line-pruning Strategies

Line-pruning strategies involve the process of getting rid of products that no longer contribute
to company profits. A simple fact of marketing is that sooner or later a product will decline in
demand and require pruning. Timex has stopped selling home computers. Hallmark has
stopped selling talking cards. A great many of the components used in the latest automobile
have replaced far more expensive parts, due to the increased costs in other areas of the
process, such as labor.

Using modern robotics technology has halved the manufacturing costs of several products.
Through such implementation, Keebler Cookies moved from packaging their cookies totally by
hand to 70% automation. Other possible ways a company might become more efficient are by
replacing antiquated machinery, moving production closer to the point of sale, subcontracting
out part of the manufacturing process, or hiring more productive employees.

16 | P a g e
 1.4. THINK OF THREE BRANDS FROM THE BEVERAGES INDUSTRY AND DESCRIBE THEIR
POSITIONING STRATEGY

1. HABESHA BREWERY: cultural based positioning strategy

2. HEINKEIGN BREWERY S,C: most of its position strategy focus on football completion.
3. GUNNES BREWERY S.C: made of back this implies that fighting to racist thinkers and
motivate back customers and again its color.

1.5. WHAT COULD BE THE MOST DESIRABLE RESULTS FROM THE INTRODUCTION OF A NEW
MOBILE PHONE, ALTHOUGH IT MIGHT CANNIBALIZE AN EXISTING COMPANY
PRODUCT?

New materials in product innovation

As with microelectronics, the availability of new materials, such as mobile phone or electronics,
may offer small firms considerable opportunities for innovation. Indeed, there is expert opinion
to indicate that new materials technology may become as important within the next decade as
microelectronics. Meanwhile, use of new materials can, like microelectronics, point to a high
degree of sophistication among small firms. In fact, slightly fewer firms in our sample had used
new materials in product innovation than had used microelectronics.

Overall, the proportion was 30 per cent of innovators, or 17 per cent of the whole sample. The
small firms in the East Midlands were again more frequently users of new materials than those
in the North East: indeed, with usage covering 22 per cent of all East Midlands establishments,
they were nearly twice as high as the North, with only 12 per cent.

On average, it seems, the innovators do better financially than the non-innovators. Is a lack of
new products, then, an indication either of lack of enterprise or of financial weakness which
shackles development? Not necessarily. Those without any new products during 1983-85
were directly asked to state the main reasons for this lack. The reason most frequently given
was ‘making to the customer’s order’, and another frequently given explanation was that

17 | P a g e
customer industries demanded standard products. In other words, so far as these small firms
were concerned, their market was not one which required new or modified products. A lack of
innovation arose from giving the customers what they wanted. However, other non-innovating
firms (a much smaller number) stated that they had been unable to find suitable new products,
with aproven or reliable level of demand. In these cases, some search for new products was
implied, but it had failed. Alternatively, one can interpret these cases in terms of an
unwillingness to bear risk. Only one firm out of 42 non-innovators stated that inability to obtain
development capital was the reason for lack of new products. So currently technology is at the
peak in the market like the introduction of Samsung galaxy, techno mobile cell phones and
other latest android and smart phones in the market cannibalize the former old model mobile
phones like blackberry, smadle 900 and others.

1.6. THE CONCEPT OF PRODUCT LIFE CYCLE

When a product enters the market, often unbeknownst to the consumer, it has a life cycle that
carries it from being new and useful to eventually being retired out of circulation in the market.
This process happens continually - taking products from their beginning introduction stages all
the way through their decline and eventual retirement. 

What Is the Product Life Cycle?

The product life cycle is the process a product goes through from when it is first introduced into
the market until it declines or is removed from the market. The life cycle has four stages -
introduction, growth, maturity and decline. 

While some products may stay in a prolonged maturity state, all products eventually phase out
of the market due to several factors including saturation, increased competition, decreased
demand and dropping sales.

18 | P a g e
Additionally, companies use PLC analysis (examining their product's life cycle) to create
strategies to sustain their product's longevity or change it to meet with market demand or
developing technologies. 

Uses of PLC Analysis 

Conducting PLC analysis can help companies determine if their products are servicing the
market they target efficiently, and when they might need to shift focus. 

By examining their product in relation to the market on the whole, their competitors, sales and
expenses, companies can better decide how to pivot and develop their product for longevity in
the marketplace. 

Examining their product's life cycle, specifically paying attention to where their products are in
the cycle, can help companies determine if they need to develop new products to continue
generating sales - especially if the majority of their products are in the maturity or decline
stages of the product life cycle.

PLC Strategies

For companies in an introduction stage with their product, there are several pricing models
available to begin generating sales - either price skimming, which sets the price of the product
initially high and lowers it to "skim" groups as the market expands, or price penetration, which
sets the initial price low to penetrate the market more quickly and eventually increases it once
demand grows. 

Companies often run into trouble when they don't understand the introduction stage of their
product's life cycle - especially when customers do not respond well to the initial product
(either because of pricing or the inherent value and usefulness of the product). It is important
to examine product advertising and packaging in addition to pricing. Is the product meeting the
demands and needs of its target market? If sales are stale, many companies consider shifting

19 | P a g e
their marketing strategy and focus on marketing to new demographics to help introduce their
product to a potential new revenue stream.

Conducting a PLC analysis can help companies learn when they need to reinvent or pivot their
product in a new direction. For example, online streaming service Netflix pivoted their product
by going from a DVD-delivering service to primarily an online streaming service - which was met
with great success.

By examining where their product is in the product life cycle, companies can continue
innovating alongside new technology to diversify their product, keep up with competition and
potentially elongate their product's life in the market.

1.7. The main stages of the product life cycle, and strategies

Generally, there are four stages to the product life cycle, from the product's development to its
decline in value and eventual retirement from the market.

5 Main Stages of Product Life Cycle

Some of the most important stages through which product life cycle passes are as follows: (i)
Introduction (ii) Growth Stage (iii) Maturity Stage (iv) Saturation Stage (v) Decline Stage.

20 | P a g e
 i) Introduction:

The product is developed keeping in view a particular need of a set of consumers, and
introduced in the market by initiating its commercial production.

