THE PRODUCT LIFE CYCLE.

Size: px

Start display at page:

Download "THE PRODUCT LIFE CYCLE."

Lizbeth Lane
5 years ago
Views:

1 THE PRODUCT LIFE CYCLE

2 BCG MATRIX High Market growth rate Star (Matches growth on PLC) Cash cow Matches Maturity on PLC) Question Mark (or Problem child) Matches introduction on PLC) Dog Matches Decline on PLC) Low High Market Share Low

3 QUESTION MARK High market growth rate Low market share If market market looks good, build strategy is best If market is not good, withdraw the product Lot of of promotion needed.

4 STAR Market growth rate High Market share Potential to have high earning Substantial marketing expenditure as part of maintain strategy

5 CASH COW High market share High market growth rate Well established product If market is good, holding strategy is best If market is bad, harvest strategy is best

6 DOG Low market share Low market growth rate Diversification strategy unless if cash flow position is strong Harvest strategy if cash flow is bad

7 THE PRODUCT LIFE CYCLE Introduction stage Growth stage Maturity stage Decline stage Complete the activity on the PLC in your guide (pp 107)

8 SECTION 4 Pricing Decisions

9 INTRODUCTION Traditionally, prices for most products were set by buyers and sellers negotiating with each other. But mass-marketing techniques of the 20 th century created (mass) consumer markets, where prices were mainly predetermined by the marketer with no room for negotiation with consumers

10 IMPORTANCE OF PRICING DECISIONS IN A MARKETING STRATEGY In marketing, we say that the price that companies charge for their products or services is usually the most controllable and flexible element of the marketing mix. Price plays a role in creating customer value and building customer relationships Price has the power to differentiate and position products/services in the consumer s mind.

11 WHAT IS PRICE Price is the sum of value that consumers exchange for the benefits of having or using a product or service (Kotler and Armstrong, 2016:324). Price is what is given up in an exchange to acquire a product or service. Price can relate to anything with perceived value, not just money (Lamb et al, 2015:458)

12 STEPS IN SETTING A BASE PRICE 1. Establish price objectives 2. Estimate demand, costs and profits 3. Choose a price strategy Price skimming Penetration pricing Status quo pricing 4. Tactics for fine-tuning the base price Answer the questions in your guide that are based on Tesla s marketing strategy

13 PRICING STRATEGIES Price skimming Relatively high prices are charged in relation to competitive products or brands. Usually common on new products perceived by the target market to have unique advantages.

14 WHEN IS PRICE SKIMMING USED? Demand is price inelastic (Not price sensitive) Few potential competitors exist Prices are used as the bases to segment the market Costs and demand are unknown Consumers know little about the market or product. Quick recovery of investment is required.

15 PRICING STRATEGIES Penetration pricing It is when a relatively low price is charged (opposite of price skimming). It is used when: Price elasticity of demand is relatively high (price sensitive) Companies can save on production costs due to higher production volume. The market cannot and will not accept high prices Strong possibility of competition exist

16 PRICING STRATEGIES Status Quo pricing It involves meeting the competition s pricing, y charging the same price or nearly the same price as the competition (Lamb et al, 2015:458) Advantage Simplicity Disadvantage May ignore demand or costs or both Safest of the 3 basic pricing strategies

17 TACTICS FOR FINE TUNING THE BASE PRICE Tactics include: Various types of discounts Geographic pricing Special pricing tactics

18 PRICING STRATEGIES IN BUSINESS MARKETS Negotiating in business markets Price negotiation in business markets Collect data Organise facts and assumptions Prioritise issues Establish settlement ranges Determine bargaining methods Select a starting point Decide on tactics Remember to complete the activity in your guide

19 VIDEO: KOTLER ON PRICING

20 SECTION 5 Distribution channels

21 PURPOSE AND CONTENT OF A MARKETING PLAN Through strategic planning, the company decides what it wants to do with each business unit Marketing planning (in turn) involves choosing marketing strategies that will help the company attain its overall strategic objectives A detailed marketing plan would eventually be developed for each business, product, or brand

22 MAJOR ELEMENTS OF A MARKETING PLAN A marketing plan involves the design and implementation of activities related to the marketing objectives of the company as part of its overall strategic objectives It becomes the guide (or roadmap) for all marketing activities, covering all the sections discussed in this module and more As a written document, the marketing plan contains several strategic elements that cut across departments and functions, also involving a range of cross-functional personnel in a company

23 MAJOR ELEMENTS OF A MARKETING PLAN

Company and Marketing Strategy: Partnering to Build Customer Relationships. Chapter 2

Company and Marketing Strategy: Partnering to Build Customer Relationships Chapter 2 Strategic planning is defined as: The process of developing and maintaining a strategic fit between the organization