The Product Lifecycle and the Marketing Strategy

Transcription

1 The Product Lifecycle and the Marketing Strategy Enterprise & Project Management Please note that these slides are not intended as a substitute to reading the recommended text for this course.

2 Objectives PLC Promotional Strategy Factors that influence price Implications of pricing 1

3 PLC 2

4 Strategic Considerations During the Product Life Cycle 3

5 Promotion The promotion strategy is the most visible marketing strategy. It is designed to get the attention of prospective customers and convince them to buy from your business. Promotion is communication intended to persuade, inform, or remind a target audience about a business or its products. Inspire desire Initiate action The promotion strategy involves planning, determining the right promotional mix, and selecting specific promotional activities. 4

6 Five Promotional Mix Elements Advertising Personal selling (sales) Public relations and publicity Sales promotion / Merchandising 5

7 Promotion Types Above-the-line promotion Purchasing communication with the consumer AKA advertising Below-the-line promotion Short-term incentives to encourage consumers to purchase the product Above-the-line Below-the-line Promotions that are visual & auditory TV Ads, billboards, radio, print ads Promotions that are tactile Samples, coupons, loyalty programs, games, price deals 6

8 Push / Pull Marketing 7

9 The Promotional Mix 8

10 PLC and Promotional Co-ordination PR X X Advertising X X X Direct Marketing X X X Personal Selling X X X X Sales Promotion X X 9

11 Marketing Strategies: Introduction Stage Product Offer a basic product Price Use cost-plus basis to set Distribution Build selective distribution Advertising Build awareness among early adopters and dealers/resellers Sales Promotion Heavy expenditures to create trial 10

12 Marketing Strategies: Growth Stage Product Offer product extensions, service, warranty Price Penetration pricing Distribution Build intensive distribution Advertising Build awareness and interest in the mass market Sales Promotion Reduce expenditures to take advantage of consumer demand 11

13 Marketing Strategies: Maturity Stage Product Diversify brand and models Price Set to match or beat competition Distribution Build more intensive distribution Advertising Stress brand differences and benefits Sales Promotion Increase to encourage brand switching 12

14 Marketing Strategies: Decline Stage Product Phase out weak items Price Cut price Distribution Use selective distribution: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyalists Sales Promotion Reduce to minimal level 13

15 Marketing Coordination Analysis of communication needs Review and revise promotional tool Selection of promotion tools Control, comparing results against objectives Integration into marketing communications Implementation of promotional campaign 14

16 Key Components of the Price-Setting Decision Process No easy formula for pricing industrial product or service Decision is multidimensional Each interactive variable assumes significance Set Strategic Pricing Objectives Estimate Demand and the Price Elasticity of Demand Determine Costs and their Relationship to Volume Examine Competitors Prices and Strategies Set the Price Level 15

17 Pricing decisions are influenced by various factors Cost of the Product Economic Conditions Company Objectives Customer needs & Characteristics Pricing Policy & Decisions Competition 16

18 Elasticity of Demand Elastic Demand Consumers buy more or less of a product when the price changes Inelastic Demand An increase or decrease in price will not significantly affect demand 17

19 Pricing decisions from a company perspective 18

20 PLACE How should products pass from the manufacturer to the final customer? Channel of distribution: the chain of intermediaries a product passes through from producer to final consumer 19

21 Distribution Channel is Important Consumers need easy access to the firm s product where they can see it, touch it, buy it, return it. Manufacturers need distribution that provides a wide market coverage. Retailers need to mark-up the product to cover the costs of sales. 20

22 Direct Selling Manufacturer to Consumer Product/Service Manufacturer Consumer 21

23 Single-Intermediary Channel Manufacturer to a Retailer to a Customer Manufacturer Retailer Consumer 22

24 Two-Intermediary Channel Manufacturer to Wholesaler to Retailer to a Customer Manufacturer Warehouse Retailer Consumer 23