At this stage product is new in the market, consequently its demand is low and requires
vigorous sales efforts. The promotional costs are, therefore, high at this stage and the
production costs are also not fully recovered due to low volume of sales.

ii) Growth Stage:

There is a rapid expansion in sales as the cumulative impact of the promotional expenditure
helps in the market acceptance of the product as well as the reputation of the product gains
around. But this rapid expansion can be sustained only by the maintenance of product quality.

(iii) Maturity Stage:

When the product enters the maturity stage the rate of growth of its sales declines, though the
volume of sales keeps on increasing. This is so because most of the persons needing the
product-had; already adopted it during the growth stage and now when the product enters its
maturity stage, it faces a small and declining number of potential buyers. Consequently, the
firm has to spend relatively increasing amount of sales promotion.

Iv) Saturation stage:

At this stage, the sales volume of the product ceases to grow. The only additional demand for
the product happens to be its replacement demand.

v) Decline Stage:

21 | P a g e
Ultimately the product enters a stage of decline where its sale volume starts shifting down. The
competitors have by then entered the market with substitutes and imitations and the product
distinctiveness starts diminishing. Consequently, the sale of the product also starts declining.

It is to be noted from the above discussion that throughout the product life cycle, changes
occur in price-elasticity of demand and promotional elasticity. There are also continuous
changes in the production and distribution costs over the product life-cycle. This necessitates
continuous adjustments in the pricing policy over the various phases of the product-life- cycle
so as to get the best return in each case.

We can analyze from the product life cycle that as the product moves to the next stage of its
life-cycle, the sellers control over prices keeps on further reducing. So, in order to save itself
from the stage of saturation and decline, the firm makes a fresh innovation just at a time when
the existing product is about to enter the saturation stage. In this manner, the firm marks a new
product line.

Marketing Strategies – Stages of Product Life Cycle

Introduction:

Product passes through four stages of its life cycle. Every stage poses different opportunities
and challenges to the marketer. Each of stages demands the unique or distinguished set of
marketing strategies. A marketer should watch on its sales and market situations to identify the
stage in which the product is passing through, and accordingly, he should design appropriate
marketing strategies. Here, strategy basically involves four elements – product, price,
promotion, and distribution.

22 | P a g e
By appropriate combination of these four elements, the strategy can be formulated for each
stage of the PLC. Every stage gives varying importance to these elements of marketing mix. Let
us analyze basic strategies used in each of the stages of the PLC, as described by Philip Kotler.

Marketing Strategies for Introduction Stage:

Introduction stage is marked with slow growth in sales and a very little or no profit. Note that
product has been newly introduced, and a sales volume is limited; product and distribution are
not given more emphasis. Basic constituents of marketing strategies for the stage include price
and promotion. Price, promotion or both may be kept high or low depending upon market
situation and management approach. Observe Figure 3.

Following are the possible strategies during the first stage:

1. Rapid Skimming Strategy:

This strategy consists of introducing a new product at high price and high promotional
expenses. The purpose of high price is to recover profit per unit as much as possible. The high
promotional expenses are aimed at convincing the market the product merits even at a high
price. High promotion accelerates the rate of market penetration, in all; the strategy is
preferred to skim the cream (high profits) from market.

This strategy makes a sense in following assumptions:

(a) Major part of market is not aware of the product.

(b) Customers are ready to pay the asking price.

(c) There possibility of competition and the firm wants to build up the brand preference.

(d) Market is limited in size.

23 | P a g e
2. Slow Skimming Strategy

This strategy involves launching a product at a high price and low promotion. The purpose of
high price is to recover as much as gross profit as possible. And, low promotion keeps
marketing expenses low. This combination enables to skim the maximum profit from the
market.

This strategy can be used under following assumptions:

(a) Market is limited in size.

(b) Most of consumers are aware of product.

(c) Consumers are ready to pay high price.

(d) There is less possibility of competition.

3. Rapid Penetration:

The strategy consists of launching the product at a low price and high promotion. The purpose
is the faster market penetration to get larger market share. Marketer tries to expand market by
increasing the number of buyers. It is based on following assumptions:

(a) Market is large, (b) Most buyers are price-sensitive. They prefer the low-priced products. ,
(c) There is strong potential for competition, (d) Market is not much aware of the product. They
need to be informed and convinced, (e) Per unit cost can be reduced due to more production,
and possibly more profits at low price.

4. Slow Penetration:

24 | P a g e
The strategy consists of introducing a product with low price and low-level promotion. Low
price will encourage product acceptance, and low promotion can help realization of more
profits, even at a low price.

Assumptions of this strategy:

(a) Market is large.

(b) Market is aware of product.

(c) Possibility of competition is low.

(d) Buyers are price-sensitive or price-elastic, and not promotion-elastic.

Marketing Strategies for Growth Stage:

This is the stage of rapid market acceptance. The strategies are aimed at sustaining market
growth as long as possible. Here, the aim is not to increases awareness, but to get trial of the
product. Company tries to enter the new segments. Competitors have entered the market. The
company tries to strengthen competitive position in the market. It may forgo maximum current
profits to earn still greater profits in the future.

Several possible strategies for the stage are as under:

1. Product qualities and features improvement

2. Adding new models and improving styling

3. Entering new market segments

4. Designing, improving and widening distribution network

25 | P a g e
5. Shifting advertising and other promotional efforts from increasing product awareness to
product conviction

6. Reducing price at the right time to attract price-sensitive consumers

7. Preventing competitors to enter the market by low price and high promotional efforts

Marketing Strategies for Maturity Stage:

In this stage, competitors have entered the market. There is severe fight among them for more
market share. The company adopts offensive/aggressive marketing strategies to defeat the
competitors.

Following possible strategies are followed:

1. To Do Nothing:

To do nothing can be an effective marketing strategy in the maturity stage. New strategies are
not formulated. Company believes it is advisable to do nothing. Earlier or later, the decline in
the sales is certain. Marketer tries to conserve money, which can be later on invested in new
profitable products. It continues only routine efforts, and starts planning for new products.

2. Market Modification:

This strategy is aimed at increasing sales by raising the number of brand users and the usage
rate per user. Sales volume is the product (or outcome) of number of users and usage rate per
users. So, sales can be increased either by increasing the number of users or by increasing the
usage rate per user or by both. Number of users can be increased by variety of ways.

