Marketing

Marketing may be defined as an economic process by which goods and services are exchanged and the values is determined in terms of money prices. The American Marketing Association has defined Marketing As the performance of business activities that direct the flow of goods and services through producers to consumers or users. Marketing is the business process by which products are match with the markets and through which transfers of ownership are effected.

Marketing is a social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others.

Marketing concepts
The Marketing concepts may be defined as a management orientation that holds that the key task of the organization is to determine the needs, wants, and values of a Targeted market and to adapt the organization to delivering the desired satisfactions more effectively and efficiently than its competitors. Marketing concept is a philosophy, an attitude, or a course of business thinking. It holds that satisfaction of the wants of the consumer is the economic and social justification of a companys existence. Marketing concepts is based upon three fundamental beliefs. 1. All companys planning , policies, and operations should be customers oriented. 2. Profitable sales volume should be the goal of the Company. 3. All Marketing activities should be organizationally integrated and co ordinated.

Core Marketing concepts

Markets

Exchange, Transactions, and relationships

NEEDS , WANTS, AND DEMANDS

Value and satisfaction

Marketing offers (product, services, experience)

Needs, wants, Demands

Need :Want:Human needs are states of felt deprivation. The form taken by a human needs as shaped by a culture and individual personality. for example a Man needs food but wants to have chicken Mc grill burger with soft drink.

Demands:- Human wants that are backed by buying power . People demand products with benefits that add up to the most value and satisfaction. Market offer:- Some combinations of product s , services, information or experiences offered to a market to satisfy a need or want. Consumer value:- It is the difference between the values the consumer gain from owning and using a product and the cost of obtaining the product. Consumer satisfactions:- It is depends upon how well the purchase product s performance lives up to the consumers expectations. Exchange :- The act of obtaining a desired object from someone by offering something in return. Market :- The set of all actual and potential buyers of a product or service.

Maslow hierarchy of Human needs

Need for self-actualization (Personal growth & fulfillment Level of income Esteem Needs (Achievement , status , dignity, recognition) Belongingness and Love Needs ( Family, Affection , Relationship etc.) Safety Needs ( Security, stability, protection, etc.) Biological and physiological Needs ( Basic life needs, Air, Food, drink , shelter , sleep etc.)

Elements of a modern marketing system

Company (marketer) Marketing intermediaries (Whole-sellers , Retailers ) Rivals

Manufacturer Exporter

End users

Environment

Marketing Managements
Marketing Management as the art and science of choosing target markets and building profitable relationship with them. This involves getting , keeping, and Growing customers through creating, delivering and communicating superior customer value. Marketing Management deals with planning, organizing, directing and controlling the Activities related to the marketing of goods and services to satisfy the customers needs.

Marketing functions

Functions of R&D 1. Marketing research 2. Product planning and development

Functions of exchange 1. 1. Buying and Assembling. 2. 2. Selling 3. 4.

Functions of Physical treatment Standardization, grading, & branding. Packaging Storing Transportation

Miscellaneous Functions 1. Promotion (advertisement, publicity). 2. Pricing 3. Financing 4. Risk-taking

Starting Point

Existing products

Means

Ends

Factory through sale

Existing products

Selling and promotion

Profits

The Selling Point

Market

Customer needs

Integrated Marketing

Profits through customer satisfaction

The Marketing Concept

Selling and Marketing concepts

Marketing Mix
Marketing Mix is the term used to describe the combination of the four inputs which Constitute the core of a companys marketing system, the Product, Price- structure, promotional activities and the distribution system. Every business firm has to determine its Marketing Mix for the satisfaction of needs of the customers. Marketing Mix represents a blending of decisions in four areas-

1. 2. 3. 4.

Product Price Place Promotion

These four elements of Marketing mix are inter-related in such a way that decisions taken in one area usually affect actions in others. It is a dynamic state of affairs of the marketing system of a business firm. It concentrates on how to satisfy the needs of the customers, If the needs of the consumers change, the Marketing Mix will also be changed.

Component of Marketing Mix

Customer

Product :In the production of a product (or service) the marketing manager should reckon the fact that his product indeed satisfies a need of the society. Product component of Marketing Mix involves planning , developing, and producing the right type of products and services to be marketed by the business firm. It should also emphasis on its proper Branding, packing, colors, and other features. In other words production planning and development involves decision about .          Quality of the product Size of the product Design of the product Volume of the production Product range Branding Packaging Warranties and after sale services Product testing etc.

