Product life cycle ss

UNDERSTANDING THE PRODUCT AND ITS

MARKET

PRESENTED BY- SIDDHARTH SIKARIA

10/04/2023 Confidential 2

Contents

Market Market Types, Size, Volumes

Indian Pharmaceutical MarketProduct Life Cycle

Relaunching Strategies Expansion of Product Life Cycle

SWOT AnalysisBoston Consulting Group (BCG) Matrix


Who is a Marketer?

A Marketer is someone seeking a response (attention, purchase, vote, donation) from another party called the prospectMarketers are responsible for stimulating

demand for a company’s productMarketing managers seek to influence the

level, timing, and composition of the demand to meet the organisation objectives. Eight demand states are possible


These are:i. Negative Demand- consumers dislike a

product and may even pay a price to avoid itii. Non-existent Demand- consumers may be

unaware or uninterested about the productiii. Latent Demand- Consumers may share a

strong need that cannot be satisfied by an existing product. Marketers try to capture this demand and come out with newer and better products

iv. Declining Demand- Consumers begin to buy the product less frequently or not at all


v. Irregular Demand- consumers purchase vary on seasonal, monthly, daily or even an hourly basis

vi. Full Demand- consumers are adequately buying all products put into the market place

vii. Overfull Demand- too many consumers would like to buy the product that can be satisfied

viii.Unwholesome Demand- consumers may be attracted to products that have undesirable social consequences


What is Market?

Economist describe market as a collection of buyers and sellers who transact over a particular product or particular classMarketers use the term “Market” to cover various group of customers. The five basic markets are:a) Resource Marketb) Government Marketc) Manufacture Marketd) Intermediary Markete) Consumer Market

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Resource Market

Government Market

Manufacture Market

Intermediary Market

Consumer Market

Resources

Money

Resources

Money

Money

Goods and Services

Money

Goods and Services

ServiceMoney

Taxes Goods


Seller and buyer are connected by flows:a) Seller sends goods, service and

communication to the market.b) In return they receive money and informationc) There is an exchange of money for goods and

serviced) There is an exchange of information


Key Customer Market

A. Consumer Market- consumer good and services such as soft drinks and cosmetics spend a great deal of time trying to establish a superior brand

B. Business Market- companies selling business goods often face well-trained and well-informed professional buyers who are skilled in evaluating competitive edge

C. Global Markets- Companies face challenges and decisions regarding which country to enter, how to enter the country, how to adapt to their product/ services to the country, and how to price their product

D. Nonprofit and Governmental Markets- Companies selling to these markets have to price their product carefully because these organisation have limited purchasing power like churches, universities, charitable organisation and government agencies


Products

Product is the end result of a manufacturing process, to be offered to the marketplace to satisfy a need or want.

Anything that is offered to the market that customers can acquire, use, interact with, experience, or consume, to satisfy a want or need

Service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or maynot be tied to a physical thing. Manufacture, Retailer, Distributor can provide value added

service to differentiate themselves


Product Characteristic

Products that are marketed include:• Physical goods• Service• Experiences• Events• Persons• Places• Properties• Organizations• Information• Ideas


CORE PRODUCT FEATURE

Expected

GENERIC PRODUCT

EXPECTED PRODUCT

AUGUMENTED PRODUCT

POTENTIAL PRODUCT


AUGUMENTED PRODUCT FEATURE

PHYSICAL

LOGICAL

EMOTIONAL


CHARACTERSTIC OF A PHARMACEUTICAL PRODUCT

PRODUCT COMPONENTEFFICACYSAFETY

TOLERABLITYSPEED OF ACTION

QUALITYCOST

EASE OF USETEMPRATURE STABILITY

SHELF LIFEPAITENT EDUCATION

PHYSICIAN INFORMATIONMAIL DELIVERY

BRANDING

CORE VALUES AUGMENTED VALUES


Product Life Cycle

Product Life Cycle Curve

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Some other types of PLC curves



What is PLC?