There are three ways to expand the number of users:

i. Convert non-users into users by convincing them regarding uses of products

26 | P a g e
ii. Entering new market segments

iii. Winning competitors’ consumers

Sales volume can also be increased by increasing the usage rate per user. This is possible by
following ways: I. More frequent use of product, ii. More usage per occasion and iii. New and
more varied uses of product

3. Product Modification:

Product modification involves improving product qualities and modifying product

characteristics to attract new users and/or more usage rate per user.

Product modification can take several forms:

i. Strategy for Quality Improvement:

Quality improvement includes improving safety, efficiency, reliability, durability, speed, taste,
and other qualities. Quality improvement can offer more satisfaction.

ii. Strategy for Feature Improvement:

This includes improving features, such as size, colour, weight, accessories, form, get-up,
materials, and so forth. Feature improvement leads to convenience, versatility, and
attractiveness. Many firms opt for product improvement to sustain maturity stage.

Product improvement is beneficial in several ways like: (1) It builds company’s image as
progressiveness, dynamic, and leadership, (2) Product modification can be made at very little
expense, (3) It can win loyalty of certain segments of the market, (4) It is also a source of free
publicity, and (5) It encourages sales force and distributors.

4. Marketing Mix Modification:

27 | P a g e
This is the last optional strategy for the maturity stage. Modification of marketing mix involves
changing the elements of marketing mix. This may stimulate sales. Company should reasonably
modify one or more elements of marketing mix (4P’s) to attract buyers and to fight with
competitors. Marketing mix modification should be made carefully as it is easily imitated.

Marketing Strategies for Decline Stage:

Company formulates various strategies to manage the decline stage. The first important task is
to detect the poor products. After detecting the poor products, a company should decide
whether poor products should be dropped. Some companies formulate a special committee for
the task known as Product Review Committee. The committee collects data from internal and
external sources and evaluates products. On the basis the report submitted by the committee,
suitable decisions are taken.

Company may follow any of the following strategies:

1. Continue with the Original Products:

This strategy is followed with the expectations that competitors will leave the market. Selling
and promotional costs are reduced. Many times, a company continues its products only in
effective segments and from remaining segments they are dropped. Such products are
continued as long as they are profitable.

2. Continue Products with Improvements:

Qualities and features are improved to accelerate sales. Products undergo minor changes to
attract buyers.

3. Drop the Product:

When it is not possible to continue the products either in original form or with improvement,
the company finally decides to drop the products.

28 | P a g e
Product may be dropped in following ways:

i. Sell the production and sales to other companies

ii. Stop production gradually to divert resources to other products

iii. Drop product immediately.

1.8. Criticisms of the Product Life Cycle (PLC)

While the product life cycle model is a very helpful tool for helping to understand current and
potential market conditions, in order to develop appropriate marketing and competitive
strategies, there are some limitations and concerns with the usage of the PLC.

Firstly, not all new products will be successful. That means that for many new product
categories, they will never leave the introduction phase and will never experience growth or
maturity. Therefore, there is a concern on overlying upon the “belief” of a new product
becoming a high-growth product – which may lead to over investment in a potentially under-
performing and expensive new product.

Not all new products will follow the standard product life cycle curve/pattern. Most
marketing textbooks represent the same S shape/roller coaster shape PLC curve. This creates a
false sense of security about the predictability of future sales. There are multiple PLC patterns
possible (as available in this academic article), so it is important to consider the possible
variations of the product life cycle for its future.

The turning points in the product life cycle curve are critical in understanding and in adapting to
the relevant market conditions. This is very easy to do in hindsight once the whole market has
been played out. However, from a forecasting perspective, it is quite difficult to determine
turning points in advance. This means it is important, when utilizing the product life cycle, not

29 | P a g e
to be overly reliant upon sales results as the only determining factor for the stage of the
market. There are other characteristics that need to be considered, as discussed in this article.

The concept of the product life cycle has been extended and utilized in different forms – some
of which is quite acceptable business practice. But the essence of the product life cycle relies
upon mapping the overall industry, not a particular firm or a particular product. For example,
Coca-Cola should not map its Coca-Cola product only – instead it should map out all carbonated
cola drinks across all players in the marketplace. Therefore it is possible, at times that a visual
presentation of the PLC may be misleading if it is limited to one firm/brand.

1.9. Examples related to five levels of product from fast food market

Stare bucks’ product levels

1. Core product level

 The “Starbucks’ life style”
 Sophisticated, trendy and community services
2. Actual products level
 Physical goods: premium coffee and teas, sandwiches, deserts, CDS, packaged
coffees and teas, coffee making equipment, collectable ice creams etc.
 Starbuck brand
 Elegant yet comfortable store and layout
3. Augmented product level

 Free wireless internet

 Prepaid Starbucks’ card
 Prepaid Starbucks’ duetto visa (credit card and reward card)
 In store music download

4. Basic product level

 Fresh snack foods
 Fresh juices
 Luxury bed rooms and latest entertainments

30 | P a g e
  Star hotel service

5. Expected product level

 Fine air conditioner
 Safe security
 Parking

1.10. Sources of new product ideas

6 Great Sources of Idea Generation for New Product Development

From the very beginning, Apple shows the creativity and customer-driven innovation. Apple
surprised its customer with so many innovations. Their latest surprise with their new product is
Apple Watch. It hits the market some months ago and got the immense response from the
consumers. Same way they are bringing the latest version of Mac, iPhone each year. The new
iPhone 6 has basically two models one iPhone 6 (4.7″ Display) and another is iPhone 6 Plus (5.5″
Display). The way how Apple keep their customers engaged is its innovation through their new
product.

New products are the lifeblood of every business. If any business doesn’t develop it’s new
product continuously it will die soon. For developing new products there have some stages and
generating ideas is the first step of new product development process. It is important to have a
great idea first and then the company can start the new product development process. For
getting great ideas there have 6 great sources. Basically, the sources can be divided into two
types- one is internal sources and another one is external sources. All the sources are discussing
below:

I). Internal Sources:

Internal sources are the great way to find new ideas. Internal sources can be divided into two
parts. They are as follows-

31 | P a g e
 1. R & D (Research and Development): It is the formal department of any organization to
generate new ideas. R&D department research according to the company’s future plan
and then come up with the new ideas which complete its journey with the
commercialization of the idea (product). One recent survey showed that traditional R&D
only contribute less than 15% of the ideas of the organization. However the importance
of R&D in the organization does not only depend on the idea generation, they also do
some other important things.
2. Employees: Companies can use the brain of their employees. If customers are the
Oxygen of any company then employees are the heart of that company. All level of
employees from executive to top management can be the great source of ideas. One
recent research showed that almost 45% of the ideas come from the employees. Many
companies now use web technology to get the ideas from their internal employees. In
that web, form employees can share their ideas about a new product. However, picking
up the great idea of it and rewarding the employees can encourage your employees to
be more creative and contribute more in future.

