CRAFTING THE BRAND POSTIONING
DEVELPOPING AND COMMUNICATION STRATEGY:
Marketing strategies built on segmentation, targeting and positioning. A company discovers different need and group in the marketplaces, target those need and group that it can satisfy in a superior way & then positions its offering so that the target market recognizes company’s distinctive offering and images.
Positioning is act of designing the company’s offering and images to occupy distinctive places in the mind of target market. The goal is to locate the brand positioning in the mind of consumer to maximize the potential benefit to the firm.
E.g.: Domino’s pizza, targeted at convince- minded pizza lovers, offer the benefit of delivery speed and good quality and its value proposition is a good hot pizza, delivered to your door within 30 minutes of ordering at a moderate prices.
• Competitive frames of references:
The defining competitive frames of references for a brand positioning is to determine category membership – the products or set of products with which a brand competes and which function as close to substitute. It includes to resources, capabilities, and likely intentions of various other firms. Target market decisions are key determinants of the competitive frames of references. It can defines the nature of competition because certain firms have decided to target that segments in the past or consumer in that segments already may look to certain brands in their purchase decisions.
• Points of differences: (PODs)
PODs are attributes or benefits to the consumers strongly associate with a brand, positively evaluate and believe that they could not find to the same extent with competitive brand. PODs may be based on virtually any type of attributes or benefits.
E.g.: FedEx (guaranteed overnight delivery), Nike (performance), Lexus (quality).
Creating strong, favorable, unique associations as PODs is a real challenges, but essential in terms of competitive brand positioning.
• Points of parity ( POPs):
POPs are not necessarily unique brand but may in fact be shared with other brands. This type of associations comes in two basic forms: category and competitive. Category POPs are association’s consumer view as essentials to be legitimate and credible offering within certain product or service in a category. They represent necessary – but not necessarily sufficient condition for brand choice. It may changes over times due to technological advances, legal developments or consumer trends.
ESTABLISHING CATEGORY MEMBERSHIP:
Marketers must inform to consumers of brand category membership. This uncertainty can be special, problem for high tech products. There are also situation where consumer know a brands category membership, but may not be convinced that the brand is a valid member of the category. This approach is one way to highlight is brands PODs, providing that consumer know the brands actual membership. It is important that consumer know the brand’s actual membership. With this approach, however it’s important to that consumer understands what the brand stand for, and not just what it is not.
There are three main ways to convey a brand category membership:
1). Announcing category benefits: To reassure consumer that brand that a brand will deliver on the fundamental reason for using a category, benefits are frequently used to announce category membership. The support this benefits claims by possessing high quality ingredients or by showing users delighting in its consumption.
2). Comparing to exemplars: Well-known brands in a category can also be used to specify category membership.
3). Relying on the products descriptor: The products descriptor that follows the brand name is often a concise means of conveying category origin.
Choosing POPs and PODs:
POPs are driven by the needs of category membership and the necessity of negating competitors PODs. There are two important consideration are that the consumer find the PODs desirable and that the firm has the capabilities to deliver on the POD
There are three key consumer desirability criteria for PODs
1) Relevance: target consumer must find the PODs personally relevant and important e.g.: The westin stemford hotel in Singapore advertised that it was the world’s tallest hotel, but a hotels height is not important to many customers.
2) Distinctiveness: target consumer must find the POD distinctive and superior. When entering a category where there are established brand, the challenge is to find a viable basis for differentiations.
3) Believability: target consumer must find the POD believable and credible. A brand must offer a compelling reason for choosing it over he other option.
There are three key deliverability criteria:
1) Feasibility: The firm must be able to actually create the POD. The product design and marketing offering must support the desired association. It is obviously easier to convince consumer of some fact about brand that they were unaware of and may have overlooked than to make changes in the products and convince consumer of these changes.
2) Communicability: it is very difficult to create an association that is not consistent with existing consumer knowledge. Consumer must be given a compelling reason and understandable rationale as to why brand can deliver the desired benefit.
3) Sustainability: positioning is likely enduring. Sustainability will depend on internal commitment and use of resources as well as external market forces. It is easier for market leader whose positioning is based in part on demonstrable product performances, (Gillette, Intel, Microsoft) to sustain their positioning than for market leader whose positioning based on fashion.
