DIFFERENT STRATEGY MODELS

The life cycle concept may apply to a brand or

to a category of a product.

Its duration maybe as short as a few months

Product or years, depending on the product.
Lifecycle
As a product progresses through the stages, it
requires different marketing, financial,
manufacturing, purchasing, and HR strategies
in each life – cycle stages.
 Basic Assumptions

• Products have a limited life

• Product sales pass through distinct stages, each posing different
challenges and opportunities
• Profits rise and fall at different stages of the PLC
• Products require different strategies during each distinct stage in
the PLC
 Introduction Stage
• Most products fail at this stage- This is the stage in which the
product is initially promoted.
• Public awareness is very important to the success of a product.
• If people don't know about the product they won't buy it.
• 2 different strategies you can use to introduce your product to
consumers:
– Penetration
– Skimming
 Skimming

• This strategy usually set the product price very high initially and then
gradually lowers it over time.
• A good strategy to use if there are few competitors for your product.
• Profits are high with this strategy but there is also a great deal of risk. If
people don't want to pay high prices you may lose out.
 Penetration

• In this case you set your prices very low at the beginning and then gradually
increase them.
• This is a good strategy to use if there are a lot of competitors who control a
large portion of the market.
• Profits are not a concern under this strategy. The most important thing is to
get you product known and worry about making money at a later time.
 Growth

• The Growth stage is where your product starts to grow.

• In this stage a very large amount of money is spent on
advertising – to concentrate on Differentiation & telling
the consumer how your product is better than
competitors' products.
 Maturity

• The third stage in the Product Life Cycle is the maturity stage.
• If your product completes the Introduction and Growth stages
then it will then spend a great deal of time in the Maturity stage.
• During this stage sales grow at a very fast rate and then gradually
begin to stabilize.
 Decline

• This is the stage in which sales of your product begin to fall.

Either everyone that wants to buy your product already has
bought your product or new, more innovative products have
been created that replace yours.
• Many companies decide to withdraw their products from the
market due to the downturn.
• The only way to increase sales during this period is to cut your
costs & reduce your spending.
 Few observations

• Very few products follow the same cycle. Many products don't
even make it through all four stages.
• Some products even bypass stages. There is no set way for a
product to go.
• Therefore, every product requires a great deal of research and
close supervision throughout its life.
Types of PLC
 A firm’s success in strategy rests upon how it
positions itself in respect to its environment.

Porter’s A firm's strengths ultimately fall into one of two

view on headings: cost advantage and differentiation.
Competitive
Advantage By applying these strengths in either a broad or
narrow scope, three generic strategies result:,
cost leadership differentiation, and focus
 Generic
Strategies

Cost Leadership Differentiation Focus

• Superior profits • Creating a product or • Concentrating on a

through lower costs. service that is perceived limited part of the
as being unique market.
• E.g. : WalMart, Jio “throughout the
industry” • E.g. : PepsiCo

• E.g. : Mcdonald,
FedEx, Apple
 Porter’s Generic Strategy

Advantage Advantage
Target Scope
(Low Cost) (Product Uniqueness)

Broad Cost Leadership Differentiation

(Industry wide)

Narrow Focus Strategy Focus Strategy

(Market wide) (low cost) (differentiation)
 Cost Leadership Strategy

• Aiming to become Lowest Cost Producer

• The firm can compete on the price with other firms and
earn higher unit profits.
• Targets a broad market.
• Competitive advantage is achieved by reduction in costs.
• A successful cost leadership strategy requires that the firm
is the cost leader and is unchallenged in this position.
• Especially beneficial : where customers are price sensitive
 Few watchwords for Cost-Leadership
• Access to the capital required to make an investment in
production process.
• Design skills for efficient manufacturing
• High level of expertise in manufacturing process
engineering.
• Efficient distribution channels.
 Differentiation Strategy

• A differentiation strategy calls for the development of a

product or service that offers unique attributes that are
valued by customers.
• Customers perceive the product to be different and better
than that of rivals.
• The value added by the uniqueness of the product may allow
the firm to charge a premium price for it.
• Differentiation can be based on product image or
durability,after-sales,quality,additional features.
• It requires R&D capability and strong marketing.
ANSOFF’S MATRIX
 PLANNING is….

deciding in advance
• what action to take ?
• how and when to take a particular action?
• and who are the people to be involved in it?
It involves anticipating the future and consciously choosing the future course
of action.
 BASIC QUESTIONS BEFORE PLANNING

