Product life cycle ss


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Product life cycle ss

  2. 2. Market  Market Types, Size, VolumesIndian Pharmaceutical MarketProduct Life Cycle  Relaunching Strategies  Expansion of Product Life CycleSWOT AnalysisBoston Consulting Group (BCG) Matrix11/5/2011 Confidential 2
  3. 3. A Marketer is someone seeking a response(attention, purchase, vote, donation) fromanother party called the prospectMarketers are responsible for stimulating demand for a company’s productMarketing managers seek to influence the level, timing, and composition of the demand to meet the organisation objectives. Eight demand states are possible11/5/2011 Confidential 3
  4. 4. These are:i. Negative Demand- consumers dislike a product and may even pay a price to avoid itii. Non-existent Demand- consumers may be unaware or uninterested about the productiii. Latent Demand- Consumers may share a strong need that cannot be satisfied by an existing product. Marketers try to capture this demand and come out with newer and better productsiv. Declining Demand- Consumers begin to buy the product less frequently or not at all11/5/2011 Confidential 4
  5. 5. v. Irregular Demand- consumers purchase vary on seasonal, monthly, daily or even an hourly basisvi. Full Demand- consumers are adequately buying all products put into the market placevii. Overfull Demand- too many consumers would like to buy the product that can be satisfiedviii.Unwholesome Demand- consumers may be attracted to products that have undesirable social consequences11/5/2011 Confidential 5
  6. 6. Economist describe market as a collection of buyersand sellers who transact over a particular productor particular classMarketers use the term “Market” to cover variousgroup of customers. The five basic markets are:a) Resource Marketb) Government Marketc) Manufacture Marketd) Intermediary Markete) Consumer Market11/5/2011 Confidential 6
  7. 7. Resources Resources Money Resource Money Market Service MoneyManufacture Consumer Government Market Market Market Taxes Goods Money Money Goods and Services Intermediary Goods and Services 11/5/2011 Market 7
  8. 8. Seller and buyer are connected by flows:a) Seller sends goods, service and communication to the market.b) In return they receive money and informationc) There is an exchange of money for goods and serviced) There is an exchange of information11/5/2011 Confidential 8
  9. 9. A. Consumer Market- consumer good and services such as soft drinks and cosmetics spend a great deal of time trying to establish a superior brandB. Business Market- companies selling business goods often face well-trained and well-informed professional buyers who are skilled in evaluating competitive edgeC. Global Markets- Companies face challenges and decisions regarding which country to enter, how to enter the country, how to adapt to their product/ services to the country, and how to price their productD. Nonprofit and Governmental Markets- Companies selling to these markets have to price their product carefully because these organisation have limited purchasing power like churches, universities, charitable organisation and government agencies11/5/2011 Confidential 9
  10. 10.  Product is the end result of a manufacturing process, to be offered to the marketplace to satisfy a need or want. Anything that is offered to the market that customers can acquire, use, interact with, experience, or consume, to satisfy a want or need Service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or maynot be tied to a physical thing.  Manufacture, Retailer, Distributor can provide value added service to differentiate themselves11/5/2011 Confidential 10
  11. 11. Products that are marketed include:• Physical goods• Service• Experiences• Events• Persons• Places• Properties• Organizations• Information• Ideas11/5/2011 Confidential 11
  13. 13. EMOTIONAL LOGICAL PHYSICAL11/5/2011 Confidential 13
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  16. 16. Product Life Cycle Curve
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  19. 19. Product life cycle, as the name suggests is thelife cycle of a product which begins from theintroduction phase, then there is the growthphase, then a steady phase and finally thedecline phase.11/5/2011 Confidential 19
  20. 20. A company’s positioning and differentiationstrategy must change as the product, marketand competitors change over the product lifecycle (PLC). To say that a product has a life cycleis to assert four things:a) Products have limited lifeb) Product sales pass through distinct stage, each posing different challenges, opportunities, and problems to the seller
  21. 21. c) Profits rise and fall at different stages of the product life cycled) Products require different marketing, financial, manufacturing, purchasi ng, and human resource strategies in each life-cycle stage.