Price:-

Another important component of Marketing Mix is the pricing of the product . A marketing manager has to do a lot of exercise to determine the price, he decide the price in such a way that the firm is able to sell its products successfully. Pricing also involves establishing policies regarding credit and Discount. Below are other variables which considered while pricing a product ( or Service)     Demand for the product. Actual cost of the product Potential competition Government rules and regulations.

Pricing decisions and policies have direct influence on the sales volume and the profit of the firm. Therefore right price can be determined through pricing research and by adopting test marketing techniques.

Promotion:-

Promotion deals with informing and persuading the consumer regarding the firms product It involves decisions about advertising , procedure of giving free articles for purchase of the particular commodities, conducting contest, role of personal selling by the salesman, and other sales techniques. Advertising is a tool marketing manager uses to communicate a message to consumers through newspaper, magazines, televisions etc. Personal selling is another means of communicating to the consumer , and consist of direct person to person interaction between salesman and consumer.

Physical distribution:This aspect of Marketing Mix includes decisions about wholesale and retail channels of distribution and the place at which the products should be displayed and made available to the consumers.

It is managements responsibility and to select and manage trade channels through which the product will reach the right customer at the right time and to develop a physical distribution system for handling and transporting the products through these channels.

Marketing philosophies:As marketing management carrying out task to build profitable relationship with target consumers, what philosophy should guide these marketing efforts ? There are five alternative concepts under which organizations conduct their marketing activities.  The production  The product  The selling  The marketing  The social marketing

The production concepts:The production concept holds that consumers will favor products that are available and highly affordable. Thus the management should focus on improving production and distribution efficiency . It is useful philosophy in two type of situations. (a) when the demand of the product is higher than its supply. (b) when the products cost is too higher and improved productivity is needed to bring it down. (Henry Ford )

The product concept:The product concept holds that consumer will favor products that offer the most in quality , performance and features that the organization should therefore devote its energy to make continuous product improvements. Selling concepts:The selling concepts which hold that consumers will not buy enough of the firms product unless it undertakes a large scale selling and promotion efforts. Most firms practice the selling concept when they face over capacity , their aim is to sell what they make rather than make what market wants. This concept is typically practiced with unsought goods and services like insurance etc. The social Marketing concepts :The social marketing concepts holds that the organization should determine the needs , wants, and interest of the target market and deliver the desired satisfaction more effectively and efficiently than do competitors in a way that maintains or improves the consumers and societys well being.

Market segmentation
As a business firm can not appeal to all the buyers in the market, as buyers are too numerous , too widely scattered , and too varied in their buying and practices. Moreover , the companies themselves vary widely in their abilities to serve different segment of the market , rather try to compete in an entire market, sometimes against superior competitors , each company must identify the parts of the market that it can serve best and most profitably.
Market segmentation :-

Dividing a market into smaller groups of buyers with distinct needs , characteristics , or behavior who might require separate products or marketing mix. The company identifies different ways to segment the market and develop profiles of the resulting marketing segments.
Target Marketing :-

The process of evaluating each market segments attractiveness and selecting one or more of the market segments to enter.
Market positioning :-

Arranging for a product to occupy a clear ,distinctive and desirable place relative to competing products in the mind of the target consumer.

Steps in market segmentation, Targeting, and positioning

Market segmentation
1. Identify bases for segmenting the market. Develop segment profiles. 3.

Target Marketing
Develop measure of segment attractiveness . Select target segments .

Market Positioning
5. Develop positioning for
target segments. 6. Develop a marketing mix for each segment.

2.

4.

Segmenting consumer market

Followings are the major variables that might be used in segmenting consumer market. 1. Geographic segmentation. 2. Demographic segmentation. 3. Psychographic segmentation. 4. Behavioral segmentation.

Geographic segmentation :Dividing a market into different geographical units such as nations, states , regions, cities, or neighborhoods. A company may decide to operate in one or a few geographical areas, or to operate in all the areas but pay attention to geographical differences in need and want.