Marketer must decide at which level to anchor brand PODs. Brand attributes at lowest level after that brand benefits comes, and the top level are the brand values.
CREATING POPs and PODs:
Its is difficult to creating a strong, competitive brand positioning is that many of the attributes or benefit that make up the POPs and PODs are negatively correlated. If consumer rate brand highly on one particular attributes or benefits, they also rate it poorly on another important attributes. There are several problems of negatively correlated POPs and PODs
1) Present separately:
There is negatively correlated attributes and benefit is to launch two different marketing campaigning each one devoted to a different brand attributes or benefits. The consumer will be less critical when judging the POP and POD benefit in isolation.
2) Leverage equity of another entity:
Brand can potentially link to any kind entity that possesses the right kind of equity as a means to establish an attribute or benefits as POP or POD. Branded ingredients may also lend some credibility to attributable in consumer minds. Borrowing equity is not risk less.
3). Redefine the Relationship:
Another potentially powerful but it is difficult to way address the negative relationship is positive. It can be accomplished by providing consumer with a different perspective and suggesting that they may be overlooking or ignoring certain consideration.
Differentiation strategies:
Brand can be differentiated on the basis of many variables. The most compelling ones to relate to aspects of product and service. There are four ways differentiation strategies.
1) Product differentiation:
Brands can be differenced on the basis no. Of different product and service dimension: product form, feature, durability, reliability, style and service dimension are ordering, delivering, customer training, consulting, maintained and repair. It’s the positive correlation between relative product quality and return on investment. High quality of business units earned more premium quality allowed them to charge a premium prices. They benefited from purchase; consumer loyalty, positive word of mouth and the cost of delivering more quality were not much higher than for business producing low quality. Quality is also communicated other marketing elements. Quality images also affected by packing, distribution, advertising, and promotion.
E.g.: A television receiver brand lost its images by continuously promoting the brand through exchange offer and price off promotion.
2) Personal Differentiatation:
Companies can gain a strong competitive advantage to having better
Trained people. Better-trained people have competency, courtesy, credibility,
Reliability. They perform the service consistently and accurate lively responsiveness
They respond quickly to customer requests and problems and communication. They
Make effort to understand the customer and communicate clearly.
E.g. IBM people are professional. The sales forces of eureka Forbes is well trained in
Direct selling.
3) Channel differentiation:
Companies can achieve competitive advantage through way they design
Their distribution channels coverage, expertise and performance.
E.g. Caterpillar success in the construction equipment industries based partly on
Superior channel development.
4) Image differentiation:
Buyer responds differently to company and brand images. Identity and
Images are to be distinguished. Identity is the way a company aim to identify or
Position of the product. Images is the way to public perceive the company or its
Product. It is established product character and value proposition. For the identity
To work, it must be conveyed to communication and brand contact. It should be
Diffused in ads, annual report, catalog, packaging.
Product Life Cylce
Product life cycle is a bell-shaped curve. This curve is divided into four stages:-
1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage
Introduction stage: - Profits are negative or low in this stage. The ratio of promotional expenditure to sales is the highest because there is a need to
• Inform Potential consumers
• Induce product trial
• Secure distribution in retail outlets
Prices tend to be high because costs are high. It is important for the company to decide when to enter the market as being first can be rewarding, but risky and expensive. If a firm comes later it can bring superior technology & quality
Though it is found that the market pioneer gains the most advantage .E.g. Coca-Cola.
The pioneer gets the advantage of economies of scale, technology leadership, patents and other barriers to entry. However, if the product is not positioned properly the pioneers do fail.
There is a difference between an inventor (first to develop patents in a new-product category, a product pioneer (first to develop a working model), and a market pioneer
(First to sell in the new-product category). However, sometimes the later entrants overtake the market pioneer. E.g. Matsushita over Sony in VCRs.
Growth stage: - In this stage the sales climb rapidly. The customers like the product and additional consumers start buying the product. New competition enters after seeing the opportunities which makes way for new product features and expand distribution.
Prices remain where they are or fall slightly depending upon the market demand. Companies maintain their promotional expenditure or even increase it to face competition and educate the market.