  22. 22. Most of the PLC curves are portrayed as bellshaped. The curve is divides basically into fourstages:a) Introductionb) Growthc) Maturityd) Decline11/5/2011 Confidential 22
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  24. 24. A period of slow sales growth as the product is introduced in the market. Profits are nonexistent because of heavy expense of product introduction11/5/2011 Confidential 24
  25. 25.  A product’s sales revenue are small and exhibit a slow growth The manufacturer is trying to gain product acceptance from the prescriber or patients The overall marketing strategy is to attract the therapeutic area opinion leaders, who are essential in communicating the product’s benefit to their colleagues through the pyramid of influence cascade The marketers need market data that help them define the product’s optimal targeting, positioning and profiling.11/5/2011 Confidential 25
  26. 26. In order to increase consumer awareness and willingness tobuy the product, the following activities can be implemented:i. Offer clinical trial experienceii. Include physicians and patients in long term treatmentiii. Develop opinion leadersiv. Develop media spokesperson (such as successful patient testimonial)v. Risk reductionvi. Adapt promotional mixvii. Sampling or couponingviii. Broaden product offeringix. Modify marketing channels11/5/2011 Confidential 26
  27. 27. Furthermore the ability to prescribe or buy canbe increased by the following activities:i. Penetration pricingii. Adequate distributioniii. Liberal payment termsiv. Wholesaler consignment stocksv. Compatibility with existing medical supplies and equipments11/5/2011 Confidential 27
  28. 28.  Product Development- when a new product is introduced in the current therapeutic segment, the company is said to be active in product development, as opposed to entering a new therapeutic segment with an existing product- a strategy called new market extension. Diversification- When a new product is introduced into a new therapeutic segment the company is pursuing a diversification approach11/5/2011 Confidential 28
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  30. 30.  Product’s sales revenue are moderate but rapidly growing and its profitability is increasing Early adopters like the product, and additional consumers start buying the product Marketers main objective is to expand the distribution and product line by offering new product benefit and forms Increasing competition drives down the product price11/5/2011 Confidential 30
  31. 31. Sales force is expanding, shifting it’s priority from the few medical specialist to a large number of family physicians or GP’s nationwide11/5/2011 Confidential 31
  32. 32. During the growth stage, the marketers use several strategiesto sustain rapid market growth:i. Improve product quality and add new product features and stylingii. Add new models and flanker productsiii. Enters new market segmentiv. Shifts from product awareness advertising to product preference advertisingv. Lowers the price to attract the next layer of price sensitive buyersvi. Increases distribution coverage and enters new distribution channel11/5/2011 Confidential 32
  33. 33. Product Life Cycle Curve
  34. 34. This phase is characterized by a stabilized saleperformance with low cost and high profitsAt this stage: Marketer is occupied with maintaining the products advantage Fighting new competitive new product launches with new features and benefitsA full product line is now available offering a widespectrum of product dosages, ROA and formulation Confidential 34
  35. 35. The Maturity phase is divided into three stages:a) Growth  sales growth rate starts to decline  No new distribution channel to fill  New competitive forces emergeb) Stable  Sales flatten on per capita basis because of market saturation  potential consumers have tried the products and the future sales govern by population growth and replacement demandc) Decaying maturity  Absolute level of sales starts to decline, customers begin to switching over to other products11/5/2011 Confidential 35
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  37. 37. Sales decline for a number of reason Technological advancement Shifting consumer taste Increase domestic and foreign competition Increase price cuttingNow the pharmaceutical marketers are faced withthe dilemma of harvesting the product orterminating the product or introducing areplacement11/5/2011 Confidential 37
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  40. 40. Very often successful product life cycle needs tobe prolonged, either because the product cancontinue to be a significant revenue makingengine for the organisation or because theexisting product pipeline does not guarantee apromising blockbuster in the near future11/5/2011 Confidential 41