II). External Sources:

Companies can also gain good new product development ideas from external sources. External
sources are those which is affiliated with the company externally. Some important external
sources for idea generation is discussing below.

3. Customers: Most probably customers are the most important sources to get new
product development ideas. The customer knows best what they need and what they
are looking for. It is the most important thing to deliver satisfaction by providing exactly
what your customers want. For instances, when you know that your customer needs a
specific product or a special feature on any particular product then it will be easier to
make that exactly what your customer need and then you will get satisfied customers.
This way you can build a long-term relationship.
4. Distributors and Suppliers: Distributors works very closely with the market and they
know consumer problems and their need. Distributors can give the ideas for new
product possibilities. Suppliers can also help with the information of the market like a
new concept, technique or materials which can be used for developing new products.
5. Competitors: Competitors are another important source. One can analyze their
competitors and can find many things which can be used for idea generation.

32 | P a g e
 Researching competitors can give you the idea that which thing you are missing or
which thing they are missing, you can decide then what things you need to include in
your new product. Remember your competitors are not your enemy, they are your
strength.
6. Others: Other idea sources includes outside Consultancies, Design Firms and Online
Communities, Trade Magazines, Shows and Seminars, Government agencies, Advertising
agencies, Marketing research firms, Universities, Commercial laboratories, Inventories
and so on. Is there anything else which might be a good source for idea generation?
Share your thoughts in the comment.

1.11. Comparison between Convenience (sugar) and Specialty products(Ferrari car)

SUGAR

Sugar is bought the most frequently by consumers.it is bought immediately and without great
comparison between other options. it is typically low-priced, not-differentiated among other
products, and placed in locations where consumers can easily purchase from either village
kiosks or kebele based enterprisers. The products are widely distributed, require mass
promotion, and are placed in convenient locations.

Ferrari car

Take, Ferrari for example, a (a specialty product). Purchasers of a Ferrari would need to spend
considerable effort sourcing the car. Specialty products require targeted promotions with
exclusive distribution; they are found in select places.

SUGAR Ferrari car

33 | P a g e
  Purchased frequently  willing to make special purchase
effort
 At a low price point
 at high price point

 Easily available
 Long distance to buy/exclusively
 Not commonly available.
compared with other
products  less compared with other car model

1.12. Criteria during idea screening

The aim in idea screening is to retain the successful ideas and eliminate the ideas which could
be failures - much easier to write than to carry out in practice! If in doubt, keep the idea until
more information is obtained. Idea screening can be based on tacit knowledge of the individual
and of the company, with little new explicit information sought in or outside the company. But
the aim in successive screenings is to build up the necessary information for the decisions to be
made in a quantitative, objective way. Screening is both a reiterative and a progressive process,
so there is a need to relate to the first screening even in the last screening in case the product
description has changed and it no longer fits the screening criteria first set out

Develop a set of criteria to evaluate your ideas against. Your criteria might include:

 Most prominently identified customer needs

 Product improvements most needed
 The benefits to your target market
 The technical feasibility of the idea
 The level and scope of research and development required
 The profitability of the idea. What is its potential appeal to the market? How would you
price it? What are the costs in bringing it to market - overall and per unit?

34 | P a g e
  Where the product fits in the market. Is there a gap? How close is it to competitor
products?
 The resources it will require in development
 The marketing potential of the idea

1.13. Concept testing and why it is crucial stage?

An idea is finally developed to a point where its benefits can be communicated to target
consumers in order to assess their reactions.

Concept testing is a quality check between the description of an idea and actual product
development. A variety of approaches are available for concept testing. All methods involve a
group of potential consumers rating one or more concept statements in which each concept is
presented with specific focus on consumer needs or benefits.

The method of testing is based on the purpose of concept testing and should therefore provide
all elements of interest where feedback is expected. Peng and Finn (2008) report the following
purposes of practical concept testing:

Concept testing, sometimes referred to as “idea screening” or “idea testing” is a research tool
used to assess the market viability of a new product idea prior to incurring the development
expense of actually fabricating a product. It’s critical to new product success.

“Concept testing is done after idea screening.” This is completely different from test marketing.
Knowing where the marketing messages will work can be one of the biggest part of testing the
concept. Does the consumer understand, need, or want the product or service? Why is this
product being created?

Why Concept Testing Is Important or crucial in new product development?

Concept testing is a step that every business needs to incorporate into its product or marketing
campaign development process. It involves going out to the market to gather information on

35 | P a g e
whether customers will accept or love a new concept. You can see why testing is important by
looking at epic product fails like Coors’ bottled water.

Coors decided to introduce a Coors bottled water brand. What they didn’t realize was that
prominently displaying the Coors logo and making the packaging reminiscent of Coors beer
would scare customers. Their target demographic started to wonder if they should be careful
about drinking the water and driving. In addition, non-drinkers didn’t want a water made by a
beer company. Coors eventually removed the water from the market.

A situation like the one Coors found them in illustrates the urgent need for iterative testing
right up to the moment of launch. Consumer sentiment can change overnight. Brands that rely
on slow and time-consuming market research run the risk of market failure. Using an approach
that provides on-demand consumer insight can avoid those types of situations.

1.14. Marketing strategy development and its appropriateness be for product ready

Market Strategy Development

Companies focus on market strategy development and execution when looking to expand their
total addressable market or market a new use for an existing product. [i] Knowing your market
is just as important as knowing your organization. It is important for growing businesses to draft
a compelling market development strategy, as part of a comprehensive strategy development
and execution process, and to create goals and objectives to implement the strategy so that
company growth and revenue do not stagnate.

Target Customer & Reasons to Buy

The Chasm Institute recommends a nine-element approach to creating a market strategy

development and execution. [ii] Here, we delve into two of the most important elements:
target customer and reasons to buy.