The firm uses several strategies to sustain market growth:
• Improves product quality and adds new product features
• Adds new models and flanker product
• Enters new market segment
• Expands its distribution coverage
• Shifts from product-awareness advertising to product-preference advertising
• It reduces the prices to attract new customers
A firm in this stage faces trade-off between high market share and high current profit. It spends money on product improvement, promotion, and distribution and tries to capture a dominant position .It forgoes maximum profit in the hope of making even greater profits in the next stage
Maturity stage:- In this stage the sales growth will slow, and the product will enter a stage of relative maturity. This stage lasts longer than the previous stages, most products are in maturity stage of life cycle and it posses a challenge for the marketing manager to market the product.
The maturity stage can be divided into three phases:
Growth: In this phase the sales growth rate starts to decline. There are no new distribution channels to fill.
Stable: In this phase the sales flatten on a per capita basis because of market saturation. As most consumers have tried the product, and future sales are depend upon population growth and replacement demand.
Decaying maturity: In this phase, the absolute level of sales start to decline, and consumers begin to switching to other products.
The sales slowdown makes the weaker companies to abandon the products and concentrate on more profitable products and on new products. The industry is dominated by few giant firms-mainly a quality leader, a service leader, and a cost leader they serve the industry and make their profits through high volume and lower costs.
Companies can adopt other strategies to increase the sales of its matured product
1. Market Modification : A company tries to expand the market for its mature brand by working with two factors that make up sales volume:
Volume = no. of brand users * usage rate per user
It can expand the number of brand users by converting the nonusers; it can also try to expand the number of brand users by entering new market segments or expand the number of brand users in winning competitors customers. The company can also increase its sales volume by increasing the brand usage. To use the product the on more occasions. Use the product in different ways.
2. Product Modification: Mangers try to stimulate sales by modifying the products characteristics through quality improvement, feature improvement, or style improvement.
Quality Improvement aims at increasing the products functional performance. This strategy is effective to the extent that the quality is improved, buyers accept the claim of improved quality and sufficient numbers of buyers pay for higher quality.
Feature Improvement aims at adding new features that expand the products performance, versatility, safety, or convenience. New features build the company’s image as an innovator and win then loyalty of market segment that value these features.
Style improvement aims at increasing the product esthetic appeal. But style improvement has its set of problems. First, it is difficult to predict whether people and which people will like a new style. Second, a style change requires discontinuing the old style , and the company risks losing customers.
3. Marketing Program Modification : Product managers try to stimulate sales by modifying other marketing program elements by asking following questions
• Prices: Would a price cut attract new buyer? or should prices be lowered through price specials, volume or purchase discounts
• Distribution: Can the company obtain more product support and display in existing outlets? Can more outlets be penetrated? Can the company introduce the product into new distribution channels?
• Advertising: Should advertising expenditure be increased? Should the message or copy be changed? Should the media mix be changed? Should the timing, frequency, or size of ads be changed?
• Sales promotion: Should the company step up sales promotion- trade deals, coupons, rebates, gifts & contests?
• Personal selling: Should the number or quality of salesperson be increased? Can sales-call planning be improved?
• Services: Can the company speed up delivery? Can it extend more technical assistance to customers?
Marketers debate which tools is most effective in the mature stage. Will the company gain more by increasing its advertising or its sales promotion budget? Some marketers believe that brands should be managed as capital assets and supported by advertising. Advertising expenditures should be treated as capital investment.
Decline stage: Sales decline for a number of reasons, including technological advances, shifts in consumer tastes, and increased domestic and foreign competition. Sales may plunge to zero, or they may petrify at a low level. As the sales and profit decline, some firms withdraw from the market. Those remaining reduce the number of products they offer. They may withdraw from smaller market segments and weaker trade channels, and they may cut their promotion budgets and reduce prices further. Unless strong reasons for retention exist, carrying a weak product is very costly to the firm as weak products consume a disproportionate amount of management’s time, instead the company can use the time for healthy products.
A company in declining industries has 5 strategies to choose from:
• Increasing the firm’s investment
• Maintaining the firm’s investment level until the uncertainties about the industry are resolved
• Decreasing the firm’s investment level selectively, by dropping unprofitable customer groups, while strengthening the firm’s investment in lucrative niches.