  41. 41.  Aspirin market is about a centaury old. Early it was used as antipyretic-analgesic but lost its market to paracetamol due to effective repositioning of paracetamol and due to certain side effects of aspirin It was repositioned in the market with safer dosage forms such as Enteric Coated tablets, Buffered coated, Dispersible tablets. Brands like Dispirin (Reckit Coleman), Microfine Aspro (Nicolas) succeeded while lesser known brands vanished from the market11/5/2011 Confidential 42
  42. 42.  Flagyl of May & Baker was used in t/t of “Giardiasis” . They later found out its use in t/t of “amoebiasis” which was more prevalent in India. The company launched aggressive promotion of “FLAGYL” in t/t of amoebiasis and replaced conventional treatment with emetine and dihydroemetine inj.. Many other companies joined the bandwagon and FLAGYL is among the top selling brands of May & Baker11/5/2011 Confidential 43
  43. 43.  Betenesol injection had always been imp. Brand of Glaxo. It was lagging behind Decadron injection (Dexamethasone) (of Merind). Glaxo by promoting its one new indication, i.e., a ten ampoule course in Myocardial Infraction, had changed the position dramatically The product image as a life saving drug had got a big boost and product became a brand leader11/5/2011 Confidential 44
  44. 44.  Find out the new usage of the product Enter new markets by covering new geographical market or expand the existing new market coverage Modify existing product, Introduce different size, Introduce larger pack size of tonics and enzymes Introduce new flavours, New dosage Forms, Introduce flanker products Keep track of competition and develop your products constantly Be alert to spot the new opportunity and introduce the new products early enough in your existing markets11/5/2011 Confidential 45
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  46. 46. The overall evaluation of a company’sStrength, Weakness, Opportunities and Threatsis called SWOT analysis. It is a way of monitoringthe external and internal marketingenvironmental Internal Enviorment include Strength and Weakness External Enviorment include Opportunities and Threats11/5/2011 Confidential 47
  47. 47. OPPORTUNITY- A marketing opportunity is anarea of buyer need and interest that a companyhas high probability of profitably satisfying.There are three main source of marketopportunity:a) To supply something that is short in marketb) To supply an existing product or service in a new or superior wayc) To develop totally new product or service11/5/2011 Confidential 48
  48. 48.  A company may be able to offer a product at a much lower price. Pharmaceutical firms have created generic versions of brand-name drugs. A company may be able to deliver a product or a service faster. Fed Ex discovered a way to deliver mail and packages much more quickly than the U.S Postal Service A company can meet the need for more information and advice. facilitates finding professional experts in a wide range of fields11/5/2011 Confidential 49
  49. 49. An environmental threat is a challenge posed byan unfavorable trend or development thatwould lead, in the absence of a defensivemarketing action, to lower sales or profit.11/5/2011 Confidential 50
  50. 50. The internal factors are those which aregoverned by the company themselves.11/5/2011 Confidential 51
  51. 51. Strengths  Cost effective technology  Strong and well-developed manufacturing base  Clinical research and trials  Knowledge based, low- cost manpower in science & technology  Proficiency in path-breaking research  High-quality formulations and drugs  High standards of purity  Non-infringing processes of Active Pharmaceutical Ingredients (APIs)  Future growth driver  World-class process development labs  Excellent clinical trial centres  Chemical and process development competencies11/5/2011 Confidential 52
  52. 52. Weaknesses  Low Indian share in world pharmaceutical market (about 2%)  Lack of strategic planning  Fragmented capacities  Low R&D investments  Absence of association between institutes and industry  Low healthcare expenditure  Production of duplicate drugs11/5/2011 Confidential 53
  53. 53. Opportunities  Incredible export potential  Increasing health consciousness  New innovative therapeutic products  Globalization  Drug delivery system management  Increased incomes  Production of generic drugs  Contract manufacturing  Clinical trials & research  Drug molecules11/5/2011 Confidential 54
  54. 54. Threats  Small number of discoveries  Competition from MNCs  Transformation of process patent to product patent (TRIPS)  Out-dated Sales and marketing methods  Non-tariff barriers imposed by developed countries11/5/2011 Confidential 55
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  56. 56. This technique is particularly useful for multi-divisional or multi-product companies. Thedivisions or products compromise theorganisations “business portfolio”. Thecomposition of the portfolio can be critical tothe growth and success of the company.The BCG matrix considers two variables, namely:a) MARKET GROWTH RATEb) RELATIVE MARKET SHARE11/5/2011 Confidential 57