1. What is unique about your business idea? What is the general need that
your product or service aims to meet?
2.Who is your target buyer? Who buys your product or service now, and
who do you really want to sell to?
3. Who are your competitors? How can your small business effectively
compete in your chosen market?
4.What positioning message do you want to communicate to your target
buyers? How can you position your business or product to let people
know about your product?
5. What is your sales strategy? How will you get your product or service in
the hands of your customers?
 Describe • Describe the Business

Conduct • Conduct a Situation Analysis

10 Define • Define the Customer

Elements Strategize • Strategize Market Entry

for a Forecast • Forecast Sales or Demand Measurement
Successful
Marketing Define • Define Marketing Budget

Plan Integrate • Integrate Marketing Communication

Identify • Identify Sales Channels

Track • Track Marketing Activities

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Evaluate • Evaluate Progress

 1. Describe Your Business

• Describe your business in detail and clearly identify goals and objectives.
• Answer the following questions:
• What is your product or service?
• How will your product benefit the customer?
• What is different about the product your business is offering?
• Is it a new business, a takeover, or an expansion?
• Why will your business be profitable?
• What are the growth opportunities?
• What is your geographic marketing area?
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2. Conduct a Situation Analysis

• Strengths: assets or a
resources that can be used to
improve your business’
competitive position.
• Weaknesses: resources or
capabilities that may cause your
business to have a less
competitive position.
• Opportunities: situations or
conditions arising from a
business’ strengths, or set of
positive externalities.
• Threats: problems that focus
on your weaknesses and which
can create a potentially
negative situation. 32
 Who is your perfect customer and client base?

What is your current customer base (in terms of age, sex, income, and
geographic location)?

3. Define What habits do your customers and potential customers share? Where do
they shop, what do they read, watch, listen to?
Your
Customers What prospective customers are you currently not reaching? How can you
reach them?

What qualities do your customers value most about your product or service?
Do they value selection, convenience, service, reliability, availability, or
affordability?

What qualities about your product or service do you need to improve? How
can they be adjusted to serve your customers better? 33
 4. Strategize Your Market Entry

Once you have identified what is unique about your

business and who your target buyers are, focus on your
competition:
• Identify your direct competitors and learn what they
do.
• Sharpen your decisions about the best business
category and market segment in which to compete.

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 5. Forecast Sales or Demand Measurement

• Sales forecasting provides the basis for comparison over a period of time.
• Market demand is the total volume that could be bought by a defined
customer group in, a defined geographical area, in a defined time period,
and under a defined marketing program.
• You should:
• Correctly identify and estimate current demand by considering total
market potential, market share, and expected sales.
• Estimate future demand by considering past sales patterns, consumer
trends, and overall market projections.
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 6. Define Your Marketing Budget
Answer the following questions:
• What previous marketing methods have been most effective?
• What are your costs compared to sales?
• What is your cost per customer?
• What marketing methods will you use to attract new customers?
• What percentage of profits can you allocate to your marketing campaign?
• What marketing tools (i.e. - newspapers, magazines, Internet, direct mail,
telemarketing, event sponsorships) can you implement within your
budget?
• What methods are you using to test your marketing ideas?
• What methods are you using to measure results of your marketing 36

campaign?
 7. Integrate Your Marketing Communication

• Integrate marketing communication to consolidate marketing tools,

approaches, and resources within a company to maximize impact and gain
edge over the competition.
• Build on a "Marketing Mix“ and include the following:
• 4P’s: Product, Price, Promotion, and Place
• Internet/ Digital
• Events ,Trade shows & Sponsorships
• Database
• Public Relations & Publicity
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 Part of the challenge of marketing is
figuring out which distribution method to
use for your business.
8. Identify
Sales
Channels
Include all relevant distribution channels:

Different
Intensity Omnichannel
Levels
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 9. Track Marketing
Activities

• Tracking is helpful
for overall program
evaluation.
• Include procedures
for tracking each
type of marketing
activity you are
using.

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 • Answer the following questions:
• Did we reach our goals?
10. Evaluate • Was the marketing campaign successful?
Your • Were we able to determine Return on Investment (ROI)?
Progress • Did our efforts result in conversion? In other words, were
we able to convert an inquirer to a visitor, a visitor to a
customer?
• Can we utilize our database to survey, capture additional
information, or establish a more comprehensive
customer relationship program?

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