• Harvesting the firm’s investment to recover cash quickly
• Divesting the business quickly by disposing of its assets as advantageously as possible.
The appropriate strategy depends on the industry’s relative attractiveness and the company’s competitive strength in that industry. A company that is in an attractive industry and has competitive strength should consider strengthening its investment.
Product life cycle: critique
The PLC concept helps marketers interpret product and market dynamics. PLC theory has its share of critics. Critics charge that marketers can seldom tell what stage the product is in. They charge that the PLC pattern is the result of marketing strategies.
Market Evolution : As the PLC focuses on what is happening to a particular product or brand rather than on what is happening to the overall market, it yields a product- oriented picture rather than a market-oriented picture.
Like products markets evolve through 4 stages: Emergence, Growth, Maturity, and decline.
Emergence: Before a market materializes, it exits as a latent market. There is a market for a product if a company can recognize the opportunity and is a market driven firm, it finds the target customers and produces the product as per the preferences of the different customers base. This type of market, in which buyer preferences scatter evenly, is called a diffused-preference market.
The company’s problem is to design an optimal product for this market. It has 3 options
• The new product can be designed to meet the preferences of one of the corners of the market ( a single-niche strategy)
• Two or more products can be simultaneously launched to capture two or more parts of the market ( a multiple-niche strategy)
• The new product can be designed for the middle of the market ( a mass-market strategy)
Growth : If the product sells well, new firms will enter the market, ushering in a market-growth strategy. If the new firm is small it will create a niche for itself, if the firm is large both the company will share the market share
Maturity : Finally, the competitors cover all the major market segmentation and the market enters into maturity stage. Firms go further can invade each others segments, reducing everyone’s profit in the process. As the market splits into finer segments and high market fragmentation occurs. Market fragmentation is often followed by a market consolidation caused by the emergence of a new attribute that has strong appeal.
Decline: Eventually, demand for the present products will begin to decrease, and the market will enter the decline stage. Either society’s total need level declines or a new technology replaces the old.
DEVELPOPING AND COMMUNICATION STRATEGY:
Marketing strategies built on segmentation, targeting and positioning. A company discovers different need and group in the marketplaces, target those need and group that it can satisfy in a superior way & then positions its offering so that the target market recognizes company’s distinctive offering and images.
Positioning is act of designing the company’s offering and images to occupy distinctive places in the mind of target market. The goal is to locate the brand positioning in the mind of consumer to maximize the potential benefit to the firm.
E.g.: Domino’s pizza, targeted at convince- minded pizza lovers, offer the benefit of delivery speed and good quality and its value proposition is a good hot pizza, delivered to your door within 30 minutes of ordering at a moderate prices.
• Competitive frames of references:
The defining competitive frames of references for a brand positioning is to determine category membership – the products or set of products with which a brand competes and which function as close to substitute. It includes to resources, capabilities, and likely intentions of various other firms. Target market decisions are key determinants of the competitive frames of references. It can defines the nature of competition because certain firms have decided to target that segments in the past or consumer in that segments already may look to certain brands in their purchase decisions.
• Points of differences: (PODs)
PODs are attributes or benefits to the consumers strongly associate with a brand, positively evaluate and believe that they could not find to the same extent with competitive brand. PODs may be based on virtually any type of attributes or benefits.
E.g.: FedEx (guaranteed overnight delivery), Nike (performance), Lexus (quality).
Creating strong, favorable, unique associations as PODs is a real challenges, but essential in terms of competitive brand positioning.
• Points of parity ( POPs):
POPs are not necessarily unique brand but may in fact be shared with other brands. This type of associations comes in two basic forms: category and competitive. Category POPs are association’s consumer view as essentials to be legitimate and credible offering within certain product or service in a category. They represent necessary – but not necessarily sufficient condition for brand choice. It may changes over times due to technological advances, legal developments or consumer trends.
