Life Cycle Management -1

8/8/2019 Life Cycle Management -1

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Life Cycle ManagementLife Cycle Management


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Introduction Begins with the launch of the ProductBegins with the launch of the Product

Monitored by Product Management TeamMonitored by Product Management Team

Responsibilities:Responsibilities:

Product Reaches its Potential asProduct Reaches its Potential as

Particular Product ItemParticular Product Item

Emerging Product Line in the Companys Product MixEmerging Product Line in the Companys Product Mix

DecisionsDecisions

Fine tuning Products Marketing StrategyFine tuning Products Marketing Strategy

Defending Against CompetitorsDefending Against Competitors Innovating ProductInnovating Product

Brand ManagementBrand Management


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The ProductLife Cycle (PLC)

Time

ProductDevelop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Sales andProfits

The Product Life Cycle (PLC) has Five StagesThe Product Life Cycle (PLC) has Five Stages

Product Development, Introduction, Growth, Maturity, DeclineProduct Development, Introduction, Growth, Maturity, Decline


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PLC Stages

ProductProduct

DevelopmentDevelopment

Introduction

Growth

Maturity

Decline

PLCPLCStagesStages

Begins when the company develops aBegins when the company develops anewnew--product ideaproduct idea

Sales are zeroSales are zero

Investment costs are highInvestment costs are high

Profits are negativeProfits are negative


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PLC Stages

Product

Development

IntroductionIntroduction

Growth

Maturity

Decline

PLCPLCStagesStages

Low salesLow sales

High cost per customer acquiredHigh cost per customer acquired

Negative profitsNegative profits

Innovators are targetedInnovators are targeted

Little competitionLittle competition


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PLC Stages

Product

Development

Introduction

GrowthGrowth

Maturity

Decline

PLCPLCStagesStages

Rapidly rising salesRapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Early adopters are targetedEarly adopters are targeted

Growing competitionGrowing competition


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PLC Stages

Product

Development

Introduction

Growth

MaturityMaturity

Decline

PLCPLCStagesStages

Sales peakSales peak

Low cost per customerLow cost per customer

High profitsHigh profits

Middle majority are targetedMiddle majority are targeted

Competition begins to declineCompetition begins to decline


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PLC Stages

Product

Development

Introduction

Growth

Maturity

DeclineDecline

PLCPLCStagesStages

Declining salesDeclining sales

Low cost per customerLow cost per customer

Declining profitsDeclining profits

Laggards are targetedLaggards are targeted

Declining competitionDeclining competition


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Marketing Strategy

Introduction StageProduct

Price

Distribution

Advertising

Sales

Promotion

Offer a basic productOffer a basic product

Use costUse cost--plus basis to setplus basis to set

Build selective distributionBuild selective distribution

Build awareness among early adopters andBuild awareness among early adopters anddealers/resellersdealers/resellers

Heavy expenditures to create trialHeavy expenditures to create trial


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Marketing Strategy

Growth StageProduct

Price

Distribution

Advertising

Sales

Promotion

Offer product extensions, service, warrantyOffer product extensions, service, warranty

Penetration pricingPenetration pricing

Build intensive distributionBuild intensive distribution

Build awareness and interest in the massBuild awareness and interest in the massmarketmarket

Reduce expenditures to take advantage ofReduce expenditures to take advantage of

consumer demandconsumer demand


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Marketing Strategy

Maturity StageProduct

Price

Distribution

Advertising

Sales

Promotion

Diversify brand and modelsDiversify brand and models

Set to match or beat competitionSet to match or beat competition

Build more intensive distributionBuild more intensive distribution

Stress brand differences and benefitsStress brand differences and benefits

Increase to encourage brand switchingIncrease to encourage brand switching


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Marketing Strategy

Decline StageProduct

Price

Distribution

Advertising

Sales

Promotion

Phase out weak itemsPhase out weak items

Cut priceCut price

Use selective distribution: phase outUse selective distribution: phase out

unprofitable outletsunprofitable outlets

Reduce to level needed to retain hardReduce to level needed to retain hard--corecore

loyalistsloyalists

Reduce to minimal levelReduce to minimal level


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Exceptions

Not all products follow this cycle:Not all products follow this cycle:

Incorrectly determining the stage of PLC Decisions pull out resources

Reduction in sales

Terminating the product


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Points to Remember Time Cycle and Shape of the life cycle varies with productsTime Cycle and Shape of the life cycle varies with products

External Factors affect the life cycleExternal Factors affect the life cycle

Company influence the PLCCompany influence the PLC

PLC viewed as a managerial planning tool and not aPLC viewed as a managerial planning tool and not a

marketing forecasting tool.marketing forecasting tool.