Demographic segmentation :1. 2. 3. 4. 5. 6. Dividing the market into groups based on demographic variables such as Age, ...under 6, 6-11, 12-19, 20-34, etc. Gender, .............Male , Female. Family size.1-2, 3-4, 5+ Family life cycle .young, single, young married, no child, married with child. Income under $ 10000, $10000-$25000, $ 25000-$50000, $50000-100000. etc Occupation..professional, officials, home-makers, unemployed etc.

7. Education :- primary , secondary, sr. secondary, collage. 8. Religion :- ...catholic, protestant, Hindu, Muslim , Buddhist. 9. Generation:-.Gen x, gen y . 10. NationalityAmerica, UK, Europe, Japan, Australia.

Psychographic segmentation:Dividing a market into different groups based on social class, Lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic make-up. 1. 2. 3. Social class:-- lower-lower, lower-middle, middle-upper, lower upper, upper -Upper. Lifestyle:------ Achievers, strivers, strugglers. Personality:--- compulsive, ambitious.

Behavioral segmentation:Dividing a market into groups based on consumer knowledge, attitude, use, or response to A product. 1. Occasions ;---------Regular, special occasion. 2. User status:---------non-user, ex-user, potential user, regular user. 3. User rates:-----------light user, medium user, heavy user. 4. Loyalty status:------none, medium, strong, absolute. 5. Attitude towards product:- enthusiastic, positive, indifferent, negative.

Inter-market segmentation :Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries. For example , Mercedes-Benz target the worlds well to do, MTV targets the teenagers. Coke, Pepsi, UCB , Nike, Adidas are the few companies that actively target world teens.

Target Marketing
Market segmentation reveals the firms market segment opportunities. Now firm has to evaluate the various segments and decide how many and which ones to target. Evaluating marketing segments- in evaluating different marketing segments, a firm must look at three factors. 1. Segment size and growth. 2. Segment structural attractiveness. 3. Companys objectives and resources.

Segment size and growth :The company must first collect and analyze data on current segment sale , growth rates, and expected Profitability for various segments. It will be interesting in segment that have the right size and growth characteristics.

Segment structural attractiveness :The company also needs to examine major structural factors that affect long run segment attractiveness. For example a segment is less attractive if it is already contain many strong and aggressive competitors. ( Rivals ). Existence of actual or potential substitute products, strong buyers power ( strong bargaining power, )

Companys objective and resources:Even if a segment has the right size and growth and structurally attractive , the company Must consider its own objectives and resources in relation to that segment.

Selecting target market segments:After evaluating different market segments , the company must now decide which and how many segments it will target. A Target market consist of a set of buyers who share common needs or characteristics that company decide to serve.

Target marketing strategies

Undifferentiated (Mass Marketing) Differentiated ( segmented market) Concentrated ( niche ) marketing Micro marketing ( Local or individual marketing)

Targeting broadly

Targeting narrowly

Undifferentiated (Mass ) marketing:A market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. This mass marketing strategy focuses on what is common in the needs of the consumers rather than on what is different. Company design a product and a marketing program that will appeal to the large number of buyers. It relies on mass distribution and mass advertising.

Differentiated marketing:A market coverage strategy in which a firm decide to target several market segments and design separate offers for each. For example Nike offers athletic shoes for a dozen or more different sports , from running, fencing, golf, bicycling to baseball. And American express offers not only its traditional green cards but also gold cards, corporate cards, or even a black card called the centurion.

Concentrated ( niche) marketing :A marketing- coverage strategy in which a firm goes after a large share of one or a few segments or niches. A niche marketing is especially appealing when company resources are limited. For example tetra sells 80% of the worlds tropical fish food, and steiner optical captures 80% of the militarys binocular markets.

In niche marketing segments are fairly large and normally attracts several competitors, niches are smaller and may attract only one or few competitors, company achieves a strong position because of its greater knowledge of consumer needs in the niches it serves and the special reputation it acquires. Concentrated marketing can be highly profitable . It involves higher than normal risk . Companies that rely on one or few segments for all their business if that segments tuned sour.

Micro marketing :The practice of tailoring products and marketing programs to the needs and wants of the specific individuals and local consumer groups ---------include local marketing and individual marketing.

Positioning for competitive advantage

After selecting and deciding which segments of the market it will target , the company must decide what positions it wants to occupy in those segments. A product s position is the way the product is defined by the consumers on important attributes----the place the product occupies in the consumer s minds relative to competing products. Positioning involves implanting the brands unique benefits and differentiation in customers mind. For example TIDE is positioned as a powerful, all purpose family detergent ; Ivory snow is positioned as the gentle detergent for fine washable and baby clothes. To simplify the buying process, consumer organize products, services, and companies into categories and position them in their minds. A products position is the complex set of perceptions, impression, and feelings that consumers have for the product compared with competing products.

