Product Life Cycle :

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.

Strategies for the differing stages of the Product Life Cycle.

Introduction.

The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

Growth.

Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise.

Maturity:

Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and uses a greater variety of media.

Decline:

At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Problems with Product Life Cycle:

In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.

Seven phases to new product development Process:

            Only a few ideas are good enough to reach commercialization. Ideas can be generated by chance, or by systematic approach. Need a purposeful, focused effort to identify new ways to serve a market. New opportunities appear from the changes in the environment.

Idea Generation: Continuous systematic search for new product opportunities.

• Marketing oriented sources--identify opportunities based on consumer needs, lab research is directed to satisfy that research.
• Laboratory oriented sources--identify opportunities based on pure research or applied research.
• Intrafirm devises--brain storming, incentives and rewards for ideas are given. Ideas should not be criticized, no matter how off-beat they are.

Product Screening and Evaluation

New product check list; list new product attributes considered most important and compare each with these attributes. Check list is standardized and allows ideas to be compared.

• General characteristics, Marketing Characteristics and Production Characteristics.

• Ideas with the greatest potential are selected for further research.
• Do they match the organizations goals (DuPont and ICI have many patents that they have not exploited for this very reason.)
• Look at companies ability to produce and market the product.
• Need to look at the nature and wants of the buyers and possible environmental changes.

Concept Testing

           

Sample of potential buyers is presented with the product idea through a written or oral description to determine the attitudes and initial buying intentions. This is done before investing considerable sums of money and resources in Research and Development.

This help to better understand product attributes and the benefits. Customer’s opinion on the product is most important on the following aspects:

• Would they like to buy the product?
• Would they replace your current brand with the new product?
• Would this product meet real needs?
• Business Analysis
• Analyze potential contribution to sales, costs and profits.
• Does the product fit into the current product mix?
• What kind of environmental and competitive changes can be anticipated?
• How will these changes effect sales etc.?
• Are the internal resources adequate?
• Cost and time line of new facilities etc.?
• Is financing available?
• Is there Synergies with distribution channel etc.
• MIS to determine the market potential sales etc.
• Find out if it is technically feasible to produce the new product.
• If you can produce the new product at a low enough cost so as to be able to make a profit.

Product Development

Develop a prototype, working model, lab test etc. Attributes that consumers have identified that they want must be communicated through the design of the product.

Test Marketing

Test Marketing helps to  observe actual consumer behavior. Limited introduction in geographical areas chosen to represent intended market. It aims to determine the reaction of probable buyers.It is the sample launch of the Marketing Mix. Determine to go ahead, modify product, modify marketing plan or drop the product.

PROS are:

• Lessens the risk of product failure.
• Reduces the risk of loss of credibility or undercutting a profitable product.
• Can determine the weaknesses in the MM and make adjustments.
• Can also vary parts of the MM during the test market.
• Need to select the appropriate MM and check the validity.

CONS are:

• Test market is expensive.
• Firm's competitors may interfere.
• Competitors may copy the product and rush it out..
• Alternatively, can use a simulated test market. Free samples offered in the mall, taken home and interviewed over the telephone later.

Commercialization

• Corresponds to introduction stage of the Product Life Cycle.
• Plans for full-scale marketing and manufacturing must be refined and settled.
• Need to analyze the results of the test market to determine any changes in the marketing mix.
• Need to make decisions regarding warranties etc (reduces consumers risk).
• Warranties can offer a competitive advantage.
• Spend a lot on advertising, personnel etc. Combined with capital expenditure makes commercialization very expensive.

Marketing Mix

            Marketing Mix is a combination of marketing tools that a company uses to satisfy their target customers and achieving organizational goals. McCarthy classified all these marketing tools under four broad categories:

• Product
• Price
• Place
• Promotion

          These four elements are the basic components of a marketing plan and are collectively called 4 P’s of marketing. 4 P’s pertain more to physical products than services.  Below is an illustration for marketing mix.

The important thing to note is that all these four P’s (variable) are controllable, subject to internal and external constraints of marketing environment. Marketers, using different blends of these variables, can target different group of customers having different needs. So, a customer may call  marketing  mix “the offering”.