ESTABLISHING CATEGORY MEMBERSHIP:
Marketers must inform to consumers of brand category membership. This uncertainty can be special, problem for high tech products. There are also situation where consumer know a brands category membership, but may not be convinced that the brand is a valid member of the category. This approach is one way to highlight is brands PODs, providing that consumer know the brands actual membership. It is important that consumer know the brand’s actual membership. With this approach, however it’s important to that consumer understands what the brand stand for, and not just what it is not.
There are three main ways to convey a brand category membership:
1). Announcing category benefits: To reassure consumer that brand that a brand will deliver on the fundamental reason for using a category, benefits are frequently used to announce category membership. The support this benefits claims by possessing high quality ingredients or by showing users delighting in its consumption.
2). Comparing to exemplars: Well-known brands in a category can also be used to specify category membership.
3). Relying on the products descriptor: The products descriptor that follows the brand name is often a concise means of conveying category origin.
Choosing POPs and PODs:
POPs are driven by the needs of category membership and the necessity of negating competitors PODs. There are two important consideration are that the consumer find the PODs desirable and that the firm has the capabilities to deliver on the POD
There are three key consumer desirability criteria for PODs
1) Relevance: target consumer must find the PODs personally relevant and important e.g.: The westin stemford hotel in Singapore advertised that it was the world’s tallest hotel, but a hotels height is not important to many customers.
2) Distinctiveness: target consumer must find the POD distinctive and superior. When entering a category where there are established brand, the challenge is to find a viable basis for differentiations.
3) Believability: target consumer must find the POD believable and credible. A brand must offer a compelling reason for choosing it over he other option.
There are three key deliverability criteria:
1) Feasibility: The firm must be able to actually create the POD. The product design and marketing offering must support the desired association. It is obviously easier to convince consumer of some fact about brand that they were unaware of and may have overlooked than to make changes in the products and convince consumer of these changes.
2) Communicability: it is very difficult to create an association that is not consistent with existing consumer knowledge. Consumer must be given a compelling reason and understandable rationale as to why brand can deliver the desired benefit.
3) Sustainability: positioning is likely enduring. Sustainability will depend on internal commitment and use of resources as well as external market forces. It is easier for market leader whose positioning is based in part on demonstrable product performances, (Gillette, Intel, Microsoft) to sustain their positioning than for market leader whose positioning based on fashion.
Marketer must decide at which level to anchor brand PODs. Brand attributes at lowest level after that brand benefits comes, and the top level are the brand values.
CREATING POPs and PODs:
Its is difficult to creating a strong, competitive brand positioning is that many of the attributes or benefit that make up the POPs and PODs are negatively correlated. If consumer rate brand highly on one particular attributes or benefits, they also rate it poorly on another important attributes. There are several problems of negatively correlated POPs and PODs
1) Present separately:
There is negatively correlated attributes and benefit is to launch two different marketing campaigning each one devoted to a different brand attributes or benefits. The consumer will be less critical when judging the POP and POD benefit in isolation.
2) Leverage equity of another entity:
Brand can potentially link to any kind entity that possesses the right kind of equity as a means to establish an attribute or benefits as POP or POD. Branded ingredients may also lend some credibility to attributable in consumer minds. Borrowing equity is not risk less.
3). Redefine the Relationship:
Another potentially powerful but it is difficult to way address the negative relationship is positive. It can be accomplished by providing consumer with a different perspective and suggesting that they may be overlooking or ignoring certain consideration.
Differentiation strategies:
Brand can be differentiated on the basis of many variables. The most compelling ones to relate to aspects of product and service. There are four ways differentiation strategies.
1) Product differentiation:
Brands can be differenced on the basis no. Of different product and service dimension: product form, feature, durability, reliability, style and service dimension are ordering, delivering, customer training, consulting, maintained and repair. It’s the positive correlation between relative product quality and return on investment. High quality of business units earned more premium quality allowed them to charge a premium prices. They benefited from purchase; consumer loyalty, positive word of mouth and the cost of delivering more quality were not much higher than for business producing low quality. Quality is also communicated other marketing elements. Quality images also affected by packing, distribution, advertising, and promotion.
E.g.: A television receiver brand lost its images by continuously promoting the brand through exchange offer and price off promotion.
