8057509
Description
Mind Map by Snezha Hristova, updated more than 1 year ago
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Created by Snezha Hristova
almost 8 years ago
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Managing Products
- Product Life Cycle (PLC)
- The life cycle
- 1. Introduction
- 2. Growth
- 3. Maturity
- 4. Decline
- Sales and profits fall due to decreased demand
because of technologic and consumer-taste
changes
- Products may be
withdrawn
- Less promotion and product
development expenses
- Advertising as a
defence from
rivals
- Sales and profits fall due to decreased demand
because of technologic and consumer-taste
changes
- Sales peak and flatten
due to market
saturation
- Product improvements, advertising
and sales promotional offers,
dealer discounts and price cutting
- Need for effective brand
building to fight off
competitors
- 4. Decline
- Faster sales and profit
growth
- Profits may devline towards the ends of the stage
because the rivals enter the attractive market
- At the end of the stage
weaker suppliers leave the
market
- 3. Maturity
- Low sales growth, losses because of
heavy development and promotional
costs
- Companies will be monitoring the
speed of product adoption and, if
this is disappointing, may
terminate the product at this
stage
- 2. Growth
- 1. Introduction
- Uses
- Product termination
- Nothing lasts
forever
- Old products have to
be terminated and
new ones developed
- Danger of being too fond
of a product to terminate
it
- Nothing lasts
forever
- Growth projections
- The growth stage (increasing sales
and profits) won't alst forever
- Caution with investing in
new production facilities
- The growth stage (increasing sales
and profits) won't alst forever
- Marketing objectives and
strategies over the PLC
- Market objectives and
strategies should change
along with the change in
the market and
competitive conditions
during the PLC
- During Decline
- Industry revitalization
strategy
- When decline is caused by lack of investment.
So increase investment and revitalize the
industry
- When decline is caused by lack of investment.
So increase investment and revitalize the
industry
- Profitable survivor strategy
- Become the sole survivor in a dying market by: further
reducing the attractiveness of the market (price cuts,
increase in promotional expenditure); buying the competitors
or their product lines; agreeing to take over competitors'
contracts (e.g. supplying spare parts or service contracts) in
exchange from their dropping out of the market
- Become the sole survivor in a dying market by: further
reducing the attractiveness of the market (price cuts,
increase in promotional expenditure); buying the competitors
or their product lines; agreeing to take over competitors'
contracts (e.g. supplying spare parts or service contracts) in
exchange from their dropping out of the market
- Industry revitalization
strategy
- Market objectives and
strategies should change
along with the change in
the market and
competitive conditions
during the PLC
- Product planning
- Balancing the product range -
different products should be in
different PLC stages to ensure
company sustainability
- Balancing the product range -
different products should be in
different PLC stages to ensure
company sustainability
- The dangers of overpowering
- When a new-to-the-world product enters the
market and is a huge success, the invetor
reaps a lot of benefits. PLC predicts the rise
of competition in the growth stage so the
inventor should prepare by securing patents
- When a new-to-the-world product enters the
market and is a huge success, the invetor
reaps a lot of benefits. PLC predicts the rise
of competition in the growth stage so the
inventor should prepare by securing patents
- Product termination
- Limitations
- Fads and classics
- Fads' PLC is like a spike. Classics seem
to be in the maternity stage forever
- Fads' PLC is like a spike. Classics seem
to be in the maternity stage forever
- Marketing effects
- PLC is the result of marketing activities not the cause
- Using the PLC may lead to the inappropriate action when
the correct response should be increased marketing support
Annotations:
- Examples: Inappropriate action - harvesting or dropping the product Correct response - product replacement, positioning reinforcement or repositioning
- PLC is the result of marketing activities not the cause
- Unpredictability
- The duration of the stages is unpredictable
- Limits the use of PLC as a forecasting tool
- The duration of the stages is unpredictable
- Misleading objective and strategy prescriptions
- Other possible startegies: harvest during Growth (e.g. due to
intense competition), build during Maturity (e.g. when a distinct,
defensive differential advantage can be developed), build during
Decline (e.e. when there is an opportunity to dominate)
- Other possible startegies: harvest during Growth (e.g. due to
intense competition), build during Maturity (e.g. when a distinct,
defensive differential advantage can be developed), build during
Decline (e.e. when there is an opportunity to dominate)
- Fads and classics
- The life cycle
- Managing Brand and
Product Line Portfolios
- Companies must decide how to distribute their limited
resources among the competing needs of products so as to
achieve the best performance for the company as a whole
- Portfolio planning
- The process of managing groups
of brands and product lines
- Making decisions on which
brands/product lines to
build, hold, harvest or divest
- Making decisions on which
brands/product lines to
build, hold, harvest or divest
- The process of managing groups
of brands and product lines
- Methods for product management
- The Boston Consulting Group
growth-share matrix
- Stars
- Market leaders, profitable,
need to be protected
- Market leaders, profitable,
need to be protected
- Problem children
- Likely unprofitable
- Likely unprofitable
- Cash cows
- Leaders in mature
markets, profitable,
minimal investment
in production facilities,
should be defended
- Leaders in mature
markets, profitable,
minimal investment
in production facilities,
should be defended
- Dogs
- Likely unprofitable,
in mature or
declining markets
- Likely unprofitable,
in mature or
declining markets
- Cash dogs
- Between cash
cows and dogs
- Between cash
cows and dogs
- Market growth rate is a proxy for
market attractiveness. Market
share is a proxy for competitive
strength (above 1 means our
share > the biggest competitor)
- This model has many limitations
- Stars
- General Electric market attractiveness -
competitive position model
- Uses more criteria to determine
market attractiveness and
competitive strenght more accurately
- It's harder to use than the Boston
Box, and its flexibility can provide
an opportunity for managerial bias
- Richer analysis leading to better
resource allocation decisions
- Uses more criteria to determine
market attractiveness and
competitive strenght more accurately
- The Boston Consulting Group
growth-share matrix
- Contribution of product
portfolio planning
- The models emphasize that different products have
different roles and should be treated differently
- Different strategic objectives call fo different
reward systems and different types of manager
- Aid to managerial judgement
- The models emphasize that different products have
different roles and should be treated differently
- Companies must decide how to distribute their limited
resources among the competing needs of products so as to
achieve the best performance for the company as a whole
- Product Strategies
for Growth
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