Product life cycle, as the name suggests is the life cycle of a product which begins from the introduction phase, then there is the growth phase, then a steady phase and finally the decline phase.

Importance of PLC

A company’s positioning and differentiation strategy must change as the product, market and competitors change over the product life cycle (PLC). To say that a product has a life cycle is to assert four things:a) Products have limited lifeb) Product sales pass through distinct stage,

each posing different challenges, opportunities, and problems to the seller

contd…

c) Profits rise and fall at different stages of the product life cycle

d) Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.


Phases in Product Life Cycle

Most of the PLC curves are portrayed as bell shaped. The curve is divides basically into four stages:a) Introductionb) Growthc) Maturityd) Decline



Introduction Phase

A period of slow sales growth as the product is introduced in the market. Profits are nonexistent because of heavy expense of product introduction


A product’s sales revenue are small and exhibit a slow growth

The manufacturer is trying to gain product acceptance from the prescriber or patients

The overall marketing strategy is to attract the therapeutic area opinion leaders, who are essential in communicating the product’s benefit to their colleagues through the pyramid of influence cascade

The marketers need market data that help them define the product’s optimal targeting, positioning and profiling.


What the Marketers can do in this Phase....

In order to increase consumer awareness and willingness to buy the product, the following activities can be implemented:i. Offer clinical trial experienceii. Include physicians and patients in long term treatmentiii. Develop opinion leadersiv. Develop media spokesperson (such as successful patient

testimonial) v. Risk reductionvi. Adapt promotional mixvii. Sampling or couponingviii. Broaden product offeringix. Modify marketing channels


Contd..

Furthermore the ability to prescribe or buy can be increased by the following activities:i. Penetration pricingii. Adequate distributioniii. Liberal payment termsiv. Wholesaler consignment stocksv. Compatibility with existing medical supplies

and equipment's


Some terms related with phase I

Product Development- when a new product is introduced in the current therapeutic segment, the company is said to be active in product development, as opposed to entering a new therapeutic segment with an existing product- a strategy called new market extension.

Diversification- When a new product is introduced into a new therapeutic segment the company is pursuing a diversification approach



Growth Phase

Product’s sales revenue are moderate but rapidly growing and its profitability is increasing

Early adopters like the product, and additional consumers start buying the product

Marketers main objective is to expand the distribution and product line by offering new product benefit and forms

Increasing competition drives down the product price


Cont.…

Sales force is expanding, shifting it’s priority from the few medical specialist to a large number of family physicians or GP’s nationwide


Some steps taken by Marketers in Phase-II

During the growth stage, the marketers use several strategies to sustain rapid market growth:i. Improve product quality and add new product features and

stylingii. Add new models and flanker productsiii. Enters new market segmentiv. Shifts from product awareness advertising to product

preference advertising v. Lowers the price to attract the next layer of price sensitive

buyersvi. Increases distribution coverage and enters new distribution

channel

Product Life Cycle Curve

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Maturity phase

This phase is characterized by a stabilized sale performance with low cost and high profitsAt this stage: Marketer is occupied with maintaining the

products advantage Fighting new competitive new product launches

with new features and benefitsA full product line is now available offering a wide spectrum of product dosages, ROA and formulation


The Maturity phase is divided into three stages:a) Growth

sales growth rate starts to decline No new distribution channel to fill New competitive forces emerge

b) Stable Sales flatten on per capita basis because of market

saturation potential consumers have tried the products and the future

sales govern by population growth and replacement demand

c) Decaying maturity Absolute level of sales starts to decline, customers begin to

switching over to other products



Decline Phase

Sales decline for a number of reason Technological advancement Shifting consumer taste Increase domestic and foreign competition Increase price cuttingNow the pharmaceutical marketers are faced with the dilemma of harvesting the product or terminating the product or introducing a replacement


STRATEGY FOR MODIFYING EXISTING PRODUCT



Very often successful product life cycle needs to be prolonged, either because the product can continue to be a significant revenue making engine for the organisation or because the existing product pipeline does not guarantee a promising blockbuster in the near future


Aspirin

Aspirin market is about a centaury old. Early it was used as antipyretic-analgesic but lost its

market to paracetamol due to effective repositioning of paracetamol and due to certain side effects of aspirin

It was repositioned in the market with safer dosage forms such as Enteric Coated tablets, Buffered coated, Dispersible tablets.