36 | P a g e
Target Customer: It is important to identify the target customer first, because they are the
direct source of revenue. Without identifying the source of revenue, the rest of the strategy
cannot move forward. It is common for most businesses to have more than one target
customer. Try to think of as many viable target customers as you can.

Reasons to Buy: New enterprises often begin because an entrepreneur saw a gap in the market
and a demand for the product. Other times, savvy business executives have to create a need for
a product they feel passionately about, thus the need for a market development strategy. Once
you have identified your target customer, write down compelling reasons they should buy the
product. These could include core business processes or issues the product solves, or assisting
the business in generating better value or production quality.

Market Strategy Development: Other Considerations

The Chasm Institute also includes these four important elements in its model: whole product,
distribution, competition, and positioning.

Whole Product: If your business sells only one product, write that product down. This is your
“whole” product. If you are a business that has multiple products, then you should think of
ways and reasons to sell as many products to your target customer as possible. The “whole
product” should be a bundle of all the products and services you are aiming to sell to each
target customer. Strategy Development And Execution

Distribution: How will you get your product to market? The distribution element identifies
which markets and venues will be best for sales, and which vendors and companies are your
“allies” when it comes to getting your product to target customers. Will you use direct or
indirect sales? How much interaction will you have with each target customer?

Competition: Identifying your competition is also important when drafting distribution ideas for
your market development strategy. You should write who is your most direct competition with

37 | P a g e
each target customer, but not make them the sole focus. You need to be aware of competitors
in your industry, but your main objective should never be to “beat the competition.”

Positioning: It is important to identify competition because then you have a better idea of how
to present your product to the target customer. Why is your product the better choice? What
advantages can your product give over the others? Product positioning should aim to answer
the question: “What makes you different?”

Target Markets

Target markets are those segments of the population that the small-business owner deems to
be potential customers. A variety of criteria ranging from income level, to age, to geographic
location can be used to determine these targets, depending on the product or services you sell.
Your marketing strategy should be designed to address these markets first and foremost. The
remainder of the market can also be addressed with a separate undifferentiated marketing
strategy in an attempt to leave no stone unturned if you so desire. Your target markets should
be specific to your type of business and should be discerned through market research and
experience.

Goals

Clear-cut goals are an essential part of marketing strategy development. Your small-business
goals should consist of distribution and financial mile-markers that will gauge the success or
failure of your marketing strategy, and will help you to know when you've hit on the right
strategy for you. Goals and projections should be based on customer and market research,

38 | P a g e
starting with past performance, and factoring in the changes that additional marketing efforts
and promotions will bring. If your marketing strategy fails to reach the goals you've set,
alterations to the plan and additional investment may be required to right the ship.

Research

Sometimes surveying your own clients is the best way to get a firm handle on who your
marketing targets should be. For example, if you notice that 80 percent of your sales are made
to members of the legal profession, your number one target market should be lawyers and
paralegals. Market research is also a key part of marketing strategy development, even though
it deals with larger generalities than you may be used to. For instance, you find through
research that 78 percent of luxury cars sold in your area are sold to homeowners and only 22
percent to renters. If you own a luxury car dealership, you know that your marketing strategy
should be directed at people who have their own homes. Research helps to eliminate wasted
efforts and fine tune your marketing so it hits the targets that will mean the most to your
company's success.

Evaluation and Adjustment

The development of your marketing strategy does not end once the campaigns hit the market.
It is an ongoing process that requires constant evaluation and adjustment to be successful. If
economic factors or changing trends cause sales to suffer, your marketing can be altered to
take up some of the slack. If your product line changes or your market position shifts, your
marketing strategy will have to change along with it to ensure that the initiatives you produce
are relevant to the current situation. Marketing strategies cannot be developed and left to run
on autopilot. If they are to be successful they must remain in a state of constant evolution.

Solid marketing plan is crucial to support growth as you're scaling a company. But how do you
know when you should flip the marketing switch and go live?

39 | P a g e
The answer is pretty intuitive: not until you're ready. The secret knows what that means for
your business model, internal processes and external branding. Read on.

Make sure your product is ready.

You have nothing to sell until your product is complete. It sounds basic, but too many
entrepreneurs rush to launch while they're still working out a few fundamental issues with their
actual offerings. Don't invest marketing time and resources until you have a product you're
proud to announce to the public -- a product you're confident won’t break. Make certain you've
taken it through a quality-control process. You get only one chance to make a favorable first
impression. A minimum viable product (MVP) is quite fine. You don't need all the bells and
whistles to start.

1.15. Four products that I have used last month and their innovation types

The 3 Types of Innovation: Product, Process, & Business Model

Differential

Innovation has become such a buzzword it can be hard to remember what it actually means.
Depending on who you talk to, the bar for “innovation” might seem incredibly high (“Let’s be
the next Netflix!”), or far too low (“Let’s hang up some hammocks in our office!”). There are
several different ways a company can innovate; in this article, they are broken down into three
general categories: product, process, and business model. By narrowing your focus on a specific
type of innovation, you can be a more effective and strategic innovator.

1. Product Innovation

When people think of innovation, often, they’re thinking of product innovation. Product
innovation can come in three different forms. 1) The development of a new product, such as
the Fitbit or Amazon’s Kindle. 2) An improvement of the performance of the existing product,

40 | P a g e
 such as an increase in the digital camera resolution of the iPhone 11. 3) A new feature to an
existing product, such as power windows to a car.

2. Process Innovation

Process innovation is probably the least sexy form of innovation. Process is the combination of
facilities, skills, and technologies used to produce, deliver, and support a product or provide a
service. Within these broad categories, there are countless ways process can improve.

Process innovation can include changes in the equipment and technology used in
manufacturing (including the software used in product design and development), improvement
in the tools, techniques, and software solutions used to help in supply chain and delivery
system, changes in

3. Business Model Innovation

Business model innovation does not necessarily imply changes in the product or even in the
production process, but in the way as it is brought to the market. Decision Innovation writes:

“Business model innovation is probably the most challenging of the innovation types as it will
likely present an organization with major requirements for change. Often, the very capabilities
or processes that have been optimized to make a company successful and profitable will
become the targets for transformation. In some cases, these changes can threaten elements of
the company identity and come into conflict with brand expectations or promises.

