Each product will have a life-cycle, even though its exact shape and length is not known in advance. Explain, in detail, each step in the Product Life Cycle. What evidence can you find, if any, to determine which stage is considered the most critical?
Product life-cycle has the following five stages according to Leong (2006).
Product Development – In this stage the company develops the product idea. The investment is high, and the profits are negative because there are no sales.
Introduction – This is the point where the initial version of the product is launched in the market, prices are set and a basic promotion and distribution strategy is outlined. The idea is to set an individual identity of the product and this stage has a high investment due to the various trials conducted to achieve an optimum strategy.
Growth – This stage sees the emergence of competitors in the market for the product and hence concentrates on increasing the brand value and hence the sales. This stage also sees the highest rates of increase in profits.
Maturity – In this stage the product and hence the company has reached a market leader status and hence the profits are the highest. The competition begins to decline and sales volume is steady. The customers by this time are loyal to the product.
Decline – In this stage the company decides to cut back on the profit margins and excess expenditure on the product’s distribution and advertisement. The target of the company is also to phase out the weaker segments of the product. The reasons for a decline might be the economic conditions, changing trends etc.
The critical stage amongst all these is the Growth stage. This is because by this stage the product has already been introduced in the market and has seen the response pattern. Based on this an increase in sales and hence profits can be affected in this stage which would bring back the investment costs. Also the brand value is created at this stage which is helpful to the company’s image long after the product’s life cycle.
When setting prices, a company must consider its external environment. Describe the four parts of the external environment and how they affect businesses. What conclusions can you draw about the effect of the external environment on current fuel prices?
The four parts of the external environment are the Customers, Suppliers, Competitors and technology. For some critical products a fifth component regulatory bodies also come in picture. These components affect the business in terms of pricing, marketing strategy, sales promotions, and services.
Customers are the primary factors because they are the ultimate target focus for the company. All the marketing process is in fact a process to lure the customers in to buying their products. The suppliers affect the pricing of the products as well as the quality. Many of the bigger companies follow strict policies regarding the selection of the vendors. Competitors are the major factors that act as incentives for the company to give their products to the customers at the best prices and the maximum features. They act as indirect regulators of the market. Technology in present times is becoming one of the most important factors of a company’s external environment. For instance many companies are seen to lose considerable market share because of them being not cognizant to the possible reach of the internet. Hence, companies are trying to become abreast with the technology. As is said earlier, the product market has regulatory bodies which counter negative affects like predatory pricing in certain product sections.
The fuel prices are most affected by the suppliers and the policies made by the domestic as well as the international regulatory crisis. The petrol price crisis in the US is the most pertinent example of what can go wrong when there are no regulatory bodies to look into the prices.
Price is one of the most flexible elements of the marketing mix, and yet, pricing and price competition account for the number-one problem facing many marketing executives. Explain why many companies do not handle pricing well. How would you improve upon these pricing mistakes?
The problem while deciding the prices by companies is the obvious temptation of making the maximum profits out of the product. It is not an easy task to set up the right prices for a product chiefly because of the many factors that affect the product pricing.
One main reasons for failure of the company to put correct prices is their failure to estimate product’s reach . While the product might be targeted to a section of the customer, there are internal factors like the intermediaries involved and the customer’s tendency to look for discount offers, which affect the product price even after an analysis is made with regards to the product environment.
Another factor is the balance between the economic status of the customers and the brand equity of the product. While it is a common knowledge that pricing a product too high would lose on the customers, and too low would hamper the brand equity, translating these into numerical figures is not an easy task. Also the company cannot frequently alter prices after a product is already launched into the market.
Pricing mistakes can be solved by a host of methods even after they have been launched. The most popular ways this is done is by clubbing the products with other products, offers bulk or seasonal discounts, offering loyalty program benefits and giving smaller versions of the products at a reduced rate
Explain how companies select, motivate, and evaluate channel members. In your opinion, which of these three components require the most time and effort? Why?
The companies need channel members for making an effective distribution system. The selection of these channel members is primarily based on their reach to the various areas. It is always preferable to have a single large channel partner, though multiple channel partners too are gaining popularity in recent times. The motivation of these channel members is of chief importance because these are the ultimate contact points with the customer, and hence companies pay special attention to maintaining long relations with these members. In addition, this also helps in building a smoother marketing system for the products. Finally, no system is complete without evaluations. The companies periodically evaluate their channel members which not only gives them an idea about the efficiency of the channel members but also the consumption rate in the particular regions.
