Strategic Management In Product Lifecycle
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Strategic Management In Product Lifecycle

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A brief on the strategic approach for entire product life cycle management.

A brief on the strategic approach for entire product life cycle management.

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Strategic Management In Product Lifecycle Strategic Management In Product Lifecycle Presentation Transcript

  • Strategic Management in Product Lifecycle Divya Sindhu Lekha MTech (Technology Management) ‘08-’10, Dept. of Futures Studies, Kerala University
  • Introduction
    • Lifecycle – The period from the product’s first launch to the market until its final withdrawal
    • Split up in phases.
    • Lifecycle management by strategic planning.
    • Helps to identify
    • Time to introduce product into market
    • Time to withdraw a product from market
    • Product’s position in market (compared to competitors)
    • Product’s success/ failure.
  • Product Lifecycle Model
    • Five major phases:
    • Product development phase
    • Product introduction phase
    • Product growth phase
    • Product maturity phase
    • Product decline phase
    • Applicable to all products/ services.
    • Phases can be split up into smaller ones depending on the product.
  • Product Lifecycle
  • Product Development Phase
    • Begins when a firm finds and develops a new product idea.
    • Product introduced to a test market .
    • If survives, introduce to real market.
    • Sales = zero, Revenue = negative
    • Period of spending with absolute no return.
  • Product Introduction Phase
    • Product launch.
    • “ Money sinkhole ” – Large expenditure on promotion and advertising, costly service requirements, distribution arrangements.
    • Aggressive pricing policy.
    • Formulate market strategy – Market research, define appropriate market mix.
  • Low Overall. Market share New and competitive Technology Limited. Competition Focused on new product features, benefits, differentiation, pricing and functionality Training Direct factory support. Engineering involvement. Support Small team of highly skilled salesmen. Sales High level of service for targeted customers. Service Direct or limited distribution through specific strategic partners. Distribution High expenditure for new production capacity Manufacturing Limited. Highly targeted at specific customers. Promotion Focus on time to market and uniqueness Development High, Early adopters Price Introduction Phase
  • Product Growth Phase
    • Product takeoff in market.
    • Focus on increasing market share.
    • Introduce differentiated products.
    • Impose barriers by means of IPRs, product complexity and low availability of product components.
    • Develop 1)cost efficiency 2)time-to-market 3)pricing and discount policy
    • Don’t be over committing.
  • High growth. Market share Newer and leading edge. Technology New appearing worldwide. Competition Transition to newer version of product. Training Phone support Support Everywhere possible. Retail shops, telephone, internet. Sales Local and regional, fully staffed. Service Highly skilled. Focused channels with strong technical skills. Distribution Addition of capacity and automation. Manufacturing Heavy. Targeted promotions, trade shows, press releases Promotion Complete development to sustain market penetration. Development 10% of market share – 10% if weak brand name and severe competition; +10% if good sales. Price Growth Phase
  • Product Maturity Phase
    • “ Period of highest returns .”
    • Introduce new brands.
    • Try to extend product’s life.
    • Focus on maintaining quality and reliability.
    • Multi distribution channels.
  • Predictable market share every year. Limited opportunities for quick gains. Market share Ageing Technology Well established. Competition Competition differentiation. Training Local channels lead support. Support Direct sales focused on hi-volume, high-profit. Sales Distributors take over the service efforts. Service Many distributions, alternative channels, offshore sales. Distribution Focused on increasing yield and productivity. Manufacturing Focused on reliability, quality, predictability, new enhancements. Promotion Focused on cost reduction. Development Stable Price Maturity Phase
  • Product Decline Phase
    • Difficult to conceptualize the decline signals of a product.
    • High price policy to 1)increase profit margin 2)gradually discourage the “few” loyal customers.
    • Start withdrawing variations of the product from market.
    • Pull back promotion.
    • Narrow down distribution.
  • Shrinking fast. Market share Old and outdated. Technology Limited. Competition None. Training Pone support. Support Maintenance and repair oriented for hi-tech products. Sales High price on spare parts. Service Use existing channels. Distribution No capital expenditure. Outsourcing. Manufacturing Limited. No promotion or advertising efforts. Promotion Focused on cost reduction Development High compared to the demand Price Decline Phase
  • Some competitors are already withdrawing. Establishment of competitive environment. Price and distribution channel pressure. Early entry of aggressive competitors into market. Almost not there. Compeition “ Milk” all remaining profits from product. Defend market position from competitors and improve your product. Maintain your market position and build on it. Acquire a strong market position. Make your product known and establish a test period Strategic goal Decline Maturity Growth Intro Develop Strategies of each product lifecycle phase
  • Some competitors are already withdrawing. Establishment of competitive environment. Price and distribution channel pressure. Early entry of aggressive competitors into market. Almost not there. Compeition Variations and models that are not profitable are withdrawn. Price decreases. Improvement – upgradation of poduct. Introduction of product variations and models. Limited number of variations. Product Maintatin price level for small profit. Defensive price policy. Re-estimation of price policy. Aggressive p[rice policy. High sales to middle men. Price goal
  • Withdrawal from most channels of distribution except those used in the development phase. Gradual decrease. General and reinforced distribution with good supply to the middle men but with low margins of profit for them. Maintain loyalty to middlemen. General and reinforced distribution with good supply to the middle men but with low margins of profit for them. Reinforcement of middlemen. General and reinforced distribution through all channels available. Reinforcement of product awareness and preference. Creation of public-market product awareness. Promotion goal Exclusive and selective distribution through certain channels and creation of high profit margins for middle men. Distribution goal
  • References
    • Strategic Management – Hugh Macmillan, Mahen Tampore
    • Strategic Management – Building and sustaining competitive advantage – Robert A. Pitts, David Lei
    • Product lifecycle management – URENIO, Aristotle University of Thessalonites.