Tool for developing marketing strategy and not a tool forTool for developing marketing strategy and not a tool for

making unit sales predictions.making unit sales predictions.


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How to sustain Competitive Adv.?

- Flankers / Line Extensions*

- New uses/ Market Extensions

- Significant Innovations*

Strategic Considerations DuringMaturity Stage

Defense

Strategy

Innovation

Strategy

Fine-tuning product mix to ensure

Product Profitability

Focus on issues important to customer

product quality

service quality

price*

Low Costs

High Margins

Create

Differential

Advantage

Maintenance

Strategy


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ProductFamilies, Platforms andMixes

Product Platforms

Product Mixes

Product Families

Common Platforms on which new products can be built

Products that share a common platform but have

specific features and functionality

Assortment of Product Families


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PRODUCT PLATFORM

Product Family 1 Product Family 2 Product Family 3

Product Mix

ProductLines

Product Mix Map


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Chryslers Product Platform for Mid-Level SedansCommon Features

Basic Car Frame : Suspension : Drive Train

Chrysler Concorde Eagle Vision Dodge Intrepid New Yorker

Product Families

Product Families

Product Families

Chrysler Product Mix

example


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Needfor ProductFamilies?

Greater Effectiveness Efficiency in Manufacturing+

How ?

1. Less Inventory of Specialized Parts

because products with share parts

2. Less Production Downtime

because products would share common processing steps

3. Greater Customer Responsiveness

because products can be half processed in batches


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Needfor ProductMix Hierarchy?

1. Identify Product Family Groupings

2. Identify Gaps in Production Lines

3. Illustrate Product Development History

Product Mix Map

Structure of Product Mix

Historical Perspective of Product Line


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Importance ofbrand management- PLC

One of key areas of life cycle management and productOne of key areas of life cycle management and product

launchlaunch

Brand helps customers toBrand helps customers to interpret and process informationinterpret and process information

about productabout product

Increases effectiveness and efficiencyIncreases effectiveness and efficiency of marketingof marketing

campaigncampaign

Brand provides strong competitive advantage throughBrand provides strong competitive advantage through

improved profit margin, brand loyalty, assist in developingimproved profit margin, brand loyalty, assist in developing

new product via brand extensionnew product via brand extension


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Brand equity

A set ofA set of assets and liabilities linked to a brands name andassets and liabilities linked to a brands name and

symbols that adds to or subtracts from the value providedsymbols that adds to or subtracts from the value provided

by a product or serviceby a product or service to a firm and/or that firmsto a firm and/or that firms

customers.customers.

Such value translates to a bottom line (financial ) impact.Such value translates to a bottom line (financial ) impact.


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Aakers Brand equity framework

Brand

Equity

BrandLoyalty

Brandawareness

Perceivedquality

Brandassociation

Other

proprietaryBrandAssets


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Brand loyaltyBrand loyalty

A measure ofA measure of customers attachment to the brandcustomers attachment to the brand

5 distinct level of loyalty5 distinct level of loyalty--

First levelFirst level --Lowest levelLowest level-- No loyalty at allNo loyalty at all

Second LevelSecond Level -- Habitual buyerHabitual buyer who have no reason to changewho have no reason to change

because they are satisfiedbecause they are satisfied Third levelThird level-- Satisfied BuyerSatisfied Buyer who will incur switching cost onwho will incur switching cost on

switching products.switching products.

Forth LevelForth Level Customers who likes the brand andCustomers who likes the brand and considers itconsiders it

as friendas friend

Fifth LevelFifth Level-- Customers who buy product of any reason toCustomers who buy product of any reason tochange.change.