Four products that I have used last month

Products Purchased place Unique feature description Types of

product
innovation

41 | P a g e
DIGITAL HD CAMERA Google play store Clear and pure Similar from other Modified
self-camera shot phone cameras but product
some unique features innovation

Stay@home Ethio telecom Time save and Save life from having New product
easy to access at crowed popn during innovation
any time. card purchasing.
Anbesa shoes boutique No more unique Even if different brand Existing product
features name but similar with innovation
other
3D juice shop Very tasty and fair Different price from Modified
price other juices like rani and product
tasty and soft. innovation

1.16. Fast-Moving Consumer Goods industry

What Are Fast-Moving Consumer Goods (FMCG)?

Fast-moving consumer goods are products that sell quickly at relatively low cost. These goods
are also called consumer packaged goods.

FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and
confections) or because they are perishable (e.g., meat, dairy products, and baked goods).
These goods are purchased frequently, are consumed rapidly, are priced low, and are sold in
large quantities. They also have a high turnover when they're on the shelf at the store.

Slow-moving consumer goods, which have a longer shelf life and are purchased over time,
include items like furniture and appliances.

Understanding Fast-Moving Consumer Goods (FMCG)

42 | P a g e
Consumer goods are products purchased for consumption by the average consumer. They are
divided into three different categories: durable, nondurable goods, and services. Durable goods
have a shelf life of three years or more while nondurable goods have a shelf life of less than one
year. Fast-moving consumer goods are the largest segment of consumer goods. They fall into
the nondurable category, as they are consumed immediately and have a short shelf life.

Nearly everyone in the world uses fast-moving consumer goods (FMCG) every day. They are the
small-scale consumer purchases we make at the produce stand, grocery store, supermarket,
and warehouse outlet. Examples include milk, gum, fruit and vegetables, toilet paper, soda,
beer, and over-the-counter drugs like aspirin.

FMCGs account for more than half of all consumers spending, but they tend to be low-
involvement purchases. Consumers are more likely to show off a durable good such as a new
car or beautifully designed smartphone than a new energy drink they picked up for $2.50 at the
convenience store.

The Fast-Moving Consumer Goods Industry

Because fast-moving consumer goods have such a high turnover rate, the market is not only
very large, it is also very competitive. Some of the world's largest companies compete for
market share in this industry including Dole, Coca-Cola, Unilever, Procter & Gamble, Nestlé,
Kellogg's, and General Mills. Companies like these need to focus their efforts on marketing fast-
moving consumer goods to entice and attract consumers to buy their products.

That's why packaging is a very important factor in the production process. The logistics and
distribution systems often require secondary and tertiary packaging to maximize efficiency. The
unit pack or primary package is critical for product protection and shelf life, and also provides
information and sales incentives to consumers.

FCMGs are sold in large quantities, so they are considered a reliable source of revenue. This
high volume of sales also offsets the low profit margins on individual sales as well.

43 | P a g e
Fast-Moving Consumer Goods and E-Commerce

Shoppers across the globe increasingly purchase things they need online because it offers
certain conveniences—from delivering orders right to the door to broad selection and low
prices—that brick-and-mortar stores can't.

The most popular e-commerce categories, not surprisingly, are non-consumable goods—
durables and entertainment-related products. The online market for buying groceries and other
consumable products is growing, as companies redefine the efficiency of delivery logistics which
shorten delivery times. While non-consumable categories may continue to lead consumable
products in sheer volume, gains in logistics efficiency have increased the use of e-commerce
channels for acquiring FMCGs.

1.17. Examples of various types family brands in service industry

Family branding refers to a marketing strategy that promotes a family of products or services
under an umbrella brand. This is different from individual branding that promotes each product
in a stand-alone fashion. As a business owner, you can get some advantages with family
branding, such as a cost-effective promotion for various lines, capitalizing on grouping products
and building brand awareness.

One-Stop Shop Insurance Agencies

Often, an insurance agency has several lines of insurance it offers. It could also offer certain
financial services or bank products. Local insurance agencies usually work on promoting one
line of insurance that is the easiest to capture a client and later to add lines of business to the
client portfolio. If the agency used family branding, it would promote the agency brand as your
all-inclusive place to find the insurance you need from home, auto, life and even business. The
agency strategy would be to get clients with more lines of insurance off the bat rather, than
promote one at a time.

44 | P a g e
Full Service Contractor Services

General contracts might have a specialty they are known for such as kitchen remodels. But
rather than promote themselves for just one service line, they general contractor using family
branding strategies would create promotions that showcase a variety of contracting work they
are successful in. This could include home renovations, new construction or disaster
remediation services. This opens the consumer's eyes to more than just kitchen remodeling.

Vehicle for Everyone Car Dealerships

The local car dealership promotes a variety of cars under one umbrella brand. For example, the
local Lincoln-Mercury-Ford dealership markets the line of cars from economy to luxury models,
without naming specific vehicle options. Consumers can visit the dealership to look for an SUV
or sedan that fits their needs. The dealership doesn't need to promote any one type of car, until
there is a promotion as part of a different marketing strategy.

Everything for Summer Patio Furniture Store

A patio furniture store has many brands and many different patio accessories for sale. They
might offer furniture, pergolas, umbrellas, barbecues and fire pits from a wide variety of brand
names. While branding may mention some of the bigger name items such as a Weber
barbecue, the patio store attracts more consumers by giving a broader promotional message,
“We have everything you could want to make your patio the place for summer parties in your
backyard."

1.18. Information required if I were using brand extension for convenience goods (laundry
detergent)

I will have gather or identify the following information first

45 | P a g e
Conduct market survey to increases the operating market of the brand: With the introduction
of a new product of a different category under the same brand, the brand’s operating market
increases. It makes sure the brand visibility to a broader audience, which eventually increases
its brand equity. Gather information related to enhance the brand image: When a new product
launches with the same underlying brand message and promise, the brand image improves,
and customers start to believe in the brand.

Identify Cost of developing or operating brand is saved: Developing a new brand incurs

substantial charges which aren’t limited to marketing and promotion. Brand extension saves
such costs and even benefits the company in cutting marketing and promotion costs as the
same communication channels that were used earlier can be used to promote both the
products.

Makes getting initial traction easy: It is usually easier to attract the existing customers of the
brand or people who are acquainted with the brand to try the new products launched by the
company under the same brand.

Measure the efficiency and effectiveness in marketing and promotion: Since the brand
identity is already set, it doesn’t involve as much effort as it would have been required if it were
a new brand.

