products - product life cycle

Businesses should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. The process of managing groups of brands and product lines is called portfolio planning.

The stages through which individual products develop over time is called commonly known as the "Product Life Cycle".

The classic product life cycle has four stages (illustrated in the diagram below): introduction; growth; maturity and decline

Introduction Stage

At the Introduction (or development) Stage market size and growth is slight. it is possible that substantial research and development costs have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. It is highly unlikely that companies will make profits on products at the Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product.

Growth Stage

The Growth Stage is characterised by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale)and possibly better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage.

Maturity Stage

The Maturity Stage is, perhaps, the most common stage for all markets. it is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to be restricted to product modification and improvement and perhaps to improve production efficiency and quality.

Decline Stage

In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Care should be taken to control the amount of stocks of the product. Ultimately, depending on whether the product remains profitable, a company may decide to end the product.

Examples

Set out below are some suggested examples of products that are currently at different stages of the product life-cycle:

INTRODUCTION	GROWTH	MATURITY	DECLINE
Third generation mobile phones	Portable DVD Players	Personal Computers	Typewriters
E-conferencing	Email	Faxes	Handwritten letters
All-in-one racing skin-suits	Breathable synthetic fabrics	Cotton t-shirts	Shell Suits
iris-based personal identity cards	Smart cards	Credit cards	Cheques books

What is global marketing?

Global marketing is expansive, extensive, and complex. It can be seen as both a business strategy and an operation, as a force for good and/or as the ‘new imperialism’. It can be embodied in companies or perceived as a phenomenon (e.g. business globalization, the internet, etc.). One view of global marketing is as a giant supply chain management system or an added value system. Global giants such as Toyota (www.toyota.com), VW (www.vw.com) and DaimlerChrysler (www.daimlerchrysler.com) source their raw materials, semi-processed and processed materials, finance and human inputs from all over the world and deliver the results of the combination of these, i.e. vehicles, to numerous market segments, adding value as they do so.

Defining terms in the global marketing arena is a complex issue. Marketing across political and cultural boundaries raises many questions, problems, and juxtapositions, rendering precise definitions difficult. Typical issues centre on the standardization–adaptation argument; locus of control—central or devolved; and when exactly a multinational corporation focus becomes a global one. How does global marketing differ from domestic and international marketing? While there are no universal definitions, the following are those that we suggest for use throughout this text.

Domestic marketing

The focus of domestic marketing is primarily marketing carried out within a defined national or geographic boundary where the marketer is relatively free to plan, implement, and control marketing plans, including decisions on the marketing mix (i.e. the ‘controllables’), within a relatively known and easily researchable marketing environment (i.e. the ‘uncontrollables’). Over time, the marketer learns to anticipate the needs and wants of his/her market. There is little need to attend to the demands of the across-boundary markets, other than to monitor and meet the threat of imports. Focus and control are firmly on the domestic market.

International marketing

International marketing takes place when the marketer explores markets outside the national boundaries of the domestic market. This often begins with direct or indirect exporting to a neighbouring country. The focus is to find markets which have needs similar to those in the domestic market and can be satisfied with similar products and services. Typical of these are standard product parts and computers. While the marketing environment may be different and some adjustment may have to be made to the marketing mix elements, exporting in economic terms is basically the movement of surplus production overseas. Once again, planning, implementation, and control of the marketing mix are based in the exporting organization. When organizations begin operating across a number of national/political boundaries, they need a more cohesive and constructive approach to their engagement with their international markets. As they progress in their internationalization, organizations would increasingly recognize the importance of accounting for country-to-country differences in their international marketing planning decisions. Because they value these differences, there is the recognition that there are many distinct marketing systems, leading to the notion that international marketing can be viewed as ‘a collection of more or less coordinated domestic marketings’ (Perry, 1999: 45). In this sense, the characteristics of international operations are the differing effects of, and the emphases on, the uncontrollable marketing elements and hence the need for differing marketing mixes to address those differences.

However, international operators may wish to minimize the effect of these differences by operating a standardized marketing mix policy by appealing to global market segments. The emphasis may still be on central production, planning, implementation, and control, with deference paid to different market conditions. When organizations begin to produce in different countries and market according to the demands of local or regional markets, with the resultant devolution of production, planning, implementation, and control (‘think global, act local’), then they are evolving into a ‘multinational’. Despite this devolution, most multinationals have a corporate base from which to operate through a network of subsidiaries. The media company BSkyB (www.sky.com) is a typical example.

