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Developing marketing strategies
Factors affecting marketing strategy
(a) Product life cycle stage
- marketing strategy must be adapted to
the product stage in its life cycle
(introduction, growth, maturity, or decline)
(b) Company’s competitive position in the
market
- whether the company is a leader,
challenger, follower, or nicher
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Stages of product life cycle
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Introduction
- period of slow growth of sales as the
product is introduced in the market
- Profits are low because of heavy
expenses of product introduction
Growth
- a period of rapid increase in sales
- substantial profit
Stages of product life cycle
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Maturity
- a period of slowdown in sales growth because the
product has achieved by most of the potential buyers
- Profits stabilize or decline because of increased
marketing outlays to defend the product against
competition
Decline
- the period when sales show a strong downward
drift
- profits erode
Marketing strategy in the introduction
stage
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Rapid-skimming strategy
- launching the new product at a high price
and a high promotional level
Market conditions
- large part of the potential market is
unaware of the product
- those who become aware are eager to have
the product and able to pay the asking price
- the firm faces potential competition and
wants to build up brand preference.
Marketing strategy in the
introduction stage
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Slow-skimming strategy
- launching the new product at high price and
low promotion
Market conditions
- the market is limited in size
- most of the market is aware of the product
- buyers are willing to pay a higher price
- potential competition is not imminent
Marketing strategy in the
introduction stage
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Rapid-penetration strategy
- launching the product at a low price and
spending heavily on promotion
Market conditions
- the market is large
- the market is unaware about the product
- most buyers are price sensitive
- strong potential competition
Marketing strategy in the
introduction stage
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Slow-penetration strategy
- launching the new product at a low price
and low level of promotion
Market conditions
- market is large
- market is highly aware about the product
- demand is price sensitive
- there is some potential competition
Marketing strategies in the growth
stage
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The firm improves product quality and
adds new product features
It enters into new market segments
It enters in new distribution channels
Advertising focus shifts from building
product awareness to bringing about
product purchase
Marketing strategies in the maturity
stage
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Market modification
- expand the market for its product by
working with the two factors that make
sales volume
sales volume = number of users x
usage rate per user
Marketing strategies in the
maturity stage
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The company can try to expand the number of
product users through
- convert nonusers
- enter new market segment
- win competitors’ customers
Volume can also be increased by getting current
users to increase their usage of the product
- gap between recommended dose and present use
- extension strategy
Marketing strategies in the
maturity stage
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Product modification
- modifying the product characteristics in a
way that will attract new users and/or more
usage from current users
- quality improvement to increase the
functional performance of the product
- feature improvement aims at adding new
features (size, accessories) that expand
product convenience
Marketing strategies in the
maturity stage
Marketing-mix modifications
(a) Prices
- would a price cut attract new users?
- if so, should the list price be lowered
or should price be lowered through
price specials, early purchase
discount, volume related discounts or
easier credit terms
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Marketing strategies in the
maturity stage
(b) Distribution
- exploring new distribution channel
(c) Advertising
- changing advertising message, timing,
frequency
(d) Sales promotion
- step up sales promotion through
rebates, gifts, and contests
Stages of product life cycle
Characteristics
Introduction
Growth
Maturity
Decline
Sales
Low
Rapidly rising
Peak
Declining
Costs per
customer
High
Average
Low
Low
Profits
Negative or
low
Rising
High
Declining
Customers
Innovators
Early adopters
Middle
majority
Laggards
Competitors
Few
Growing
Stable
Decline
Stages of product life cycle
Marketing
Objectives
Introduction
Growth
Maturity
Decline
Product
awareness
Maximize
market
share
Maximize
profit while
defending
market
share
Reduce
expenditure
and milk
the brand
Stages of product life cycle
Strategies
Introduction
Growth
Maturity
Decline
Product
Offer a basic
product
Offer product
extensions
Diversify
brands
Phase out
weak items
Price
Use cost plus
Price to
penetrate
market
Price to match
best
competitor
Cut price
Distribution
Selective
Intensive
More intensive
Phase loss
making outlets
Advertising
Build Product
awareness
among early
adopters
Build
awareness
among the
mass market
Stress brand
Reduce
differences and
benefits
Sales
Promotion
Use heavy
sales
promotion
Reduce to take
advantage of
consumer
demand
Increase to
encourage
brand
switching
Reduce to
minimum level