Product

            Product is the actually offering by the company to its targeted customers which also includes value added stuff. Product may be tangible (goods) or intangible (services).

While formulating the marketing strategy, product decisions include:

• What to offer?
• Brand name
• Packaging
• Quality
• Appearance
• Functionality
• Accessories
• Installation
• After sale services
• Warranty

 Price

            Price includes the pricing strategy of the company for its products. How much customer should pay for a product? Pricing strategy not only related to the profit margins but also helps in finding target customers. Pricing decision also influence the choice of marketing channels. Price decisions include:

• Pricing Strategy (Penetration, Skim, etc)
• List Price
• payment period
• Discounts
• Financing
• Credit terms

            Using price as a weapon for rivals is as old as mankind. but it’s risky too. Consumers are often sensitive for price, discounts and additional offers. Another aspect of pricing is that expensive products are considered of good quality.

Place (Placement):

            It not only includes the place where the product is placed,  all those activities performed by the company to ensure the availability of the product tot he targeted customers. Availability of the product at the right place, at the right time and in the right quantity is crucial in placement decisions.

• Placement decisions include:
• Placement
• Distribution channels
• Logistics
• Inventory
• Order processing
• Market coverage
• selection of channel members

 Promotion

            Promotion includes all communication and selling activities to pursuade future prospects to buy the product. Promotion decisions include:

• Advertising
• Media Types
• Message
• Budgets
• Sales promotion
• Personal selling
• Public relations
• Direct marketing

      As these costs are huge as compared to product price, So it’s good to perform a break-even analysis before allocating the budget. It helps in determining whether the new customers are worth of promotion cost or not.

           

      It often takes time and requires market research to develop a successful marketing mix. You should not depend on one mix always try new mixes. While designing the mix, make changes to all mixes in such a way that all conveys the same message. Don’t confuse your customers by just changing one variable and keeping the rest same.

Limitation of Marketing Mix

            

      Marketing mix (4 P’s) was more useful in early 19’s when production concept was in and physical products were in larger proportion. Today, with latest marketing concepts, marketing environment has become more intergrated. So, in order to extend the usefulness of marketing mix, some authors introduced a fifth P and then seven P’s (People, Packaging, Process). But the foundation of Marketing Mix still stands on the basic 4P’s.

Cost/Benefit Analysis:

As plans and objectives are developed, statements should be produced which should say what the marketing strategy is to accomplish. There are two ways of evaluating the actual performance of these plans, these are sales analysis and cost analysis.

1. Sales Analysis: Sales is usually the best way to measure the performance of a marketing plan. This analysis should be broken down into:

·   Marketing area (geographical)

·   Company decision

·   Individual/Groups of sales representatives (Quota of sales Vs Individual/Group's sale)

2. Cost Analysis: This is a detailed study of the business' operating section of the organization's profit and loss statement. With cost analysis costs which occurred as a result of the marketing sector of a business are declared as profitable or unprofitable. This can be broken down into:

• Research costs
• Order-getting costs (Promotional costs)
• Order-filling costs (Distribution and insurance costs)

Strategies to achieve objectives:

Marketing strategies are the way marketing objectives are achieved. Development of a strategy involves:

            - Selecting and analyzing a target market

            - Creating and maintaining a marketing mix

            - Creation of advertising and promotional ideas

   When properly implemented, the firm achieves objectives.

1. Selection and analyzing of Target market: This area must be separated into three areas, as different areas have different needs, these areas are: 

• Retail market 
• Wholesale market 
• Industrial market

2. Creating and maintaining of Marketing Mix:This broken down into the four P's, they are:

                 

  Marketing Mix - Breakdown:

      PRODUCT:           PRICE:                          PROMOTION:                    PLACE:

      Quality                R.R.P. (List Price)             Advertising                           Transport

      Features              Bulk Discounts                 Personal/DirectSelling            Channels

      Options              Other Discounts/Offers?    Sales Promotions                   Coverage

      Style                   Allowances                       Publicity                                Locations

      Brand Name       Payment Period                                                             Inventory

      Packaging          Credit Terms                 

      Sizes                                         

      Service                                       

      Warranties                                   

      Returns                                      

      Positioning                                  

An additional part of the marketing mix now exists, it is called  'Service'. Factors here include:

• Customer Needs  
• Installation, Maintenance, and repairs
• Guarantees/Warranty period   
• After-sales Service
• Complaints & returns procedures 
• Comparison to competitors
• Credit offered

3. Creation of Advertising and Promotions: Once the marketing mix has been established, the company’s promotional aspects have now to be completed; these can be made up of plans to do:

• Advertising
• Personal or direct selling
• Sales Promotion
• Publicity (Public relations)
• Packaging and design

4. Staff Motivation: The effectiveness of the companies market will depend heavily upon the staff, and their degree of motivation.

