Managing the product at different stages of plc


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Managing the product at different stages of plc

  1. 1. Managing the product at different stages of the product life cycle Maxwell Ranasinghe
  2. 2. Introductory Stage (IS) <ul><li>A better planning in product development and introduction would lead to success of the product in the market. </li></ul><ul><li>Innovators or early adopters would be your customers </li></ul><ul><li>Profits would be low or even losses may incur due to the heavy start up cost </li></ul><ul><li>Early stages will have low sales </li></ul><ul><li>Many products fail in the initial stages if the product introduced was not customers centered in all 4 p’s </li></ul>
  3. 3. Decisions as to product at the IS <ul><li>Not much could be done at this stage as most of the decisions would have taken at the development stage. </li></ul><ul><li>However Depending on the nature of the product, changes could be done if the test marketing had not really revealed them. </li></ul><ul><li>Therefore before you make mistakes you got to do so much of work before the launch to find out what would be the correct product. </li></ul>
  4. 4. Decisions as to place at the IS <ul><li>Depending on the product the distribution problems could occur in numerouse forms </li></ul><ul><li>Dealers may be reluctant to accept your product, there may not have shelf space in supermarkets to carry your product, competitors will adopt many strategies to block your product. Therefore before the introduction all these problems have to be looked into. Nothing should be taken for granted. </li></ul><ul><li>A fantastic product may not be successful just because reluctance of distribution network to carry your product. </li></ul>
  5. 5. Pricing decisions at IS <ul><li>Price strategy may be two fold at any new product. It could be skimming or penetrative. </li></ul><ul><li>Pricing decisions can be changed at any time but making a mistake in the early pricing strategy may distort most of the projections. </li></ul><ul><li>Further a price reduction at the initial stage also would reflect bad on the products image. </li></ul>
  6. 6. Promotion decisions at IS <ul><li>Most of the promotions decisions are made to make the product known to the customers. </li></ul><ul><li>Heavy advertising budgets may be required to promote the product.(FMCG) </li></ul><ul><li>There are certain products which have been successfully introduced without much advertising but rare. </li></ul><ul><li>It is better to use most appropriate promo methods available bearing the cost and results in mind. </li></ul><ul><li>Media ratings also could be taken in to consideration when selecting channels in TV, Radio and Newspapers and magazines. </li></ul><ul><li>Novels ways of promotions should be pursued. </li></ul>
  7. 7. Decisions at Growth Stage (GS) <ul><li>Rising sales, increasing profitability will attract competitors. </li></ul><ul><li>More distributors will take up your product </li></ul><ul><li>You have to take decisions to counter the mounting competition </li></ul><ul><li>Brand distinction and creating brand loyalty for your product is very important </li></ul>
  8. 8. Decisions as to product at GS <ul><li>Product is accepted and mee too are coming </li></ul><ul><li>Make a decision to add new features to show that you are ahead </li></ul><ul><li>Retain the old by giving loyalty status and attract new by offering better features, reliability and pioneering status </li></ul>
  9. 9. Decisions as to distribution at GS <ul><li>Get all the possible outlets </li></ul><ul><li>More incentives to be given </li></ul><ul><li>Do not take it for granted that others cannot beat you and their product will not be accepted by the distributors </li></ul><ul><li>Be vigilant about the competitors products and their approach in distribution </li></ul><ul><li>Stronger companies may become your competitors </li></ul>
  10. 10. Decisions as to pricing at GS <ul><li>Highest profit margins can be gained at this stage </li></ul><ul><li>Profits earned to be retained to have a better leverage at later stages. </li></ul><ul><li>However you may have to cut price or increase incentives to face competition at the latter stage of GS </li></ul>
  11. 11. Decisions as to Promotion in GS <ul><li>More promotions to be made to face the competition </li></ul><ul><li>Brand loyalty creation, USB s are the themes of promotion </li></ul><ul><li>Incentives to loyal customers/ distributors to be made </li></ul><ul><li>Comparative advertising may occur if only a few strong players are active in the market. </li></ul><ul><li>More public relations and customer conventions etc could be used to get better results than advertising. </li></ul>
  12. 12. Decisions at the maturity stage (MS) <ul><li>This is the longest period and the period where the bulk of sales and profits are made. </li></ul><ul><li>You got to be very vigilant about the consumer preferences as with time it could change substantially. </li></ul><ul><li>Competitors will do their best to become the leader or take chunks of your market by offering various products and packages </li></ul><ul><li>Market place become crowded and consumers become aware of the product well. </li></ul>
  13. 13. Decisions as to Product at MS <ul><li>Lot of R&D will take place </li></ul><ul><li>Many types of products will come to market. </li></ul><ul><li>Product mix may change drastically </li></ul><ul><li>Technology spreads and many producers start producing </li></ul><ul><li>Entirely new products may be introduced. </li></ul><ul><li>Quality and service has to be emphasized to show a difference </li></ul>
  14. 14. Declining stage of PLC and MM <ul><li>Shifts in consumer taste, demographic factors, increased competition or technological obsolesce may decrease the demand. </li></ul><ul><li>The decline may be slow as in the sewing machine or rapid as in the floppy disk or video tapes </li></ul><ul><li>Weaker will exit if exit barriers are low </li></ul>
  15. 15. Declining stage…. <ul><li>Three important factors determining the attractiveness of the declining markets </li></ul><ul><li>Demand </li></ul><ul><li>Competition/ rivalry </li></ul><ul><li>Exit Barriers </li></ul>
  16. 16. Five options are available for a firm in a declining stage of the market. <ul><li>Exit - selling the business in the early stage of decline </li></ul><ul><li>Harvesting - Maximising short term cash flow, maintain or increase margins even if it could result in quicker decrease in the market share </li></ul><ul><li>Maintenance- This is a short term strategy to maintain market share even at the cost of declining margins </li></ul><ul><li>Profitable survivor- This aims to increase the share of a declining market with a view to future gains </li></ul><ul><li>Niche - Identify a small segment and concentrate activity in that area </li></ul>
  17. 17. MM at declining stage… <ul><li>Product </li></ul><ul><li>Harvesting- R&D expenditure is eliminated. No new products or extensions or modifications developed. </li></ul><ul><li>Maintenance- Product and process expenditures are maintained for the short term </li></ul><ul><li>Profitable survivor- Product and process expenditures are maintained for the short term as part of strategy of pursuing increased market share </li></ul><ul><li>Niche - Continues product and process R&D aiming at product improvements or modifications to appeal to a specific segment of the market that has not been served properly </li></ul>
  18. 18. MM at declining stage… <ul><li>Price </li></ul><ul><li>Harvesting- Cost cutting across the board. Price may be raised to maintain margins </li></ul><ul><li>Maintenance- Lower prices, if necessary to maintain market share </li></ul><ul><li>Profitable survivor- Lower prices as appropriate to increase market share even with much lower margins </li></ul><ul><li>Niche- Price depends on the nature of the special segment targeted. </li></ul>
  19. 19. MM at declining stage… <ul><li>Promotion </li></ul><ul><li>Harvesting- Sales and Marketing budgets are slashed. </li></ul><ul><li>Maintenance- Advertising, sales promotions and trade promotions are sustained at a level sufficient to prevent any erosion of the market share. </li></ul><ul><li>Profitable survivor- A signal is sent out to the competitors that the firm is going to remain in the market and will increase the market share. Advertising and Promotions are increased. Strong trade promos are done to strengthen the channels </li></ul><ul><li>Niche- Advertising and Promotions are concentrated at the selected market with much care . </li></ul>