MARKETINGMANAGEMENT Question 1: What is product life cycle Choose a case in international marketing and discuss the same Answer: Any new product passes through set of stages known as product life cycle Product life cycle applies to both brand and category of products Its time period vary from product to product Modern product life cycles are becoming shorter and shorter as products in mature stages are being renewed by market segmentation and product differentiation Companies always attempt to maximize the profit and revenues over the entire life cycle of a product In order to achieving the desired level of profit, the introduction of the new product at the proper time is crucial If new product is appealing to consumer and no stiff competition is out there, company can charge high prices and earn high profits There are differing stages of the Product Life Cycle Introduction: The need for immediate profit is not a pressure The product is promoted to create awareness If the product has no or few competitors, a skimming price strategy is employed Limited numbers of product are available in few channels of distribution Growth: Competitors are attracted into the market with very similar offerings Products become more profitable and companies form alliances, joint ventures and take each other over Advertising spend is high and focuses upon building brand Market share tends to stabilize Maturity: Those products that survive the earlier stages tend to spend longest in this phase Sales grow at a decreasing rate and then stabilize Producers attempt to differentiate products and brands are key to this Price wars and intense competition occur At this point the market reaches saturation Producers begin to leave the market due to poor margins A promotion becomes more widespread and uses a greater variety of media Decline: At this point there is a downturn in the market For example more innovative products are introduced or consumer tastes have changed There is intense price-cutting and many more products are withdrawn from the market Profits can be improved by reducing marketing spend and cost cutting PLC Case analysis for Apple production The Apple PLC (product life cycles) indicates just how big the iPhone and the iPad will be over the next few years It took the iPod five years to break the thirty million units per annum mark The iPhone got there in four and the iPad will make it in year two of launch As for the Sony Walkman it never made it, it took over ten years to top out, the iPod topped out within eight years of launch Apple products Life Cycles are moving faster and higher sooner than ever before iPod sales may have peaked in 2008 at just under 55 million units and may fall to around 45 million units this year but the iPhone is set to sell just under 70 million units and the iPad is chasing fast behind It all adds up to an exciting phase of growth for Apple over the next four years with revenues set to rise over $100 billion in 2011 Students of corporate strategy and business theory are familiar with the concept of the Product Life Cycle Generally the life cycle is perceived to have four specific stages, introduction, growth, maturity and decline generally plotted with volumes a function of time In the introduction phase, costs are high, sales volumes are slow, there may be little or no competition and customers have to be stimulated to action Profits are limited and the product is cash extensive as marketing costs are substantial Key customers tend to be innovators and early adopters In the growth phase, unit costs are reduced as volumes increase, advertising is amortised over greater volume, market awareness increases beyond the early adopters, to the “early majority”, competition increases with more competitors entering the market and price levels may begin to fall Profits increase but the product remains cash extensive as greater investment in marketing or working capital is required In the maturity stage, costs are lowered further as volumes have increased, the market becomes more competitive and alternative products begin to date the initial product offering The product remains profitable and begins to generate cash The innovators, early adopters and early majority are joined by the “late majority” In the saturation and decline phase, sales volumes decline, profits margins are maintained and the product becomes remains cash generative The laggards and luddites still not enter the market Either way for Apple, four years of strong growth are evident from products already in the line up, both the iPhone and the iPad are set to hit the one hundred million units per annum mark in 2012 and 2014 Despite the march of the Androids, the Apple growth story will continue Question 2: Marketing research is the key to the success of a company Discuss the above statement, keeping in view of an example of the recent past where application of market research helped in formulating the right marketing stratergy Answer: A close study of market is required because the business has become risky and uncertain For running the business, it has to be ascertained what the customers want? How many consumers are ready to buy the products and at what price? What is the extent of competition? What changes are required in the products and through which channels they are to be distributed? All this information is gathered through marketing research Market research is conducted for the introduction of the product, for any improvement in the existing product, to know the strategies of the rival firms, to know the behavior of the consumers Thus, market research helps to get the information about the customers, competitors and other marketing activities Marketing is concerned with identifying and fulfilling customer needs and wants The unfulfilled wants should first be identified and translated into technically and economically feasible product ideas, which then should be marketed to the customers But mere identification of customer wants is not enough Marketing requires continuous effort to improve the existing product, increase sales and beat the competition For this, it is important to know who the customers are for our products (whether housewives, teenagers, children), what their socio-economic profile is (in terms of income, education, cultural, religious and professional background) and where they are concentrated in terms of location Besides this information, it is also important for you to know the process by which a prospective customer arrives at a decision to buy your product The study of consumers and their purchase behavior is so important that there is a separate, special body of knowledge known as consumer behavior The second area which is of direct concern for MR is product and product design MR is helpful in determining the final design of the product and its physical attributes of color, size, shape, packaging, and brand name It is useful in arriving at the right combination of product mix, the number of variations of the, basic product, accessories and attachment It can also help decide the quantities to be produced according to the projected demand estimates, MR can also be used to gauge customer reactions to different prices Marketing research helps in discovering what types of distribution channels and retain outlets are most profitable for your product On the basis of comparative information for different channels and different types of outlets you can choose the combination most suitable for your product Distributor, stockiest, wholesaler, retailer may represent one kind of distribution channel in contrast to another in which you may use only the distributor and retailer Marketing research reveals that one of the reasons for this low sales performance is the poor after sales service provided by the distributor In a high value, durable product such as refrigerator, the quality of after sales service is an important factor influencing the customers' purchase decision regarding the specific brand to buy The firm decides to away with the distributor and instead opens its own branch office The new distribution channel comprising branch office and retailers is operationally more expensive, but the company can now control the quality of after sales service as well as the other marketing inputs The result is improved sales and the incremental cost associated with the new distribution network is justified Most companies provide advertising support for their products In some cases, the amount spent on advertising may be small, while in others, it may run into crores of rupees Irrespective of the actual amount spent on advertising, each firm would like to maximize the return on every rupee that it spends Marketing research can help the firm to this Research can provide information on the most cost-effective media help determine the advertising budget Measure the effectiveness of specific advertisements; advertising campaigns and the entire advertising strategy Research also provides information on the size and type of audiences for different advertising media channels This information can be used to refine the advertising strategy to make it more relevant and sharply focused Advertising research is also useful in determining customer perceptions, about the image of specific branches and companies