RELATIONSHIP BETWEEN PRODUCTQUALITY, PROFITABILITY AND MARKET SHARE. How quality is defined? 1.Greater conformance to product specifications-----high market share. 2.Superior or more expensive features-----low market share.
THE IMPACT OF PRODUCT LINE BREADTHON MARKET SHARE AND PROFITABILITY •A broad product line can reduce the chances of market share erosion. •The relationship between product line breadth and profit is equivocal.
VERTICAL INTEGRATIONIs a firm’s acquisition of the control of the different stages of productionprocess from the earliest processes of raw materials to the distribution ofthe final products.There are two types of vertical integration:• Forward• Backward integration.Expenditures can be referred to the cost ofcompanies for acquiring the inputs andmanufacturing a product.
EXPENDITURE AND COMMUNICATION ELEMENTSThe marketing communication elements are a specific mix of advertising, personalselling, sales promotion, public relations and direct marketing, a company uses topursue its marketing objectives. Advertising refers to any form of paid of non-personal presentation of ideas, goods or service by an identified sponsor. Personal selling refers to the presentation by the firm’s sales force for the purpose of making sales and Sales promotion refers to the short- building customer relationships. term incentives to encourage the purchase or sale of a product or service and others.
NEW PRODUCTS• Favorable effect on market share to • New products cannibalizes the the extend that they satisfy customer sales of existing products and needs better than the existing goods consume the marketing and prevent competitors from taking resources that would otherwise away businesss customs with their go to them. own new products. • There is evidence to suggest that• New products and profits are new product introductions could positively related in the long term. hurt business profits in the short run.• New products and profits are positively related when consumers • They require large investments in are willing to pay a price premium for R&D, plant, equipment, superior new products that cannot be advertising, promotion and readily duplicated by competitors. investigation.
RESEARCH AND DEVELOPMENT EXPENDITURESThis field, is concern with product innovation and process innovation,trying to endow the business with competitive advantages. Innovative new products and improvements in existing products resulting from R&D are less likely to be vulnerable to price wars and more likely to command a price premium. It has a long run results.
The question is addressed by examining whetherstandardization is better than adaptation in a company.
PRODUCT• Production economies of scale. • Meet differences at the stage of• Economies in research and development, consumer differences in development. taste, needs, wants, socio cultural• Stock cost reduction. differences, lifestyle, consumer• Consumer mobility. perception, beliefs and consumer• Create world wide uniformity. practices, physical environment, etc.• Psychological meaning. • Meet differences in technology.• Consistency with customers. • Psychological meaning and the effect• Improved planning and control. on the consumer.• Synergetic effects. • Meet standards required.
PRICE • Meet development stage• Better control. differences.• Price uniformity and • Meet exchange rate fluctuation. consumer mobility. • Market demand rate. • Meet competition and competitive practices. • Meet differences in the product life cycle. • Meet legal and political restriction.
PLACE• Transfer of experience and • Meet different development stage and efficiency. consumer buying behavior patterns.• Economies of scale. • Meet differences in the physical environment. • Number and size of intermediaries involved. • Meet market size requirements. • Specialization among channels of distribution. • Differences in distribution structures and patterns. • Meet legal, political and technological restriction. • Difference in logistical decisions. • Difference in the product lifecycle. • Meets competition and competitive products.
PROMOTION• Economies of scale. • Meet differences in the physical• Consumer mobility and environment. consistency with customer. • Meet legal and political restrictions,• Create world-wide uniformity. • Meet development stage differences.• Synergetic effects. • Meet exchange rate fluctuation.• Psychological meaning. • Market demand rate. • Meet competition and competitive practices. • Meet differences in the product life cycle. • Meet legal and political restriction.
PEOPLE, PROCESS AND PHYSICAL• Achieve consistency with • Motivate and empower employees. customers. • Allow flexibility in meeting consumer• Offer universal appeal message non-identical needs and and image. requirements.• Achieve a strong corporate • Meet local competitive practices. identity.• Allow better identification by customer.
Reasons for adapting and their level ofImportance UKhttp://www.businessperspectives.org/journals_free/im/2007/im_en_2007_04_Vrontis.pdf