Choosing a positioning strategy:The positioning consist three steps:1. Identifying a set of possible competitive advantages upon which to build a position. 2. Choosing the right competitive advantages. 3. Selecting an overall positioning strategy. Competitive advantages:An advantage over competitors gained by offering consumer greater value, either through lower prices or by providing more benefits that justify higher prices. Thus positioning begins with actually differentiating the company s marketing offer so that it will give more value that competitor s offers do. Companies can differentiate their products on such attributes as consistency, durability, reliability, or reparability. Product differentiation with its services differentiation i.e. speedy, convenient, or careful delivery, customer training, consulting services, advising services etc. Choosing the right competitive advantages:A company has to choose the ones ( differentiations) on which it will build its positioning strategy. It must decide how many differences to promote and which ones.

1. 2.

How many differences to promote ? One or two or more. Which differences to promote ? The company must carefully select the ways in which it will distinguish itself from competitors. Important :- the differences delivers a highly valued benefit to target buyers. Distinctive:- competitors do not offer the difference, or the company can offer it in a more distinctive way. Superior: - the difference is superior to other ways that consumer might obtain the same benefit . Communicable :- the difference is communicable and visible to the buyers. Preemptive:- competitors cannot easily copy the difference. Affordable: - buyers can afford to pay for the difference. Profitable:- the company can introduce the difference profitability.

Selecting an overall positioning strategy:Consumers typically choose products and services that give them the greatest value. Thus marketers want to position their brand on the key benefits that they offer relative to competing brands. The full positioning of a brand is called the brands value proposition---- the full mix of benefits upon which the brand is positioned.
It is the answer to the consumer question why should I buy your brand ?

Developing a positioning statement:A statement that summarizes company or brand positioning --- it takes this form: To ( target segment and need ) our ( brand) is (concept) that ( point of difference)

Perceptual Mapping
Marketing research technique in which consumers views about a product are traced or plotted (mapped) on a chart. Respondents are asked questions about their experience with the product in terms of Its performance packaging, price, size, etc. Theses qualitative answers are transferred to a chart (called a perceptual map) using a suitable scale and the results are employed in improving the product or in developing a new one. A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions. HOW A Perceptual map is created ? Choose a product or service and identify three companies who manufacture it. For example, you might choose peanut butter as the product you will study. Then identify three peanut butter manufacturers. Next create two questions about how the peanut butter product is positioned compared to its competitors, the other two brands of peanut butter. Ask six people your questions and plot their answers on your perceptual map. Analyze your results, draw conclusions (such as, do you think the product or service is competing head-on or is avoiding competition?), and if needed, make recommendations about the positioning of your chosen product.

When plotting a perceptual map two dimensions are commonly used. Below is a very basic perceptual map. If we plot the UK chocolate market we can identify those brands which are high price and high quality. Belgium chocolates are plotted as high quality and high price, and Twix is plotted one low quality low price brand. Once completed the perceptual map could help identify where an organization could launch a new brand perhaps at the medium price and quality range. We must remember that perceptual maps are plotted on the basis of some ones perception and what maybe a quality product to one person, may not be perceived as quality to another.

Product
A product may be defined as anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products includes more than just tangible goods. Broadly defined, products include physical objects, services , events, persons places, ideas, organizations, or mix of these entities. A service may be defined as any activity or benefit that one party can offer to another party that is essentially intangible and does not result in the ownership of anything. A product has three dimensions or layer, which must be distinguished. 1. Core product ( Benefit ) 2. Formal product ( Actual product) 3. Augmented product.

Core benefit ( product):It is the fundamental dimension of a product as it represents bundle of benefits to its prospective customers ( buyers) .The core product answer the question : what is the buyer buying ?? For example a women buying a lipstick, is buying hope and not a set of chemicals and physical attributes for their own sake.