Global marketing

The concept of global marketing begins with the notion that the world has no centre. The ‘borderless’ global marketplace encompasses the participation of all countries—not only the industrialized and the newly industrialized nations, but also the emergent economies such as China and India—in international competition. This new ‘market internationalism’ is coupled with more integrative global structures, including free trade areas, common markets, and multilateral agreements (e.g. World Trade Organization) which link international markets more closely, even though protectionism and conflicts coexists with it. It rests upon ‘the dynamic premise that consumer preferences can be, and are, constantly being reshaped by common exogenous (rather than endogenous) forces, resulting in the convergence of many consumers’ wants and desires’ (Perry, 1999: 48). The growing availability and spread of communication and transportation technologies are making consumers more homogeneous and foreign markets more accessible. National borders are no longer effective barriers against external influences. For instance, the internet has made it possible for foreign companies to get around local advertising restrictions. Global marketing organizations would strive exclusively to ‘maximize standardization, homogenization, similarity, concentration, dependence, synchronization, and integration of marketing activities across markets’ (Svenssen, 2002: 581).

On the other hand, the truly global marketing organizations would also have an enlightened recognition that global consumers differ in their consumption behaviour from culture to culture. Markets are about people, not products. There may be global products, but there are not global people. There may be global brands but they are no global motivations for buying those brands (De Mooij, 1998). Global organization seeks to lever its resources across political and cultural boundaries to maximize opportunities and exploit market similarities and differences in search of competitive advantage. There is a proactive willingness to adopt a global perspective instead of a country-to country or region-by-region perspective in the development of a marketing strategy. It will move its resources from country to country to achieve its goals and maximize stakeholders’ value by globalizing marketing activities in the organization of worldwide efforts, the research of domestic and foreign markets, the pursuit of international partnerships, the sourcing of raw materials and support services, and the managing of international transactions. Organizations would operate as if the world were one large market, ignoring superficial regional and national differences while making sure that marketing activities fit the products and services to the practices and cultural characteristics of different markets.

Difference between Selling and Marketing

Selling	Marketing
1. Selling starts with the seller, Selling focuses with the needs of the seller. Seller is the center of the business universe. Activities start with seller’s existing products.	Marketing starts with the buyers. Marketing focuses on the needs of the buyer. Buyer is the centre of the business universe. Activities follow the buyer and his needs.
2. Selling emphasizes on profit. It seeks to quickly convert ‘products’ into ‘cash’; concerns itself with the tricks and techniques of pushing the product to the buyers.	Marketing emphasizes on identification of a market opportunity. It seeks to convert customer ‘needs’ into ‘products’ and emphasizes on fulfilling the needs of the customers.
3. Selling views business as a ‘goods producing processes’.	Marketing views business as a ‘customer satisfying process’.
4. It over emphasizes the ‘exchange’ aspect without caring for the ‘value satisfactions’ to the buyers.	It concerns primarily with the ‘vale satisfactions’ that should flow to the customer from the exchange.
5 Seller’s convenience dominates the formulation of the ‘marketing mix’.	Buyer determines the shape of the ‘marketing mix’.
6. The firm makes the product first the then decides how to sell it and make profit.	The customer determines what is to be offered as a ‘product’ and the firm makes a ‘total product offering’ that would match the needs of the customers.
7. Emphasizes accepting the existing technology and reducing the cost of Production.	Emphasis’s on innovation of adopting the most innovative technology.
8. Seller’s motives dominate marketing communications.	Marketing communications acts as the tool for communicating the benefits/ satisfactions of the product to the consumers.
9. Costs determine price.	Consumer determines price.
10. Transportation, storage and other distribution functions are perceived as mere extensions of the production function.	They are seen as vital services to provide convenience to customers.
11. There is no coordination among the different functions of the total marketing task.	Emphasis is on integrated marketing approach.

CONCEPT OF MARKETING

The marketing concept is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition. Today most firms have adopted the marketing concept, but this has not always been the case.

In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. While this philosophy is consistent with the marketing concept, it would not be adopted widely until nearly 200 years later.

To better understand the marketing concept, it is worthwhile to put it in perspective by reviewing other philosophies that once were predominant. While these alternative concepts prevailed during different historical time frames, they are not restricted to those periods and are still practiced by some firms today.