As is already written above, the most important component of the three is the motivation. This is because the channel members are an extension to the company and have to perform as well as the company so that product is efficiently marketed.
Discuss the reasons Target is able to compete against Wal-Mart. What do you think would happen if these two industry giants replaced their respective positioning statements with `something for everyone’?
Target is considered to be one of the major competitors of Wal-Mart. It is also one of the most successful ones. Target primarily concentrates on making shopping a pleasant and different experience as against the blandness of Wal-Mart. Target’s focus customer base is the upperscale segment of the discount niche and gives them lower priced products with better quality and better service. Alix Partners (2006) give the following areas where Target has managed to be significantly better than Wal-Mart:
Product – Target has managed to capture the upper ended mass-discount market segment from Wal-Mart by offering products that are stylish and marginally higher priced than Wal-Mart. The aggressive marketing has ensured that the brand equity is very high in this segment.
Access – Target’s malls’ interiors are designed so that the customers have easy access to the products as against Wal-Mart who concentrates on getting the maximum number of customers inside their malls. This many a times ensure higher value purchases by the customers.
Service – While Target’s customer service is rated as pretty average, it scores higher than Wal-Mart due to the latter’s extremely low quality of customer service. Wal-Mart has been getting a lot of flak in this area which has benefitted its competitors by taking away much of its customer base.
Experience – Target’s designs and product value has made shopping a quality experience which is one of the main reasons for its success as against Wal-Mart.
If these two shopping giants were to replace their statements with ‘something for everyone’, the results would be bad for both of them. This is because the economic divide that exists in the society which has led to multiple versions of the same products. Stocking everything is virtually impossible, and this also takes away from their niche statements, which give them individuality. The shops too would be difficult to maintain.
Compare and contrast shopping centers types. If you were in charge of deciding which type of shopping center to construct in a given location, what facts would you compile to help make your decision?
According to Tubridy’s definitions from the ICSC (2004), the various shopping malls can be classified as below:
Mall – This type of shopping center is usually enclosed, climate-controlled and lighted. It is usually flanked on one or both sides by storefronts and entrances. This type can be further sub-divided based on their sizes as below:
Regional Center – This type of mall provides general merchandise, usually apparels, with multiple stores from different brands and even common non-branded sections. The mall has a common walkway which connects the various outlets. The parking of the center is usually around the mall.
Super-regional center – This type is similar to regional malls except that it is much larger in size and hence caters to a larger population base. It has multi-levels and the parking may be architecture within the building because of its huge size.
Open Air Centers – In this type of shopping centers, different stores are connected within a common premise but is not completely enclosed or and may not even be interconnected. It can be sub-divided as below:
Neighborhood Centers – These types of shopping centers provide the items needed for daily use by people in the neighborhood.
Community Centers – The type of apparel or goods provided here are more in quantity and variety than the neighborhood centers for instance the super markets, super drugstores and the different discount stores.
Power Centers – These types of shopping centers combine centers like the discount stores warehouse clubs etc.
Theme/Festival Centers – These types of shopping show is common theme running throughout the entire wares provided by the various good and service outlets inside the center. These are primarily targeted towards the tourists.
Outlet Centers – These types of centers are typically the manufacturers’ outlets which provide the goods at a discount rate.
Lifestyle centers – These types of centers are meant for luxurious neighborhoods and target the needs of people for an entire range of shopping cum entertainment necessities. The size of premise is huge and they act as multipurpose leisure-time destination to people.
Hybrid Centers – These centers combine features of malls and open-air centers. Some examples are entertainment-retail centers, megaplex movie theatres etc.
Apart from these types there are some other types of centers like the convenience stores and super-off-price malls which are aimed at a niche market rather than the needs of people in a complete region.
While selecting the type of shopping center to be constructed in a particular location, the most important factors that should be considered are the economic power of the people that is being targeted and the population of people in the neighborhood where the shopping center is to be constructed. The first factor would define the type of items that the people of the neighborhood would be interested in while the second factor would determine the size and hence the quantity of items to be kept by the shopping centers.
Elaborate on the major steps involved in media selection. If you were launching a new soft drink, how would you select the media that would most benefit your product?
According to Leong (2006) following are the four major steps involved in media selection for the product promotion:
Deciding on reach, frequency and impact – In this step, the marketing group splits its target market according to the different strategies which are to be taken to approach them for getting the maximum impact. For instance the section of the target market that would be the most avid purchasers would be targeted first with repeated advertisements and luring offers.