A person buying a washing machine is buying comfort and not a mere collection of drum, heater, and nuts and bolts for his own sake. The basic job of a marketer is to sell the core benefits. Actual products - it is the larger packaging of a core product . It is what the target market recognizes as the tangible offer (product) . A product is a physical object have the following attributes:  Features  Style or Design  Level of quality  A brand name  Packaging

Augmented products:It is a broader conception of the product . It represents the totality of the benefits that a consumer may receive or experience in getting the actual product . The augmented product of a TV distributor is not only the TV .. But also the whole set of accompanying services like instructions, free home delivery, free installations, warranty, and service and maintenance. This dimension of the product is very important for a firm operating in a competitive market. The firm that develops the right augmented products will be able to attract more consumers and survive in the competitive market.

Augmented product
Actual products

Delivery and credit Brand name

After sale services

Features

Quality level warranty

Core benefits
Design installation Packaging

Three level of product

Product mix
A product mix consists of all the product lines and items that a particular seller offer for sale . A companys product mix has four important dimensions . 1. Width 2. Length 3. Depth 4. Consistency Product mix width:It refers to the number of different product lines the company carries. P & G market a fairly wide range of the product mix consisting of 250 brands organized into many product lines. These lines includes homecare, baby care, beauty care, health care, and food and beverages products. Product mix length:It refers to the total no of items, one company carries within its product lines. P & G typically carries many brands within each line. For example it sales six laundry detergents, six hand soaps, five shampoos etc. Product line depth:It refers to the number of versions offered of each product in the line. For example Hindustan unilever Ltd is offering bath soaps Lifebuoy, Lux, Breeze, Liril, Rexona,Hamam and Moti soaps.

Consistency of the product mix:It refers to how closely related the various products lines are in end use, production requirement, distribution channels, or some other way. P & G s product lines are consistent insofar as they are consumer products that go through the same distribution channels. Lines are less consistent insofar as they perform different functions for the buyer.

Product Differentiation:Product differentiation is a marketing strategy in which busnis firms attempt to create and exploit differences between their products and those offered by competitors. These differences may lead to competitive advantage if customers perceive the difference and have a preference for the difference. A product differentiation strategy requires that a firm be able to effectively communicate with customers through advertising, public relations, sponsoring of events, etc.

Product Differentiation...is creating products so that customers perceive them as different from competing products .

Form creation A manager s view

Profit

Idea Acceptance

Demand Estimation

(a) Differentiation through Multiple sources  L&T , the engineering firm , recruits engineers with excellent qualification and engineers with excellent qualification and claims superiority in executing projects.  Modi Xerox with its collaboration with Rank Xerox as its differentiation.  Coke and Pepsi differentiated through brand power. (b) Product Differentiation based on ingredients  HULs Close-up based on gel used Glycerine while others use calcium carbonate .  Dabur Vatika with herbal ingredients used by woman for hair care -Coconut oil ,Brahmi , Lime and Mehandi etc. Product Differentiation through Functional values  Videocon computer controlled fridge,450 lts, 6 door with quick freezing corner and Deodorizer at a touch of with quick freezing corner and Deodorizer at a touch of finger .

(d) Product Differentiation through Additional features  Mega Feature BPL , Videocon , ONIDA , Philips Large screen features .  Aristocrat suitcases with wheels , a unique convenience to users. (e) Product Differentiation by Packaging  Frooti in Tetra packs.  Le sancy in see thru pack.  Harpic Toilet cleaner with an application friendly nozzle. (f) Product Differentiation by Design  Product attributes (tangible or intangible tangible or intangible) separate your product from others - Kinetic Honda with electronic ignition and do away with kick start routine , automatic gear shifting especially for women.

(g) Services Differentiation When Physical cannot easily differentiated , the key to competitive success may lie in adding services and improving their quality. The main service differentiators are : Ordering ease Delivery Installations Customer Training Maintenance and Repair Miscellaneous Services

Products offered by hindustan unilever Ltd. The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands.[3] Some of its brands include 1. Kwality Wall's ice cream, 2. Knorr soups & meal makers, 3. Lifebuoy, Lux, Breeze, Liril, Rexona, amamand Moti soaps, 4. Pureit water purifier, 5. Lipton tea, Brooke bond tea, Bru coffee, 6. Pepsodent and Close Up toothpaste and brushes, and 7. Surf, Rin and Wheel laundry detergents, 8. Kissan squashes and jams, 9. Annapurna salt and atta, 10. Pond's talcs and creams, Vaseline lotions, Fair and Lovely creams, Lakm beauty products, 11. Clinic Plus, Clinic All Clear, Sunsilk and Dove shampoos, Vim dish wash, Ala bleach, 12. Domex disinfectant, Rexona 13. Modern Bread, and 14. Axe deosprays.