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Brand AwarenessBrand Awareness--

Ability of potential buyerAbility of potential buyer to recognize that the brand belongsto recognize that the brand belongs

to a certain product categoryto a certain product category

4 distinct level of awareness4 distinct level of awareness

First levelFirst level --Lowest levelLowest level-- No awareness at allNo awareness at all

Second LevelSecond Level RecognitionRecognition of the brandof the brand

Third levelThird level-- Brand recallBrand recall

Forth LevelForth Level TopOf Mind recallTop Of Mind recall

To create and maintain brand awareness brand should beTo create and maintain brand awareness brand should be

Different and memorableDifferent and memorable

Associated with a slogan or jingleAssociated with a slogan or jingle -- BritaniaBritania

Connected to a symbolConnected to a symbol -- AppleApple


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Perceived qualityPerceived quality

CustomersCustomers perceptionperception that a product or service overall is excellentthat a product or service overall is excellent

w.r.t. its intended purpose.w.r.t. its intended purpose.

Key influence driving perceived qualityKey influence driving perceived quality

Product qualityProduct quality

Service qualityService quality

Low

Perceived

Quality

Exceeded

Perceived

Quality

Adequate

Perceived

Quality

Expectation>

Quality

Expectation=

Quality

Quality>

Expectation


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Brand AssociationsBrand Associations

A brand is aA brand is a productproduct plusplus valuesvalues and associationsand associations

Brand knowledge consists of a brand node in memoryBrand knowledge consists of a brand node in memory with awith avariety of associations linked to itvariety of associations linked to it

What comes in mind about a particular brandWhat comes in mind about a particular brand Top of mindTop of mind

Measured by Nodal mapMeasured by Nodal map

ApplesLaptop

Applelogo

Friendly

Macintosh

Innovative


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Brand equity Other proprietary brand assetsOther proprietary brand assets--

Patents , trademarks , channel relationshipPatents , trademarks , channel relationship-- Source of competitiveSource of competitiveadvantageadvantage

11 metrics to measure brand equity11 metrics to measure brand equity

Price premiumPrice premium

Customer satisfactionCustomer satisfaction

Brand awarenessBrand awareness

Perceived qualityPerceived quality

LeadershipLeadership -- Popularity of the brandPopularity of the brand

Perceived valuePerceived value underlying valueunderlying value

Brand personalityBrand personality

Organizational associationsOrganizational associations

Market shareMarket share

Market priceMarket price

Distribution coverageDistribution coverage


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Various decisions take place in brand managementVarious decisions take place in brand management

Framework which outlines these decisionsFramework which outlines these decisions Brand DecisionBrand Decision

FrameworkFramework

Brand decision, brand sponsor decision, brand name decision,Brand decision, brand sponsor decision, brand name decision,

brand strategy decision, brand repositioning decisionbrand strategy decision, brand repositioning decision

Brand Decision Framework


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Decide whether to brand or not brand the product or service.Decide whether to brand or not brand the product or service.

Purpose of branding a product is to give an identity to it in thePurpose of branding a product is to give an identity to it in the

market placemarket place

Generic or no name products need not be given a brand name.Generic or no name products need not be given a brand name.

Brandingdecision


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Concerns the channel level in which the brand will be given.Concerns the channel level in which the brand will be given.

Manufacturer brandManufacturer brand

Distributor brandDistributor brand

Licensed brandLicensed brand

Branding Sponsordecision


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Is a brand that the manufacturer designates and that retains itsIs a brand that the manufacturer designates and that retains its

brand characteristics (name, mark) throughout the channelbrand characteristics (name, mark) throughout the channel

ExamplesExamples Tide (P&G), Colgate (ColgateTide (P&G), Colgate (Colgate Palmolive)Palmolive)

Also referred to as national brandsAlso referred to as national brands

ManufacturerBrand


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Brand that a distributor designates and sells through its outletBrand that a distributor designates and sells through its outlet

ExampleExample Arizona Jeans (Arizona Jeans (JCPennyJCPenny),), SamsSams Choice (Choice (WalmartWalmart))

DistributorBrand


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Associate and professional groups are associated with licensedAssociate and professional groups are associated with licensed

brands.brands.

A group gives permission so that products can be sold with theirA group gives permission so that products can be sold with their

name/brand on them.name/brand on them.

ExamplesExamples Merchandise sold with logos of National FootballMerchandise sold with logos of National Football

League, Major league Baseball.League, Major league Baseball.

