plc and strategies

7/26/2019 PLC and Strategies

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Strategies for Different Stages

of Product Life Cycle

Strategic MarketingManagement


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The Introduction Stage


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Introduction Stage

There are few or no competitors of importance.

Profits are negligible due to high production cost, R&D, andmarketing costs.

s a general rule, pricing is set high to attempt to reco!er thesecosts of introduction. "ut as we will see, this in not alwa#s so.

During the introduction stage there is a certain amount of

bu#ers inertia.

$ustomers must be con!inced to %tr# the product. Strateg#re'uires a particular emphasis on promotion, and thusmarketing costs are high.


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Introduction Stage (Contd.)

(n this stage manufacturing has an o!er ) capacit#.

Production runs tend to be short, and there is a high )

skill labor content that contributes to the highproduction costs.

There ma# be some attempt at e*port in this stage, but

usuall# such efforts are limited.

$hannels of distribution are probabl# limited due tothe limited resources a!ailable, and thus the first

channels opened are selected !er# carefull#.


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Introduction Stage (Strategies)

(n the introduction stage our basic purpose is toestablish market shareand persuade the earl#adoptersbu# our product.

+or lectronics & -adgetr# To establish share andpersuade earl# adopters to bu#, R&D andengineering are ke# functions.

/arious combinations and use of product price,promotion, and distribution !ariables are alluseful. .


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Introduction Stage (Strategies)

The newer the class of product, the harder it ma# be to get itaccepted.

The more comple* the product, the slower the acceptance.e.g. personal home computers.

n!irons can0 of course, slow down the introductor# stagee.g. Maggi 1oodles, utomobiles.

clear and significant competiti!e differential ad!antageo!er older products can shorten the introduction stage. Thismeans either superior 'ualit# or significantl# lower prices.(n general, the higher the cost of the product, the larger this

ad!antage must be.


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Four Introductory Marketing Strategies

Rapid-skimmingstrategy

Rapid-skimmingstrategy

Rapid-penetrationstrategy

Rapid-penetrationstrategy

Slow-penetrationstrategy

Slow-penetrationstrategy

Slow-skimmingstrategy

Slow-skimmingstrategy

Pric

e

Low

High

PromotionHigh Low


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THE PRICE QUALITY RELATIONSHIPTHE NINE PRICE/QUALITY STRATEGIES

PRICE

LOW MEDIUM HIGH

LOW Cheap value

strategy

Out of step

strategy

Exploitative

strategy

PRODUCT

QUALITY MEDIUM Above average

strategyMiddle of theroad strategy

Overchargingstrategy

HIGH Superb valuestrategy

High valuestrategy

Premium strategy


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CONSUMERS AN THEIR RESPONSE PATTERNS

the unique value effect:

the more distincti!e aproduct is, the less price sensiti!e bu#ers become0

the substitute awareness effect:the more

aware consumers become of substitutes, thegreater their price sensiti!it#0

the difficult comparison effect:the moredifficult it is to make direct comparisons betweenproducts, the less price sensiti!e the# are likel# to

be0


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the end benefit effect:as percei!ed benefitincreases, so price sensiti!it# reduces0

the sunk investment effect:when theproduct is used in association with products

bought pre!iousl#, price sensiti!it# is reduced0

the shared cost effect:price sensiti!it# isreduced when the costs are shared with one ormore other parties0


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the price-quality effect:the greater thedegree of percei!ed 'ualit# or e*clusi!eness,the lower the price sensiti!it#0

the inventory effect:when the productcannot be stored and consumption takes placeimmediatel#, price sensiti!it# again reduces.

the total expenditure effect:the lower thee*penditure is as a proportion of their totalincome, the lower the degree of pricesensiti!it#0

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