Products mix of procter and gamble

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Ariel is a brand of laundry detergent/liquid available in numerous forms and scents. Crest is a brand of toothpaste and teeth whitening products. Dawn is a brand of dishwashing detergent Downy/ Lenor is a brand of fabric softener. Duracell is a brand of batteries and flashlights. Fusion is a brand of men's wet shave razors. Gain is a brand of laundry detergent and fabric softeners. Gillette is a brand of safety razor and male grooming products. Head & Shoulders is a brand of shampoo and conditioners. Old Spice is a brand of aftershave Deodorants, Soaps and Body wash Ivory is a soap. Nice 'n Easy is a hair coloring product. Olay is a brand of women's skin care products. Oral-B is a brand of toothbrush, and oral care products. Pampers is a brand of disposable diaper and other baby care products. Pantene is a brand of hair care products (conditioners/styling aids). Puffs is a brand of facial tissue Secret is a brand of antiperspirant and deodorant. TAG is a deodorant and body spray. Tide is a brand of laundry detergent. Wella is a brand name of hair care products (shampoo, conditioner, styling, and hair color). Whisper is a brand of panty liners sold primarily in Asian markets.

Product classification
Product and services can be classified in to two categories : (a) Consumer products (b) Industrial products. Consumer products:- consumer product and services bought by final consumers for personal consumption. These products include convenience products, shopping products, specialty products and unsought products. (a) Convenience products:- these are the items which the consumer buy frequently, immediately and with minimum shopping efforts. Cold drink, cigarettes, magazines and newspaper, drugs and most grocery items are the examples of these products . These products are non-durable and used and consumed rapidly. (b) Shopping products:- these products include items which the consumer select and buy after making comparison on such criteria such as suitability, quality, price and style. Furniture items, dress, shoes, TV , refrigerator , and other home appliances are the example of shopping goods. These goods are durable and is used up slowly. The consumer has to compare different stores offerings and devote considerable time and efforts to take the buying decision. (c) Speciality products:- consumer products with unique features or brand identification for which a significant group of buyers is willing to make a special purchase effort. For example specific brands, types of cars, luxury watches, designer clothes service of medical and legal specialists.

(d) Unsought products:consumer products that the consumer either does not know about or knows about but does not normally think of buying. For example blood donation to Red cross, Life insurance. By their very nature , unsought products require a lot of advertising, and other marketing efforts.

Industrial products:- are those meant for use in making other products or for
rendering a service in the operation of business firm. These can be further classified on the basis of use into five categories. Raw material : Fiber for making yarn, etc. Fabricated material and parts: yarn for knitting / weaving etc. Installations : Heavy machinery , diesel engine, trucks etc for industrial use. Accessories equipment : Buttons, zipper, labels, laces, etc. Operating supply: these are the convenience goods for industrial products, oil, pen, pencil, paper, pins, fuel. etc

Product life cycle

The concept of product life cycle has gained importance as it indicates that sooner or later all products die and if management wishes to sustains its revenue , it must replace the declining products with new ones. The product life cycle concepts also indicates what can be expected in the market for a new product at various stages. The product life cycle concepts is also a useful framework for describing the typical evolution of marketing strategy over the product life cycle. This will help in taking sound marketing decisions at different stages of the product life cycle. The product moves through the four stages : 1. Introduction 2. Growth 3. Maturity 4. Decline As the product moves through different stages of its life cycle, not only do profit and sales volume changes from one stage to the other stage but also the management decisions regarding the marketing mix undergoes changes from stage to stage.

Product life cycle

Sales and Profits ($) Sales

Profits

TIME

Product Development Losses/ Investments ($)

Introduction

Growth

Maturity

Decline

1. Introduction stage:The first stage of PLC is the introduction, under which competition is slight or nonexistent , price are relatively higher, market are limited and rapid improvements are being made in its technology . The growth in sales volume is at lower rate because of lack of knowledge on the part of consumers and delays in making the product available to the consumer. During this stage higher expenditure are to be incurred on advertising and other promotional techniques. Price are higher during this stage because of small scale of production, technology problems, and heavy promotional expenditure. 2. Growth stage :- as the product grows in popularity, it moves into second phase of its life cycle i.e. growth stage in which demand expands rapidly, price fall, competition increases, and distribution is greatly broadened. The management focuses its attention on improving the market share by deeper penetration into the existing market or entry into the new markets. The promotional expenses remain high although they tend to fall as a ratio to sales volumes. It will increase the profit .