Brands like Dispirin (Reckit Coleman), Microfine Aspro (Nicolas) succeeded while lesser known brands vanished from the market


Metronidazole

Flagyl of May & Baker was used in t/t of “Giardiasis” . They later found out its use in t/t of “amoebiasis” which was more prevalent in India.

The company launched aggressive promotion of “FLAGYL” in t/t of amoebiasis and replaced conventional treatment with emetine and dihydroemetine inj..

Many other companies joined the bandwagon and FLAGYL is among the top selling brands of May & Baker


Betamethasone

Betenesol injection had always been imp. Brand of Glaxo. It was lagging behind Decadron injection (Dexamethasone) (of Merind).

Glaxo by promoting its one new indication, i.e., a ten ampoule course in Myocardial Infraction, had changed the position dramatically

The product image as a life saving drug had got a big boost and product became a brand leader


Product Life can be extended by: Find out the new usage of the product Enter new markets by covering new geographical market or

expand the existing new market coverage Modify existing product, Introduce different size, Introduce

larger pack size of tonics and enzymes Introduce new flavours, New dosage Forms, Introduce

flanker products Keep track of competition and develop your products

constantly Be alert to spot the new opportunity and introduce the

new products early enough in your existing markets


SWOT ANALYSIS


What is SWOT analysis?

The overall evaluation of a company’s Strength, Weakness, Opportunities and Threats is called SWOT analysis. It is a way of monitoring the external and internal marketing environmental Internal Enviorment include Strength and

Weakness External Enviorment include Opportunities

and Threats


EXTERNAL ENVIORMENT

OPPORTUNITY- A marketing opportunity is an area of buyer need and interest that a company has high probability of profitably satisfying. There are three main source of market opportunity:a) To supply something that is short in marketb) To supply an existing product or service in a

new or superior wayc) To develop totally new product or service


Examples

A company may be able to offer a product at a much lower price. Pharmaceutical firms have created generic versions of brand-name drugs.

A company may be able to deliver a product or a service faster. Fed Ex discovered a way to deliver mail and packages much more quickly than the U.S Postal Service

A company can meet the need for more information and advice. Guru.com facilitates finding professional experts in a wide range of fields


Threats

An environmental threat is a challenge posed by an unfavorable trend or development that would lead, in the absence of a defensive marketing action, to lower sales or profit.


INTERNAL ENVIORMENT

The internal factors are those which are governed by the company themselves.


SWOT of Indian Pharma Industry

Strengths Cost effective technology Strong and well-developed manufacturing base Clinical research and trials Knowledge based, low- cost manpower in science & technology Proficiency in path-breaking research High-quality formulations and drugs High standards of purity Non-infringing processes of Active Pharmaceutical Ingredients (APIs) Future growth driver World-class process development labs Excellent clinical trial centres Chemical and process development competencies


Weaknesses Low Indian share in world pharmaceutical market

(about 2%) Lack of strategic planning Fragmented capacities Low R&D investments Absence of association between institutes and

industry Low healthcare expenditure Production of duplicate drugs


Opportunities Incredible export potential Increasing health consciousness New innovative therapeutic products Globalization Drug delivery system management Increased incomes Production of generic drugs Contract manufacturing Clinical trials & research Drug molecules


Threats Small number of discoveries Competition from MNCs Transformation of process patent to product

patent (TRIPS) Out-dated Sales and marketing methods Non-tariff barriers imposed by developed

countries


BOSTON CONSULTING GROUP (BCG ) MATRIX


This technique is particularly useful for multi-divisional or multi-product companies. The divisions or products compromise the organisations “business portfolio”. The composition of the portfolio can be critical to the growth and success of the company.The BCG matrix considers two variables, namely:a) MARKET GROWTH RATEb) RELATIVE MARKET SHARE