Identify the areas may leads to brand dilution: Brand dilution is the weakening of the power of
the brand because of its overuse. It happens when the company uses the brand extension
strategy in almost every industry it wants to enter into without considering the logical
relationship between the existing and new products. This often confuses the customer about what
the brand stands for and what to expect from it.

1.19. These three products I have lately purchased in relation to plc decision

CBE ATM CARD

46 | P a g e
When manual cash payment without e-payment first introduced in the late 18th century, system
payment or computerized payment grew in popularity as a technology that improved the ease and
efficiency of system or software base payment. However, new additional electronic payment
technology like ATM card, credit card and even visa card and POS machine have quickly
replaced or minimize load of system or manual payment causing customers time save and
demand to drop off going to bank as usually. But am used lately due to understand how to save
energy cost and time very important even easy to control covid-19 and related diseases from
crowed banking station.

Suit

Many of us probably grew up clothing or using suit for ceremonies (wedding, and graduation or
office work probably) but would likely be hard cloth suit in regular basis and to find one in
anyone's home these days because most programmers wear suit by rent for specific program.
Because currently replaced by shirt and other designed fashion suit related trousers.

Motor bicycle

The rise of electric vehicles shows more of a growth stage of the product life cycle. Companies
like Tesla (TSLA) - Get Report have been capitalizing on the growing product for years,
although recent challenges may signal changes for the particular company.

Still, while the electric car isn't necessarily new, the innovations that companies like Tesla have
made in recent years are consistently adapting to new changes in the electric car market,
signaling its growth phase. So am late to purchase motor bicycle because currently most people
use car and Bajaj as replacement.

1.20. Two examples of product that don’t follow s-curve in plc

In practice, organizations are made up of scores and scores of S-curves, the exact mix will vary
according to how you choose to look at the organization’s affairs. Individual product S-curves
taken together could form a larger product class S-curve.

47 | P a g e
For example, taken together in sequence, a series of S-curve product life cycles can trace a larger
S-curve, over the full elapsed time period, describing the growth and decline pattern of the
product class to which the individual products belong.

Similarly, a product class S-curve could be one of many product class S-curves which taken
together over time will describe a product sector. And so on. There is fractal like quality of ‘self-
similarity’ to these S-curves as you zoom out or zoom in and vary the scope of detail under
analysis.

This kind of analysis can be applied to any other quantitative data of interest in the organization,
e.g. expenses, earnings, share data, etc. In complex organizations, with many projects in play, the
portfolio of projects can be assessed with S-curves using, for example, Earned Value Analysis as
metric with which to draw the S-curve. Alternatively, using qualitative phases of projects, the
portfolio can be analysed in a figurative way.

Leaders must pay attention to the portfolio mix of S-curves in play in their organization at any
one time. If most S-curves are approaching or are at their peak at the same time then the
organization’s resources will be consumed by these S-curves while contributing little to
strategic development.

Consequently, leaders always face the challenge of escaping the seductive trap of rigidly staying
for too long with a set of successful ventures. New S-curves are always needed and the skills to
transform from old to new are demanded. So products that does not need modification and
change don’t pass the s-curve plc cycle example, biblical preaching or words and grain products.

1.21. Marketing strategy of leader differ from follower in plc

The Market Leader

The Market Leader is dominant in its industry. It has substantial market share and often
extensive distribution arrangements with retailers. It typically is the industry leader in
developing innovative new business models and new products (although not always). It tends

48 | P a g e
to be on the cutting edge of new technologies and new production processes. It sometimes has
some market power in determining either price or output. Of the four dominance strategies, it
has the most flexibility in crafting strategy. There are few options not open to it. However it is in
a very visible position and can be the target of competitive threats and government anti-
combines actions.

Research in experience curve effects and the PIMs study during the 1970s concluded that
market leadership was the most profitable strategy in most industries. It was claimed that if you
cannot get enough market share to be a major player, you should get out of that business and
concentrate your resources where you can take advantage of experience curve effects and
economies of scale, and thereby gain dominant market share. Today we recognize that other
less dominant strategies can also be effective.

The main options available to market leaders are:

• Expand the total market by finding new users of the product new uses of the product more
usage on each use occasion.

• Protect your existing market share by developing new product ideas, improve customer
service, improve distribution effectiveness and reduce costs.

• Expand your market share by targeting one or more competitor without being noticed by
government regulators.

Market Follower

A Market Follower is a firm in a strong, but not dominant position that is content to stay at that
position. The rationale is that by developing strategies that are parallel to those of the market
leader, they will gain much of the market from the leader while being exposed to very little risk.
This "plays it safe" strategy is how Burger King retains its position behind McDonalds. The
advantages of these Strategies are:

49 | P a g e
• No expensive R&D failures

• No risk of bad business model

• "Best practices" are already established

• Able to capitalize on the promotional activities of the market leader

• No risk of government anti-combines actions

• Minimal risk of competitive attacks

• Don't waste money in a head-on battle with the market leader

1.22. A pension scheme is in a high growth rate market, with increasing profitability,
increasing competition, and targeted to early adopters

Our pension scheme comprises retirement savings, insurance cover for anticipatory pension,
certain critical illnesses and death as well as a healthcare programme.

The number one priority is retirement savings that will eventually supplement state pension
benefits and labor market supplementary pension benefits (ATP). 

A typical pension scheme

Most of PensionDanmark’s members have Standard Cover, while a small group of members
have Basic Cover or Individual Cover.

Standard Cover – most members have this cover

50 | P a g e
Basic Cover has been designed for members with small contributions and part-time
employment (smaller benefits but otherwise identical to Standard Cover)

Individual Cover has been designed for members comprised by a salaried employees’
agreement and with relatively high salaries (salary-adjusted anticipatory pension cover but
otherwise identical to Standard Cover)

Pension contributions are distributed such that the maximum allowed amount is allocated to a
member’s Retirement Account, while 50% of the remainder is allocated to an annuity pension
scheme and 50% to a lifetime pension scheme. 