3.

Maturity stage:- the product enters into maturity stage as competition intensifies
further and market grows saturated. Profits come down because of stiff competition , and marketing expenditure rise. The price are decreased because of competition and technology. This stage may last for long period as in the case of many products with long run demand characteristics. But sooner or later , demand for the product starts declining as new product displace it. Product differentiation, identification of new segments and product improvements are the strategies are followed in this stage.

4. Decline stage:The stage is featured by either the product s gradual displacement by some new products or evolving change in consumer buying behavior, the sales fall down sharply and the expenditure on promotion has to be cut down drastically . Many firm abandon the product in order to put their resources to better use. The demand of the people change and other innovations come to the market to take place of the abandoned products.

Style , Fashion , Fad

Basic, Fashion, and Fad Products Apparel and other consumer products can be classified by the length of their life cycles. Basic products such as T-shirts and blue jeans are sold for years with few style changes. Businesses selling basic products can count on a long product life cycle with the same customers buying multiple units of the same product at once or over time. .

Fashion product life cycles last a shorter time than basic product life cycles. By definition, fashion is a style of the time. A large number of people adopt a style at a particular time. When it is no longer adopted by many, a fashion product life cycle ends. Fashion products have a steep decline once they reach their highest sales. The fad has the shortest life cycle. It is typically a style that is adopted by a particular sub-culture or younger demographic group for a short period of time. The overall sales of basic products are the highest of the three types of products, and their life cycles are generally the longest. Apparel products often have a fashion dimension, even if it is just color. As fashion features increase in a product, the life cycle will decrease. Therefore, if you are designing a fashion product, you will want to have multiple products in line for introduction as each fashion product's cycle runs its course. Some firms build their lines to include basic, fashion, and fad products in order to maximize sales. For example, with a sweater line, a business may have four styles that have classic styling and colors and are always in the line. Four additional styles may be modified every two years to include silhouette, length, and collar changes based on the current fashion. One or two short-cycle fashion or fad styles based on breaking trends may be introduced once or twice a year. Styles that a popular celebrity or sports hero is wearing are examples of fashion and fad styles.

New product developments

A firm can obtain new products in two ways. One it is through acquisition ----by buying a whole company, a patent, or a license to produce some ones product. Or other through New product development in companys on research and development department . New product development:- means development of new original product , product improvement, product modification, and new brand that the firm develops through its own research and development efforts. Followings are the main stages in new product development. 1. 2. 3. 4. 5. 6. 7. 8. Idea generation Idea screening Concept development and testing Marketing strategy Business analysis Product development Test marketing Commercialization

Major stages in new product development

New Product Development Process

Step 1. Idea Generation
The Systematic Search for New Product Ideas Internal sources : From companys own executives, scientists, engineers, designers, manufacturing staff, marketing and sales executives etc. External sources : 1. Customers 2. Competitors 3. Distributors 4. Suppliers

New Product Development Process

Step 2. Idea Screening

Process to spot good ideas and drop poor ones Criteria :

Market size Product price Development time & costs Manufacturing costs Rate of return

New Product Development Process

Step 3. Concept Development & Testing

1. Develop Product Ideas into

Alternative Product Concepts

2. Concept Testing - Test the Product Concepts with Groups of Target Customers

3. Choose the Best One

New Product Development Process

Step 4. Marketing Strategy Development Marketing Strategy Statement Formulation Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two - Short-Term: Products Planned Price Distribution Marketing Budget Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy

New Product Development Process

Step 5. Business Analysis Step 6. Product Development Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If No, Eliminate Product Concept

If Yes, Move to Product Development

New Product Development Process

Step 7. Test Marketing

Standard Test Market Full marketing campaign in a small number of representative cities.

Controlled Test Market A few stores that have agreed to carry new products for a fee.

Simulated Test Market

Test in a simulated shopping environment to a sample of consumers.

New Product Development Process

Step 7. Commercialization

Introducing a new product into the market