MARKET GROWTH RATE

The market growth rate is shown on the vertical (y) axis and is

expressed as a %. The range is set somewhat arbitrarily. The

overhead shows a range of 0 to 20% with division between low

and high growth at 10%. Inflation and/or Gross National Product have some impact on the range and thus the vertical axis can be modified to represent an index where the dividing line between low and high

growth is at 1.0. Industries expanding faster than inflation or GNP

would show above the line and those growing at less than inflation

or GNP would be classed as low growth and show below the line.


RELATIVE MARKET SHARE

The horizontal (x) axis shows relative market share. The share is calculated by reference to the largest competitor in the market. Again the range and division between high and low shares is arbitrary. The original work used a scale of 0.1, i.e. market leadership occurs when the relative market share exceeds 1.0.


The BCG growth/share matrix is divided into four cells or quadrants, each of which represent a particular type of business. These are:a) QUESTION MARKb) STARc) CASH COWSd) DOGS

Divisions or products are represented by circles. The size of the circle reflects the relative significance of the division/product to group sales. A development of the matrix is to reflect the relative profit contribution of each division and this is shown as a pie-segment within the circle.



QUESTION MARK

These are products or businesses, that compete in high growth markets but where the market share is relatively low. A new product launched into a high growth market and with an existing market leader would normally be considered as a question mark. Because of the high growth environment, they can be a “cash sink”.Strategic options for question marks include.. Market penetration Market development Product development Which are all intensive strategies or divestment.


STARSSuccessful question marks become stars. i.e. market leaders in high growth industries. However, investment is normally still required to maintain growth and to defend the leadership position. Stars are frequently only marginally profitable but as they reach a more mature status in their life cycle and growth slows, returns become more attractive. The stars provide the basis for long term growth and profitability.Strategic options for stars include.. Integration – forward, backward and horizontal Market penetration Market development Product development Joint ventures


CASH COWSThese are characterised by high relative market share in low growth industries. As the market matures the need for investment reduces. Cash Cows are the most profitable products in the portfolio. The situation is frequently boosted by economies of scale that may be present with market leaders. Cash Cows may be used to fund the businesses in the other three quadrants.It is desirable to maintain the strong position as long as possible and strategic options include.. Product development Concentric diversificationIf the position weakens as a result of loss of market share or market contraction then options would include..Retrenchment (or even divestment)


DOGS

These describe businesses that have low market shares in slow growth markets. They may well have been Cash Cows. Often they enjoy misguided loyalty from management although some Dogs

can be revitalised. Profitability is, at best, marginal.

Strategic options would include.. Retrenchment (if it is believed that it could be revitalised) Liquidation Divestment (if you can find someone to buy)

Successful products may well move from question mark though

star to Cash Cow and finally to Dog. Less successful products that

never gain market position will move straight from question mark to

Dog.




Advantages of BCG Matrix

The BCG is simple and useful technique for strategic analysis. It is convenient for multi-product or multi-divisional companies. It focuses on cash flow and is useful for investment and marketing decisions.


Limitations of BCG Matrix Definition (qualitative and quantitative) of the market is

sometimes difficult. It assumes that market share and profitability are directly related. The use of high and low to form four categories is too simplistic. Growth rate is only one aspect of industry attractiveness and high growth markets are not always the most profitable. It considers the product or business in relation to the largest

player only. It ignores the impact of small competitors whose market share is rising fast.

Market share is only one aspect of overall competitive position. It ignores interdependence and synergy.


Companies will frequently search for a balanced portfolio, since..Too many stars may lead to a cash crisisToo many Cash Cows puts future profitability

at riskAnd too many question marks may affect

current profitability.


Product life cycle ss

Business

product services

product lifecycle

existing product

product life cycle curve

product life cycled

market market types

unwholesome demand consumers

nonexistent demand consumers