Different Phases of Product Life Cycle

Marketing Mix: Introductory Stage

Stage Characteristi cs Strategic Marketing Objectives Product Introductio n Stimulate Primary Demand Quality Growth Shakeout Mature Decline Build Share Continu al Quality Improve ments Broad Build Share Rationaliz e Hold Share Harvest

Concentrat e on features

No change

Product Line

Narrow

Rationaliz e

Hold Length of Line

Reduce Length of line

Price

Skimming Or Penetration
Selective High

Reduce

Reduce

Hold or reduce selectively

Intensive High to

Reduce

Channels Communicati

Intensiv e High

Intensive High

Selective Reduce

Strategic Implications of PLC

Stage Strategic marketing Objectives Accelerate market growth and prod. acceptance through trial and availability Increase Competitive position Solidify Position Maintain Investments Profits Cash Flow

Introduction

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

Highly negative

Highly Negative

Growth

High to very high Moderate

High

Negative

Shakeout

Low to Moderate High

Low to Moderate Moderate

Mature

Low

Potential Advantages Of Pioneer And Follower Strategies

Pioneer
Economies of Scale

Follower
Take advantage of

and Experience High Switching cost for early adopters Defines the rules of the game Distribution Advantages Possibility of preempting scarce resources

pioneers positioning mistakes Take advantage of pioneers product mistakes Take advantage of latest technology Take advantage of pioneers limited resources.

Alternative Marketing Strategies

Situational Variables Mass Market Penetration Niche penetration Skimming: Early Withdrawal

Primary Objective

Maximize no. of triers and adopters. Lead market share

Maximize no. of triers in the Target Segment Lead market share in the Target Segment Large potential demand Fragmented Market

Recoup development and commercialization costs quickly Withdraw when competition increases Limited potential demand Short adoption process

Market Characteristics

Large potential demand Homogeneous needs

Alternative Marketing Strategies

Situational variables Product Characteristics Mass market penetration Technology patentable or superior Value increase with number of customers Competitor Characteristics Few potential Competitors Niche Penetration Little patent protection No network effects Skimming: Early Withdrawal Little patent protection Little development or additional investment required Many potential competitors

Many sources of supply

Many potential competitors

Most competitors have limited resources

Several have substantial resources and competencies

Possible sources of differential advantages

Alternative Marketing Strategies

Situational Variables Firm Characteristics Mass-Market Penetration Strong product development skills Niche penetration Skimming: Early withdrawal

Limited product Strong R&D, a engineering skills prospector with capabilities for Limited continued Strong marketing marketing skills product resources, ability innovation to identify Limited financial multiple resources to Good sales and segments build capacity in promotional skills advance of Sufficient growing demand Limited financial financial resources. resources

XEROX:BOMBED BY CANON
Product: Low Cost personal copiers for small

businesses. Price: Lower price, lower margins. Channel: Retail channel rather than sales agent who were used by Xerox. Promotion: Xerox was leasing their copiers, canon used third party dealers to sell them and used extensive advertisements.

Nokia: India Calling!

Invested before every other player in brand,

people and distribution. Distribution : 50,000 out of total 95,000 outlets sell Nokia. Addressed the affordability issue in rural India. High focus on R&D and building India specific products. Continuously bringing out new products in the market as the market evolves.

Strategies For Growth Markets

Opportunities and risks in growth markets

It is easier to gain share when market is growing

Share gains are worth more in a growth market

than in a mature market Price competition is likely to be less intense Early participation in a growth market is necessary to make sure that the firm keeps pace with technology

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

$ sales volume

Late entrants (20% share) Follower(30% share) Leader/pioneer (50%share)

Introduction

growth

Early maturity

maturity

Growth market strategies for market leaders

Market objectives
1. Retaining customers
2. Stimulate selective demand

among later adapters 3. Stimulate demand to increase market size

Lux
Enjoys status of market leader for its unique

positioning of a beauty soap. New variants are being launched from time to time to attract new consumers and increase the market size New variants were also helpful in retaining customers who were looking for new variety of soaps late entrants were mainly from rural areas and tier three cities, it ensured that these customers try it by ensuring the reach of soap.