LicensedBrand


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Concerns the approach of choosing a brand nameConcerns the approach of choosing a brand name

Individual namesIndividual names

Blanket family nameBlanket family name

Separate family nameSeparate family name

Company individual nameCompany individual name

BrandName Decision


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Gives the product its own identityGives the product its own identity

If product fails the company name and other company brands doIf product fails the company name and other company brands do

not get affectednot get affected

Drawback is that additional resources are required for developingDrawback is that additional resources are required for developing

a new brand namea new brand name

General mills gives individual brand names to its productsGeneral mills gives individual brand names to its products BettyBetty

crockercrocker,, bisquickbisquick, gold medal, nature valley, gold medal, nature valley

IndividualName


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Emphasizes core name and connects with all the productsEmphasizes core name and connects with all the products

Name is typically the manufacturer nameName is typically the manufacturer name

HeinzHeinz Heinz ketchup, Heinz 57 sauce, Heinz mustardHeinz ketchup, Heinz 57 sauce, Heinz mustard

BlanketFamily Name


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Uses different name for different families of productsUses different name for different families of products

SearsSears Craftsman tools, Kenmore appliancesCraftsman tools, Kenmore appliances

Separate Family Name


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Highlights both the company brand and the product brandHighlights both the company brand and the product brand

Intent of the strategy is to use the company brand name toIntent of the strategy is to use the company brand name to

accentuate the individual brand nameaccentuate the individual brand name

KellogsKellogs KellogsKellogs cornflakes,cornflakes, kellogskellogs rasinrasin branbran

Company IndividualName


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Concerns the establishment of the brand in the marketplaceConcerns the establishment of the brand in the marketplace

Line extensionLine extension

Brand extensionBrand extension

Multi brandMulti brand

New brandsNew brands

Co brandsCo brands

Brand Strategy Name


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Concerns the establishment of the brand in the marketplaceConcerns the establishment of the brand in the marketplace

Line extensionLine extension

Brand extensionBrand extension

Multi brandMulti brand

New brandsNew brands

Co brandsCo brands

License extension


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Existing brand names is applied to new product categoriesExisting brand names is applied to new product categories

Honda uses its brand across various industriesHonda uses its brand across various industries automobiles,automobiles,

motorcycles, lawn mowersmotorcycles, lawn mowers

BrandExtension


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New brand names are introduced to the same product categoryNew brand names are introduced to the same product category

currently served by the companycurrently served by the company

Company can serve multiple market segmentsCompany can serve multiple market segments

Marriott uses multiple brand names strategyMarriott uses multiple brand names strategy mariottmariott courtyard,courtyard,

residence inn,residence inn, fairfieldfairfield inn, Courtyard byinn, Courtyard by mariottmariott

MultiBrand Strategy


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The use of a new brand strategy would be predicted on the beliefThe use of a new brand strategy would be predicted on the belief

that present brand would not provide a good association for thethat present brand would not provide a good association for the

new categorynew category

NewBrand Strategy


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Product bears two or more well known namesProduct bears two or more well known names

BettyBetty crockercrocker brownies withbrownies with hersheyshersheys chocolatechocolate ingredient coingredient co

brandingbranding

TrixTrix Flavored Yoplait Yogurt (General mills )Flavored Yoplait Yogurt (General mills ) company connectscompany connects

two or more of its brands into a new producttwo or more of its brands into a new product same companysame company

cobrandingcobranding

Multi sponsor cobrandingMulti sponsor cobranding 2 or more companies brand names are2 or more companies brand names are

there in a productthere in a product Dow CorningDow Corning

Co.Brand Strategy


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After brand introduce d in the market, brand repositioningAfter brand introduce d in the market, brand repositioning

decision.decision.

Decide whether to change a brand or maintain the brandDecide whether to change a brand or maintain the brand

Brands performing wont be changed and can be given moreBrands performing wont be changed and can be given more

resources to strengthen their current imageresources to strengthen their current image

Brands below expectations will be repositioned to meet aBrands below expectations will be repositioned to meet a

different marketdifferent market

Brand Repositioning


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BRAND SWITCHING MATRIX

Analytical method useful for brand managementAnalytical method useful for brand management

Its a matrix which classifies purchase behavior so to reflect theIts a matrix which classifies purchase behavior so to reflect the

characteristics of the market place and customer brand loyaltycharacteristics of the market place and customer brand loyalty

To construct BSM, conduct survey of customers previous brandTo construct BSM, conduct survey of customers previous brand

purchases and current brand purchasespurchases and current brand purchases

An additional use of brand switching matrix is to estimate marketAn additional use of brand switching matrix is to estimate market

share over timeshare over time

Can be used to estimate long run market share over timeCan be used to estimate long run market share over time


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Thank You

Life Cycle Management -1

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