- •В.Е. Приходский
- •Contents
- •Introdiction
- •Market-based pricing
- •Competition-based pricing
- •1. The Principles and Functions of Marketing
- •Introduction: Develop and review a framework for marketing
- •1.1. What is marketing?
- •1.2. The objectives of marketing
- •1.3. Implementing the marketing mix
- •Test Questions
- •Product
- •Personnel
- •2. Market Research
- •Introduction
- •2.1. What is market research?
- •2.2. Sources of marketing information
- •Information requirements
- •Internal sources
- •2.3. Primary research
- •2.4. Market changes
- •Information on sales
- •Test Questions
- •A questionnaire
- •Case Study ‘Sun Rush’
- •4M Brits shrug off gloom in sun rush
- •3. Product
- •Introduction
- •3.1. Kotler’s five ‘levels’ of product benefit Core and basic benefits
- •Expected, augmented and potential benefits
- •Competition of augmented benefits
- •Copeland’s product typology and strategy
- •3.2. The product life cycle Uses of the product life cycle
- •Introduction
- •Figure 3.1. The product life cycle The introduction stage
- •The growth stage
- •The maturity stage
- •The decline stage
- •Criticisms of the product life cycle
- •3.3. New product development The importance of new products
- •Screening
- •Development
- •3.4. Product portfolio theory
- •The bcg matrix
- •Figure 3.2. The Boston Consulting Group matrix
- •A composite portfolio model: the gec matrix
- •Figure 3.3. The gec matrix
- •4. Pricing Decisions and Strategies
- •4.1. The Pricing Decision What determines prices?
- •Factors influencing pricing decisions
- •External factors influencing pricing decisions
- •4.2. Cost-Based Pricing
- •What is break-even analysis?
- •Calculating break-even point
- •Break-even charts
- •‘What if’ analysis
- •The margin of safety
- •Cost-based pricing methods
- •Fixed Cost 200,000
- •Contribution 25
- •Problems with cost-based pricing
- •4.3. Market-Based Pricing Demand based pricing
- •4.4. Competition-Based Pricing
- •4.5. Problems with Demand- and Competition-Based Pricing
- •Test Questions
- •Case Study ‘What Price Promotion?’
- •5. Customer Service and Sales Methods
- •Introduction
- •5.1. ‘The customer is always right’
- •5.2. Placing the product – distribution
- •Indirect distribution via intermediaries
- •5.3. Closing the sale
- •Test Questions
- •Case Study ‘Company Handbook’
- •6. Marketing Communications
- •6.1. Targeting an audience
- •6.2. How to reach a target audience
- •6.3. Marketing communications performance
- •6.4. Guidelines and controls on marketing communications
- •Test Questions
- •Case Study ‘Marketing Communication’
- •References and further reading
The maturity stage
Maturity is reached when a high proportion of people who will eventually purchase a product have already purchased it once. This is likely to be the longest stage but, depending on the market, this could range from days or weeks to many decades or even centuries. It is important at this stage either to have achieved a high market share, or to dominate a special niche in the market. It can be expensive and risky to achieve large market share changes at this time, so some companies prefer to concentrate their competitive efforts on retaining existing customers and competing very hard for the small number of new customers appearing.
It has been pointed out that market shares among leading competitors are often very stable over extremely long periods of time (Mercer, 1993) and this may be used as a criticism of the product life cycle concept. However, over the time of maturity in the market, companies have to be vigilant in detecting change in the market, and be ready to modify or improve products and to undertake product repositioning if necessary.
The decline stage
It is part of product life cycle theory that all markets will eventually decline, and therefore companies have to be ready to move to new markets when decline is felt to be inevitable, or to be ready with strategies to extend the life cycle if this is felt to be feasible. Appropriate extension strategies could include developing new uses for the product, finding new users, and repositioning the product to gain a presence in the parts of the market that will remain after the rest of the market has gone. Even when markets have reached an advanced stage of decline, there may remain particular segments that can be profitable for organizations able to anticipate their existence and dominate them.
Companies that succeed in declining markets usually adopt a ‘milking’ strategy, wherein investment is kept to a minimum, and take up any market share that may be left by competitors that have left the market because of the decline. There is a certain recognition that death will come eventually and thus any revenues that can be made in the interim are something of a bonus.
Criticisms of the product life cycle
The product life cycle appears to be both widely understood and used as a tool for strategic analysis and decision-making. Despite this, some important criticisms have been made. Although it is easy to go back into history and demonstrate all the features of the concept, it is hard to forecast the future and, in particular, it is hard to forecast turning points. Not to try to do so at all, however, would seem to avoid confronting hard strategic issues.
Another criticism is that life cycles may sometimes not be inevitable as dictated by the market, but created by the ineptitude of management. If management assumes that decline will come, they will take the decision to reduce investment and advertising in anticipation of the decline. Not surprisingly, decline does come, but sooner than it otherwise would have done had the investment not been withdrawn.