1.23. The alternative marketing strategies and tactics for this service

Alternative marketing strategies for service companies

Marketing strategies may differ depending on the unique situation of the individual business.
However there are a number of ways of categorizing some generic strategies. A brief
description of the most common categorizing schemes is presented below:

I. Strategies Based On Market Dominance - In this scheme, firms are classified based on their
market share or dominance of an industry. Typically there are four types of market dominance
strategies: a) Leader, b) Challenger, c) Follower, d) Niche Market dominance is a measure of the
strength of a brand, product, service, or firm, relative to competitive offerings. There is often a
geographic element to the competitive landscape. In defining market dominance, you must see
to what extent a product, brand, or firm controls a product category in a given geographic area.

There are several ways of calculating market dominance. The most direct is market share. This
is the percentage of the total market serviced by a firm or brand. A declining scale of market
shares is common in most industries: that is, if the industry leader has say 50% share, the next
largest might have 25% share, the next 12% share, the next 6% share, and all remaining firms
combined might have 6% share.

51 | P a g e
Market share is not a perfect proxy of market dominance. We must take into accoimt the
influences of customers, suppliers, competitors in related industries, and government
regulations. Although there are no hard and fast rules governing the relationship between
market share and market dominance, the following are general criteria:

• A company, brand, product, or service that has a combined market share exceeding 60%)
most probably has market power and market dominance.

• A market share of over 35% but less than 60%, held by one brand, product or service, is an
indicator of market strength but not necessarily dominance.

ii.Porter Generic Strategies Strategy on the dimensions of strategic scope and strategic
strength. Strategic scope refers to the market penetration while strategic strength refers to the
firm's sustainable competitive advantage. The generic strategy framework (porter 1984)
comprises two alternatives each with two alternative scopes. These are Differentiation and low-
cost leadership each with a dimension of Focwi^-broad or narrow. a)Product differentiation, b)
Market segmentation

a) Cost Leadership Strategy

This strategy emphasizes efficiency. By producing high volumes of standardized products, the
firm hopes to take advantage of economies of scale and experience curve effects. The product
is often a basic no-frills product that is produced at a relatively low cost and made available to a
very large customer base. Maintaining this strategy requires a continuous search for cost
reductions in all aspects of the business. The associated distribution strategy is to obtain the
most extensive distribution possible. Promotional strategy often involves trying to make a
virtue out of low cost product features. To be successful, this strategy usually requires a
considerable market share advantage or preferential access to raw materials, components,
labour, or some other important input. Without one or more of these advantages, the strategy
can easily be mimicked by competitors. Successful implementation also benefits from: a)

52 | P a g e
Process engineering skills, b) Products designed for ease of manufacture, c) Sustained access to
inexpensive capital, d) Close supervision of labour, e) Tight cost control, f)

b) Differentiation Strategy

Differentiation involves creating a product that is perceived as unique. The unique features or
benefits should provide superior value for the customer if this strategy is to be successful.
Because customers see the product as unrivaled and unequaled, the price elasticity of demand
tends to be reduced and customers tend to be more brand loyal. This can provide considerable
insulation from competition. However there are usually additional costs associated with the
differentiating product features and this could require a premium pricing strategy.

To maintain this strategy the firm should have: a) Strong research and development skills, b)
Strong product engineering skills, c) Strong creativity skills, d) Good cooperation with
distribution channels, e) Strong marketing skills, f) Incentives based largely on subjective
measures, g) Be able to communicate the importance of the differentiating product
characteristics, h) Stress continuous improvement and immolation, I) Attract highly skilled,
creative people.

c) Market Segmentation Strategies

In this strategy the firm concentrates on a select few target markets. It is also called a focus
strategy or niche strategy. It is hoped that by focusing your marketing efforts on one or two
narrow market segments and tailoring your marketing mix to these specialized markets, you
can better meet the needs of that target market.

Iii. Innovation Strategies

This deals with the firm's rate of the new product development and business model innovation.
It asks whether the company is on the cutting edge of technology and business innovation. The
concurrence of shared innovation efforts can best be The most important pillar and main

53 | P a g e
driving force of innovation are the Business Units. They operate close to customers and they
are working on product-specific innovation strategies and technology road maps in their
segments, and thus increase Freudenberg's power of innovation.

The second pillar in the middle stands for the Business Group Freudenberg New Technologies.
Its goal is to concentrate cross-Group technical know-how, especially which of interdisciplinary
technologies (Freudenberg Forschungsdienste – Research Services) and to examine and to
develop new business fields (New Business Development, Freudenberg Venture Capital).

The third pillar is made up of acquisitions aimed at the targeted expansion of the Freudenberg
portfolio, thus contributing to increasing Freudenberg's innovative power.

• Growth strategies - A strategy based on investing in companies and sectors which are growing
faster than their peers. The benefits are usually in the form of capital

1.24. One tangible product and one intangible product (namely, service) and describe the
differences in their development process.

VEGETABLES
Sellers are business man
Sellers sell goods like cabeges, tomatoes etc
Sellers may not professionals
Goods may sold at low or minimum price
Buyers see, touch or taste the goods
EDUCATION
Either business man or government owened
Sellers selling experience that can’t be handle
Sellers are professional
Services sold at high price if the owner is
private
Buyers are students they can’t see , touch or
taste the service.

1.25. What stage precedes the technical development of a new service? Discuss its necessity
for the development of a life insurance plan

Product modification involves improving product qualities and modifying product

characteristics to attract new users and/or more usage rate per user.

54 | P a g e
Maturity stage of plc focus on modification of technical parts of products includes improving
safety, efficiency, reliability, durability, speed, taste, and other qualities. Quality improvement
can offer more satisfaction. And improving of product features, such as size, color, weight,
accessories, form, get-up, materials, and so forth. Feature improvement leads to convenience,
versatility, and attractiveness. Many firms opt for product improvement to sustain maturity
stage.

This is the last optional strategy for the maturity stage. Modification of marketing mix involves
changing the elements of marketing mix. This may stimulate sales. Company should reasonably
modify one or more elements of marketing mix (4P’s) to attract buyers and to fight with
competitors. Marketing mix modification should be made carefully as it is easily imitated. Often,
an insurance agency has several lines of insurance it offers. It could also offer certain financial
services or bank products. Local insurance agencies usually work on promoting one line of
insurance that is the easiest to capture a client and later to add lines of business to the client
portfolio. If the agency used family branding, it would promote the agency brand as your all-
inclusive place to find the insurance you need from home, auto, life and even business. The
agency strategy would be to get clients with more lines of insurance off the bat rather, than
promote one at a time

55 | P a g e