Market actions to achieve share maintenance objectives

1.
2. 3.

1.

2.

Retain customers by Managing/improving satisfaction and loyalty. Encouraging/simplifying repeat purchase. Reducing attractiveness of switching. Stimulate selective demand among late adopters by Head to head positioning against competitive offerings or potential offerings. Differentiated positioning against competitive offerings or potential offerings.

Flanker Strategy: Proactive, Reactive

Fortres s or positio n defens e strateg y

Competito r or potential competitor

Confrontation strategy proactive strategy

Contraction or strategic withdrawl

market expansion

Leapfrog Strategy
Flanking Strategy

Guerill a attacks

Target competitor

Frontal attack

challenger

Encirclement Strategy

Marketing actions to achieve share growth objectives

Capture repeat purchases from current customers of the leaders or other competitors by 1. Head to head positioning against competitors offering in primary target market. 2. Technological differentiation from target competitors offering in his primary target market. Dettol and Savalon

Marketing actions to achieve share growth objectives

Stimulate selective demand among late adopters by 1. Head to head positioning against competitors offering in established market segments. 2. Differentiated positioning focused on untapped or underdeveloped segments . Virgin Mobile Targeted youth New schemes like paying for incoming Flashy image in contrast to all other major players in market

Strategies for Mature And Declining Markets

Mature Markets
Half of potential customers have adopted the

product. (approx) Replacement purchases rather than first time buyers vast majority (term not defined) Over estimate future sales vol->over capacity. Competitive turbulence leading to
Weaker businesses fail Withdraw from industry Acquired by other firms

Common strategic traps to avoid

Failure to recognise events signalling the beginning of

shake out period. Get caught in the middle without any strategic advantage. Declining importance of prod differentiation and increasing importance of price or service. Not responding to more aggressive pricing/marketing actions of competitors Amritanjan Vicks differentiated itself on the basis of use in cold and cough Also Vicks hit emotional cord by showing children in advertisements

Strategic Actions for Success

Competitive advantage Pursue growth or profit opportunities

Success

Competitive Advantage

Analyser
Product/Mkt Dev

Defender
Prod Imprv/Line ext

Dev industries with technology

Basic Tech not complex

Methods of Differentiation

Product Quality

Differentiatio n Methods

Service Quality

Dimensions to Product Quality

Performance Durability Conformance to specs
Features Reliability Serviceability Fit and Finish Brand Name

Dimensions to Service Quality

Tangibles Reliability Responsiveness

Assurance
Empathy

Methods for Low Cost Position

No Frills Product

Innovative Product Design

Cheaper Raw Materials Innovative Production Processes Low Cost Distribution Reductions in Overhead

Tata Nano
All the processes were centralized and scale of production

was made so large that the costs come down to a drastic

Marketing Strategies for Mature Markets

Maintaining current market share Extending Volume Growth Increased Penetration Strategy

Extended use strategy

Market Expansion Strategy Global Market Expansion-Sequential Strategies

Consumer durable markets consumer durable markets offering various schemes like exchange schemes, new product development etc.

Strategies for Declining Markets

Conditions of Demand Technological reasons,

demographic shifts, costs of inputs/complementary

products
Exit barriers Intensity of Future Competitive Rivalry Divestment or Liquidation

T-series came up with series of cassettes having old songs or

some other featured albums when CD market started

Strategies for Remaining Competitors

Strategy & Objectives Possible Marketing Actions
Harvesting Maximise short term cash flow Eliminate R&D exp, cap investment Reduce Mktg & Sales Budgets Reduce prod costs/Raise price for margins

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

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

Strategies for Remaining Competitors

Strategy and Objectives
Profitable Survivor Increase share of declining mkt, encourage weaker competitors to exit

Possible Marketing Actions

Maintain or increase advt & sales promotion budgets Introduce line extensions to appeal to remaining segments Maintain or increase distribution coverage Agreements to produce replacement parts or private labels for smaller competitors considering getting out of production Continued prod and process R&D Private labels supply to hold down unit costs Focussed advt, sales promotion, personal selling to target cust Maintain distribution channels for specific segments Service programs to address unique concerns of customers in target segment

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