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  58. 58. The market growth rate is shown on the vertical (y) axis and isexpressed as a %. The range is set somewhat arbitrarily. Theoverhead shows a range of 0 to 20% with division between lowand high growth at 10%. Inflation and/or Gross National Product havesome impact on the range and thus the vertical axis can be modified torepresent an index where the dividing line between low and highgrowth is at 1.0. Industries expanding faster than inflation or GNPwould show above the line and those growing at less than inflationor GNP would be classed as low growth and show below the line.11/5/2011 Confidential 59
  59. 59. The horizontal (x) axis shows relative marketshare. The share is calculated by reference tothe largest competitor in the market.Again the range and division between high andlow shares is arbitrary. The original work used ascale of 0.1, i.e. market leadership occurs whenthe relative market share exceeds 1.0.11/5/2011 Confidential 60
  60. 60. The BCG growth/share matrix is divided into four cells orquadrants, each of which represent a particular type of business.These are:a) QUESTION MARKb) STARc) CASH COWSd) DOGSDivisions or products are represented by circles. The size of the circlereflects the relative significance of the division/product to group sales.A development of the matrix is to reflect the relative profitcontribution of each division and this is shown as a pie-segment withinthe circle.11/5/2011 Confidential 61
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  62. 62. These are products or businesses, that compete in high growthmarkets but where the market share is relatively low. A newproduct launched into a high growth market and with an existingmarket leader would normally be considered as a question mark.Because of the high growth environment, they can be a “cashsink”.Strategic options for question marks include..  Market penetration  Market development  Product development  Which are all intensive strategies or divestment.11/5/2011 Confidential 63
  63. 63. Successful question marks become stars. i.e. market leaders inhigh growth industries. However, investment is normally stillrequired to maintain growth and to defend the leadership position.Stars are frequently only marginally profitable but as they reach amore mature status in their life cycle and growth slows, returnsbecome more attractive. The stars provide the basis for long termgrowth and profitability.Strategic options for stars include.. Integration – forward, backward and horizontal Market penetration Market development Product development Joint ventures11/5/2011 Confidential 64
  64. 64. These are characterised by high relative market share in lowgrowth industries. As the market matures the need for investmentreduces. Cash Cows are the most profitable products in theportfolio. The situation is frequently boosted by economies of scalethat may be present with market leaders. Cash Cows may be usedto fund the businesses in the other three quadrants.It is desirable to maintain the strong position as long as possibleand strategic options include.. Product development Concentric diversificationIf the position weakens as a result of loss of market share ormarket contraction then options would include..Retrenchment (or even divestment)11/5/2011 Confidential 65
  65. 65. These describe businesses that have low market shares in slow growthmarkets. They may well have been Cash Cows. Often they enjoy misguidedloyalty from management although some Dogscan be revitalised. Profitability is, at best, marginal.Strategic options would include.. Retrenchment (if it is believed that it could be revitalised) Liquidation Divestment (if you can find someone to buy)Successful products may well move from question mark thoughstar to Cash Cow and finally to Dog. Less successful products thatnever gain market position will move straight from question mark toDog.11/5/2011 Confidential 66
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  68. 68. The BCG is simple and useful technique forstrategic analysis. It is convenient for multi-product or multi-divisional companies. It focuseson cash flow and is useful for investment andmarketing decisions.11/5/2011 Confidential 69
  69. 69.  Definition (qualitative and quantitative) of the market is sometimes difficult. It assumes that market share and profitability are directly related. The use of high and low to form four categories is too simplistic. Growth rate is only one aspect of industry attractiveness and high growth markets are not always the most profitable. It considers the product or business in relation to the largest player only. It ignores the impact of small competitors whose market share is rising fast. Market share is only one aspect of overall competitive position. It ignores interdependence and synergy.11/5/2011 Confidential 70
  70. 70. Companies will frequently search for a balancedportfolio, since..Too many stars may lead to a cash crisisToo many Cash Cows puts future profitability at riskAnd too many question marks may affect current profitability.11/5/2011 Confidential 71
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