2) Personal Differentiatation:
Companies can gain a strong competitive advantage to having better
Trained people. Better-trained people have competency, courtesy, credibility,
Reliability. They perform the service consistently and accurate lively responsiveness
They respond quickly to customer requests and problems and communication. They
Make effort to understand the customer and communicate clearly.
E.g. IBM people are professional. The sales forces of eureka Forbes is well trained in
Direct selling.
3) Channel differentiation:
Companies can achieve competitive advantage through way they design
Their distribution channels coverage, expertise and performance.
E.g. Caterpillar success in the construction equipment industries based partly on
Superior channel development.
4) Image differentiation:
Buyer responds differently to company and brand images. Identity and
Images are to be distinguished. Identity is the way a company aim to identify or
Position of the product. Images is the way to public perceive the company or its
Product. It is established product character and value proposition. For the identity
To work, it must be conveyed to communication and brand contact. It should be
Diffused in ads, annual report, catalog, packaging.
Product Life Cylce
Product life cycle is a bell-shaped curve. This curve is divided into four stages:-
1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage
Introduction stage: - Profits are negative or low in this stage. The ratio of promotional expenditure to sales is the highest because there is a need to
• Inform Potential consumers
• Induce product trial
• Secure distribution in retail outlets
Prices tend to be high because costs are high. It is important for the company to decide when to enter the market as being first can be rewarding, but risky and expensive. If a firm comes later it can bring superior technology & quality
Though it is found that the market pioneer gains the most advantage .E.g. Coca-Cola.
The pioneer gets the advantage of economies of scale, technology leadership, patents and other barriers to entry. However, if the product is not positioned properly the pioneers do fail.
There is a difference between an inventor (first to develop patents in a new-product category, a product pioneer (first to develop a working model), and a market pioneer
(First to sell in the new-product category). However, sometimes the later entrants overtake the market pioneer. E.g. Matsushita over Sony in VCRs.
Growth stage: - In this stage the sales climb rapidly. The customers like the product and additional consumers start buying the product. New competition enters after seeing the opportunities which makes way for new product features and expand distribution.
Prices remain where they are or fall slightly depending upon the market demand. Companies maintain their promotional expenditure or even increase it to face competition and educate the market.
The firm uses several strategies to sustain market growth:
• Improves product quality and adds new product features
• Adds new models and flanker product
• Enters new market segment
• Expands its distribution coverage
• Shifts from product-awareness advertising to product-preference advertising
• It reduces the prices to attract new customers
A firm in this stage faces trade-off between high market share and high current profit. It spends money on product improvement, promotion, and distribution and tries to capture a dominant position .It forgoes maximum profit in the hope of making even greater profits in the next stage
Maturity stage:- In this stage the sales growth will slow, and the product will enter a stage of relative maturity. This stage lasts longer than the previous stages, most products are in maturity stage of life cycle and it posses a challenge for the marketing manager to market the product.
The maturity stage can be divided into three phases:
Growth: In this phase the sales growth rate starts to decline. There are no new distribution channels to fill.
Stable: In this phase the sales flatten on a per capita basis because of market saturation. As most consumers have tried the product, and future sales are depend upon population growth and replacement demand.
Decaying maturity: In this phase, the absolute level of sales start to decline, and consumers begin to switching to other products.
The sales slowdown makes the weaker companies to abandon the products and concentrate on more profitable products and on new products. The industry is dominated by few giant firms-mainly a quality leader, a service leader, and a cost leader they serve the industry and make their profits through high volume and lower costs.
Companies can adopt other strategies to increase the sales of its matured product
1. Market Modification : A company tries to expand the market for its mature brand by working with two factors that make up sales volume:
Volume = no. of brand users * usage rate per user
It can expand the number of brand users by converting the nonusers; it can also try to expand the number of brand users by entering new market segments or expand the number of brand users in winning competitors customers. The company can also increase its sales volume by increasing the brand usage. To use the product the on more occasions. Use the product in different ways.
2. Product Modification: Mangers try to stimulate sales by modifying the products characteristics through quality improvement, feature improvement, or style improvement.
Quality Improvement aims at increasing the products functional performance. This strategy is effective to the extent that the quality is improved, buyers accept the claim of improved quality and sufficient numbers of buyers pay for higher quality.