The Production Concept:

The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concept was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were:

* Can we produce the product?

* Can we produce enough of it?

At the time, the production concept worked fairly well because the goods that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose job it was simply to execute transactions at a price determined by the cost of production. The production concept prevailed into the late 1920's.

The Sales Concept

By the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were:

• Can we sell the product?
• Can we charge enough for it?

The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people use the word "marketing" when they really mean sales.

The Marketing Concept

After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased discretionary income, customers could afford to be selective and buy only those products that precisely met their changing needs, and these needs were not immediately obvious. The key questions became:

* What do customers want?

* Can we develop it while they still want it?

* How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketing concept, which involves:

* Focusing on customer needs before developing the product

* Aligning all functions of the company to focus on those needs

* Realizing a profit by successfully satisfying customer needs over the long-term

When firms first began to adopt the marketing concept, they typically set up separate marketing departments whose objective it was to satisfy customer needs. Often these departments were sales departments with expanded responsibilities. While this expanded sales department structure can be found in some companies today, many firms have structured themselves into marketing organizations having a company-wide customer focus. Since the entire organization exists to satisfy customer needs, nobody can neglect a customer issue by declaring it a "marketing problem" - everybody must be concerned with customer satisfaction.

The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix.


The major differences between selling concept and marketing concept

 1. The selling concept starts with the seller and its focus is on existing products, it  being seller-oriented. The company believes in aggressive selling and other promotions. Customer value and satisfaction are no concern for the seller. The firm produces the products first and then figures out ways to sell and make profits. Different company departments operate without coordination.

2. Marketing orientation starts with the customer and the company strives to learn  customer needs and wants, develops appropriate products or services to satisfy the customer. Business is viewed as a customer need satisfying activity. All departments coordinate their activities and the focus is on customer needs. Profits are an outcome of doing the job well by the company. It requires reliable company wide  information system and maintains it. All departments are responsive to informational inputs. Everybody understands the critical role played by marketing, a fact visibly demonstrable when the head of marketing is part of top management.

THE SOCIETAL MARKETING CONCEPT

Marketing concept was accepted widely among companies in developed and some developing countries and continued to evolve and take on new meanings. Not long after this, criticism started about the nature of its social responsibility. The emphasis shifted to how marketing affected society as a whole in an age of depleting and increasingly scarce resources, environmental deterioration, etc. It was good enough to produce what customers needed or wanted, and for achieving organisational objectives, but in certain cases the concept could be in conflict with customers’ and society’s best long-run interests. Societal marketing concept is a management philosophy that takes into account the welfare of society, the organisation, and its customers.

Adoption of this concept requires that marketing decisions be made in an ethical and socially responsible manner. Companies must pay attention not only to the short-term needs of customers but also to their long-term well being. This includes, for instance, excess fat content in ready-to-eat foods, toxic wastes, and environmental issues.

The need is to strike a balance between the interest of customers, the company itself, and the society in which operations are conducted. Some responsible firms have started using recyclable packaging materials and products that do not harm the environment. Among the marketing tasks, demarketing is an approach that reflects the societal marketing philosophy.

Many companies encounter several hurdles in adopting the marketing concept. For some firms, it is simply too difficult to understand the underlying philosophy and they fail to implement it. Other companies face a conflict between short-term and long-term objectives and have no inclination to sacrifice short-term gains for the sake of customer satisfaction, simply because the customer is not the major priority of top management.

HOLISTIC MARKETING APPROACH

There have been major changes in almost every sphere of human activity over the last decade, like implication being that this requires fresh marketing thinking, a fresh approach to business, and this calls for a holistic marketing approach. This new thinking relies upon marketing research to define market segments, their size, and their needs. To more completely satisfy those needs, marketers need to have a more complete and cohesive approach to internal marketing, targeted marketing, relationship marketing, be visibly socially responsible, and make decisions about the controllable elements of the marketing mix.

MANAGEMENT BY EXCEPTION (M.B.E.)

It is a system of identification and  communication that signals the manager when his attention is needed: conversely, it remains silent when his attention is not required.

The primary purpose of such a system is to simplify the management  process itself.

It permits the manager to find the problems that need his action and to avoid  dealing with these the are better handled by his subordinates.