Choice of media type – The type of media like the radio, television, print media for advertising the product is selected at this stage. The choice would be made based on a comparison of costs, impact and reach.
Selecting the sub-categories in the chosen media – The sub-categories denote the specific type of the media that would be used. For instance a favorable place to advertise financial products is the finance magazines and periodicals.
Deciding on the timing of the promotion through the media – This is an extremely important step of media selection especially when the products are related to seasonal purchases. For instance many of the products are targeted to be introduced at the festive season when the purchases by customers are maximum.
For launching a soft drink the choice for the most preferable media would be based on the type which is reachable to the maximum number of people including the teens and pre-teens because the customers here is practically everyone. The media hence would have to be chosen which reaches the maximum number of people so that they are aware that a new soft drink is in the market.
Marketing management must make four important decisions when developing an advertising program. Describe the process. Which component would you categorize as being the most crucial in developing a winning advertising program? Why?
According to Kotler and Armstrong (2006), the four important decisions taken by the marketing managers to develop successful advertising programs are
To set the advertising objectives – While setting the objectives, the marketing manager should take care of the target customer base to be reached and the sales target needed. This decides the input for the other stages.
To set the advertising budget – While making the budget the marketing managers takes in account the recovery, and the media and frequency that would help in achieving this at the fastest possible time
To develop an advertising strategy – Strategy is one of the most important components of the strategy because here the managers lays out the entire marketing plan albeit in brief, which would help in gaining and retaining the customers.
To evaluate advertising campaigns – Advertising campaign evaluations are a necessary part because they help in charting out the effectiveness and ineffectiveness of a particular strategy so that it can be reused or discarded.
The most important part of the four decisions is the development of the strategy because here the frequency, mode and the type of advertisements are decided upon. It is very easy to go wrong at this stage even when the budget and media has been rightly chosen and the objectives have been clearly defined.
Discuss the causes which led to Disneyland Paris to be a flop. Describe the actions Disneyland Paris took to remedy the situation. Do you agree with these remedies? Why or why not? Can you suggest additional actions Disneyland Paris could have used to improve its acceptance?
Disneyland Paris faced multiple problems right from its start. There were multiple problems, most of while originated from the culture differences between the US and Europe. The major mistake was considering that both of them have similar choices and beliefs. This led to problems on both the labor as well as the vendor front. Another major cause of the problem was the alienations of the Paris media, which was very hostile to theme park, labeling it as an attempt to Americanize the people of Paris. The theme park owners have miscalculated the affect of such comments on the public.
There were major attempt to woo all these segments in the restructuring plans. The workers were given additional benefits and a lesser work load to deal with. The vendors were taken into confidence. A major attempt was made to woo the Paris media, so that there would be less of a hostility. French language was given major importance as was the introduction of French culture related shows in the theme park.
The measure were taken were good, but came too late in the day. Many of the people already were dead against the theme park and the task was hence uphill all the way.
Describe the two advantages of an idea management system for developing new products and offer five strategies a company might use to accomplish a successful system. Rank the five strategies, based on your opinion as to which would be the most to least effective, and justify your ranking.
An idea management system, as the name suggests is a way to give creative inputs to the product and service development by a company. The major advantages of such as system are to give an access to the past innovations so that newer ideas could be build up on this, and also inculcate a spirit of innovation in the company.
A company can use the following strategies to successfully develop a system:
Use a common database system which is accessible to all
Have regular interaction sessions with people to check the feasibilities of certain ideas
Encourage people by additional incentives if they come up with good ideas
Share the ideas on a common platform by fellow companies who might add their own inputs
Have experts in the field analyze a particular idea before it is incorporated
Kotler P, Armstrong G, (2006), Principle of Marketing, Pearson Publishing
Tubridy M, (2004), ICSC Shopping center Definitions,
http://www.icsc.org/srch/about/impactofshoppingcenters/03_Definitions.pdf, Article accessed on 30th October 2007.
Alix Partners, (2006), How to beat Wal-Mart at your own game,
(http://www.alixpartners.com/en/portals/3/images/Wal-Mart.Study.pdf, Article accessed on 30th October 2007
Leong JW, (2006), Marketing Final Review, 31st may 2006,
http://people.ucsc.edu/~jowleong/Josh’s%20marketing%20final%20review.ppt, Article accessed on 30th October 2007