Feature Improvement aims at adding new features that expand the products performance, versatility, safety, or convenience. New features build the company’s image as an innovator and win then loyalty of market segment that value these features.
Style improvement aims at increasing the product esthetic appeal. But style improvement has its set of problems. First, it is difficult to predict whether people and which people will like a new style. Second, a style change requires discontinuing the old style , and the company risks losing customers.
3. Marketing Program Modification : Product managers try to stimulate sales by modifying other marketing program elements by asking following questions
• Prices: Would a price cut attract new buyer? or should prices be lowered through price specials, volume or purchase discounts
• Distribution: Can the company obtain more product support and display in existing outlets? Can more outlets be penetrated? Can the company introduce the product into new distribution channels?
• Advertising: Should advertising expenditure be increased? Should the message or copy be changed? Should the media mix be changed? Should the timing, frequency, or size of ads be changed?
• Sales promotion: Should the company step up sales promotion- trade deals, coupons, rebates, gifts & contests?
• Personal selling: Should the number or quality of salesperson be increased? Can sales-call planning be improved?
• Services: Can the company speed up delivery? Can it extend more technical assistance to customers?
Marketers debate which tools is most effective in the mature stage. Will the company gain more by increasing its advertising or its sales promotion budget? Some marketers believe that brands should be managed as capital assets and supported by advertising. Advertising expenditures should be treated as capital investment.
Decline stage: Sales decline for a number of reasons, including technological advances, shifts in consumer tastes, and increased domestic and foreign competition. Sales may plunge to zero, or they may petrify at a low level. As the sales and profit decline, some firms withdraw from the market. Those remaining reduce the number of products they offer. They may withdraw from smaller market segments and weaker trade channels, and they may cut their promotion budgets and reduce prices further. Unless strong reasons for retention exist, carrying a weak product is very costly to the firm as weak products consume a disproportionate amount of management’s time, instead the company can use the time for healthy products.
A company in declining industries has 5 strategies to choose from:
• Increasing the firm’s investment
• Maintaining the firm’s investment level until the uncertainties about the industry are resolved
• Decreasing the firm’s investment level selectively, by dropping unprofitable customer groups, while strengthening the firm’s investment in lucrative niches.
• Harvesting the firm’s investment to recover cash quickly
• Divesting the business quickly by disposing of its assets as advantageously as possible.
The appropriate strategy depends on the industry’s relative attractiveness and the company’s competitive strength in that industry. A company that is in an attractive industry and has competitive strength should consider strengthening its investment.
Product life cycle: critique
The PLC concept helps marketers interpret product and market dynamics. PLC theory has its share of critics. Critics charge that marketers can seldom tell what stage the product is in. They charge that the PLC pattern is the result of marketing strategies.
Market Evolution : As the PLC focuses on what is happening to a particular product or brand rather than on what is happening to the overall market, it yields a product- oriented picture rather than a market-oriented picture.
Like products markets evolve through 4 stages: Emergence, Growth, Maturity, and decline.
Emergence: Before a market materializes, it exits as a latent market. There is a market for a product if a company can recognize the opportunity and is a market driven firm, it finds the target customers and produces the product as per the preferences of the different customers base. This type of market, in which buyer preferences scatter evenly, is called a diffused-preference market.
The company’s problem is to design an optimal product for this market. It has 3 options
• The new product can be designed to meet the preferences of one of the corners of the market ( a single-niche strategy)
• Two or more products can be simultaneously launched to capture two or more parts of the market ( a multiple-niche strategy)
• The new product can be designed for the middle of the market ( a mass-market strategy)
Growth : If the product sells well, new firms will enter the market, ushering in a market-growth strategy. If the new firm is small it will create a niche for itself, if the firm is large both the company will share the market share
Maturity : Finally, the competitors cover all the major market segmentation and the market enters into maturity stage. Firms go further can invade each others segments, reducing everyone’s profit in the process. As the market splits into finer segments and high market fragmentation occurs. Market fragmentation is often followed by a market consolidation caused by the emergence of a new attribute that has strong appeal.
Decline: Eventually, demand for the present products will begin to decrease, and the market will enter the decline stage. Either society’s total need level declines or a new technology replaces the old.