Elements of MBE: The MBE system’s structure is constituted by the following elements

1.	Measurement	by assigning values to performance
2.	Projection	Towards business objective & expectations.
3.	Selection	Follow progress towards its objectives
4.	Observation	to know current state of performance.
5.	Comparison	actual with expected and identify the            exceptions.
6.	Decision making	Prescribes the action that must be fallen in order
		(i) Bring performance back into control
		(ii) Adjust expectations to reflect changing conditions
		(iii) Exploit opportunity

It is also deeply rooted in the principles of the decision of labour, delegation or responsibility and authority and span of control.

Merits: The practice of MBE in management yields benefit in the following way

1. It save personal time
2. Concentrative executive effort
3. Reduces distortions
4. Facilitates broader management coverage
5. Lessens frequency of decision making.
6. Makes fuller use of knowledge of trends history and available business data.
7. Fully utilizes highly paid people on high-return work.
8. Identify crises and critical problems.
9. Provides qualitative and quantitative yardsticks for judging situations and people.
10. Enables inexperienced managers to handle new assignments with a minimum of related experience and training.
11. Alerts management to opportunity as well as difficulties.
12. Encourages more comprehensive knowledge of all phases of business operations.
13. Stimulates communication between different segments of an organization.

Demerits : Peter Druker’s critically viewed MBE as follows.

1. It breeds organization man thinking
2. It is often dependent upon unbelievable data.
3. It rewires a comprehensive observing and reporting system.
4. It tends to proliferate paper work
5. It often assumes an un relational stability in business affairs.
6. It gives false sense of security to management.
7. Standard of comparison tend to become obsolete.
8. Some critical business factors are difficult to measure
9. It can’t be a substitute for thinking.

Principles of MBE: The make the MBE system effective the following principles may be followed.

1. Practice of Self-control
2. Discard pre-conceived notions.
3. Be guided by policy
4. Learn to live with accountants.
5. Delegate for result.
6. Sharpen your observational power
7. Use MBE to describe subordinates in different phases.
8. Invite enough participation
9. Expect some people to call you lazy
10. Differentiate between “Big” and  “Little” jobs
11. Don’t be an “Over-the-Shoulder” supervisor
12. Avoid the “organization – man” attitude
13. Expect to work harder but to enjoy it more.

MANAGEMENT BY OBJECTIVES

It is a process whereby the superior and subordinate managers of an enterprise jointly identify its common goals, define each individual’s major areas of responsibility in terms of the results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members.

                                                                                    -           GEORGE S. ODIORNE

MBO is comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed toward the effective and efficient achievement of organizational and objective.

MBO PROCESS

Step – 1:          Set down informally the goals of the enterprise.

Step – 2:          Objective the goal so set out and define measures of performance.

Step – 3:          The goals and sub-goals at all management levels must them be set out.

Step – 4 :         Adjustment in the organization structure.

Step – 5:          The goals to be set at all levels must be joint and agreed ones.

Step – 6:          Continuous feedback from appraisal of internal

                        Goals and the enterprise goal as it is set.

Step – 7:          Appraisal of results proceed continuously against the goals at all levels.

Step – 8:          Review of sub-results throws light on organization results.

Benefits of MBO

1.                  Improvement of managing

2.                  Clarification of organization.

3.                  Encouragement of personal commitment

4.                  Development of effective controls.

Weakness of MBO

1.                  Failure to teach the philosophy of MBO

2.                  Failure to give guidelines to goal setters.

3.                  Difficulty of setting goals

4.                  Emphasis on short-term goals

5.                  Danger of inflexibility

6.                  Other dangers.

DIRECT CONTROL VERSUS PREVENTIVE CONTROL

DIRECT CONTROL:

1.                  Cause of negative Deviations from standards. Un certain, Lac of knowledge, experience or judgment

2.                  Questionable assumptions underlying direct control

• Assumption that that performance can be measured
• Assumption that personal responsibility exists
• Assumption that time expenditure if warranted
• Assumption that mistake can be discovered in time
• Assumption that the person responsible will take.
•                               Corrective steps.

Preventive control

Assumption :

            Qualified managers make a minimum of errors.

            Management fundamental can e used to measure performance

            Application of management fundamentals can be evaluated.

Advantages :

1.                  Greater accuracy

2.                  Encourage self control

3.                  Lighten the managerial burden

4.                  Impressive

Thus control is a very important process through which managers ensure that actual activities confirm to planned activities. It is mainly used to measure progress, to uncover deviations and to indicate corrective action.