Specific Objectives:

            Establishing objectives it is usually thought of as the most important feature in the planning process. The success and failure of a marketing plan are determined by how well the marketing objective reflects the organisations needs. Therefore it is vital objectives are set based around the companies overall goals. This is reflected in the diagram below:

        

                      Goals

                        |

     Opportunities      |         Resources

          |________ Marketing ________|

                    Objectives

           ____________ | ____________    Diagram of the

           |   Marketing Strategies   |    Objectives of a

           |    (Marketing program)   |          Business

           |--------------------------|

           | Selection  | Development |

           | & analysis | of Marketing|

           | of target  | Mixes       |

           |   market   |             |

           |____________|_____________|      

- Essential marketing objectives include the following:

Increasing market share   

Expanding product range

Targeting the geographical representation

And expansion of marketing opportunities

1. Market share: An increase in a companies market share shows how the company is gaining on competitors. To attain greater market share, the following strategies, which are generally thought of as sure winners include:

More aggressive pricing (lowering price or providing discounts)

Search for new outlets to distribute your products to

A change in some features of your products, to open up to a possibly wider market

2. Product Range: By expansion of a company’s product range, a company can attract a wider market than it's initial market, and maybe also expand into other markets

3. Geographical Representation: Some geographical markets offer greater market potential than others, and is in the interests of the firm to invest there to reach these markets whether they be regional, national or international. This allows a company to maximise on it's  profits.

4. Expansion: (I) Through exporting

                        (II) Maximizing customer service

The Entrepreneurship Development Institute of India (EDI):

An autonomous body and not-for-profit institution, set up in 1983, is sponsored by apex financial institutions, namely the IDBI Bank Ltd, IFCI Ltd. ICICI Ltd and State Bank of India (SBI). The Institute is registered under the Societies Registration Act 1860 and the Public Trust Act 1950. The Government of Gujarat pledged twenty-three acres of land on which stands the majestic and sprawling EDI campus.

In consonance with this belief, EDI aims at :

• creating a multiplier effect on opportunities for self-employment,
• augmenting the supply of competent entrepreneurs through training,
• augmenting the supply of entrepreneur trainer-motivators,
• participating in institution building efforts,
• inculcating the spirit of 'Entrepreneurship' in youth,
• promoting micro enterprises at rural level,
• developing and disseminating new knowledge and insights in entrepreneurial theory and practice through research,
• facilitating corporate excellence through creating intrapreneurs (entrepreneurial managers),
• improving managerial capabilities of small scale industries,
• sensitising the support system to facilitate potential and existing entrepreneurs establish and manage their enterprises,
• collaborating with similar organisations in India and other developing countries to accomplish the above objectives.

Salient Features of the National Training Policy

• Training for all- training to be imparted to all rungs of the civil service starting from the lowest and the cutting edge to the highest in policy making. All categories of civil servants shall receive (i) Induction Training - at time of entry (ii) In service Training- suitable intervals in their career

• Concept of 'once a trainer, always a trainer' shall be developed under which expertise developed as a trainer shall be used even after he/she returns to his/her department

• Systematic approach to training- put in place a system suitably grounded in training theory for development of a training process

• Training should focus on bringing right attitudinal change amongst the civil service

• A National Training Council, headed by the Minister-in0-Charge of Personnel shall be set up for advising the Government of India on matters related to training policy, training design and programmes as well as issues concerning their implementation.

• All organisations will designate training managers at appropriate level to develop and coordinate training programmes and monitor them.

• All cadre Controlling Authorities shall endeavour to develop suitable infrastructure for induction and in-service training at the cutting edge and middle levels.