Strategies of Marketing Management using product life cycle
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Introduction Of Product life cycle
The product life cycle is regarded as an omnipresent concept in marketing. The product life cycle concept (PLC) suggests that like every other form of life on earth, a product or service also has a limited duration. As soon as a product enters the market it starts a “life cycle” and subsequently will disappear from the market.
The product life cycle theory also suggests that a product all along its life cycle should go through specific phases or steps which will symbolize particular marketing strategies or plans.
The main aspects of each phase come as follows:
At the introductory phase, products or services are new to the market, unknown to the public or customers and therefore with no or very few competitors. The chances of success at this stage are very low and the foremost sales tend to be quite slow. The only consumers available at this phase are the ones predisposed to take risks and try new products. Sales volume being low and marketing expenses being very high, the amount used to launch the product is considered as a long-term investment.
The greatest work to do at this level would be to bring the product to the attention of buyers and salesperson or traders through advertisement which will reinforce awareness of the product; pricing strategies. There are two kinds of pricing strategies: “skimming” which is to introduce the product in the market with higher prices and slowly decrease them with time; and “market penetration” which is introducing the product in the market with low prices to rapidly attain higher levels of market shares.
At this phase, if the product or service is appreciated by the innovator costumers, it starts rising profits and sales volume increase as other customers are also keen to try the new product. As sales grow high we can expect a big number of competitors entering the market and at the same time marketing strategies should be developed to beat back new competitors.
In the maturity stage, there is a slowdown and stabilization period in the sales growth of the product as sales level decreases. This situation brings about more producers and so more products; in other words, overcapacity that leads to a strong competitive condition. With this competition, rivals try to create innovative better product and introduce it into the market with the support of advertisement and promotions and eventually the market prices reduce and a drop in profit occurs. Competitors which are able to defend market share and meet the customer’s changing demands have a competitor advantage over the others and maximize the profitability.
Asos.com can order more stock in order to provide the sufficient product for the loyal and new consumers. It can also go to sales by reducing the prices; but it may be rational to advertise the product on its website, magazine, newspaper or social media to increase the sales and profit.
Demand for the existing product begins to drop and sales fall down in decline stage. The probable results of the decline are new technologically advanced products, changes in preferences of consumers, changes in social and political environment and intensified competition. While sales and profits go down, some competitors withdraw from the market that cause smaller market segments and some try to continue to sell out with low price and promotions.
The rate of decline depends on the type of the market, product and customer; for example if it is a fashion or technological market, the decline is generally faster. But the decline of some other products can take ages because of some loyal purchasers that hold back from shifting product types.
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There are different factors that affect the level of financial commitment at each stage of the product life cycle. Therefore, the knowledge of the product life circle is of particular importance to the managers of Asos.com due to the nature of its business. A significant factor that affects the demand for any product is taste and fashion. As a result, the fashion industry is systematically dynamic with new product rapidly replacing old one. The fashion industry is fast-moving and the individual product life cycles may be seasonable. This means that some items will only sell well during parts of the year. In addition, the lead time on the production and buying process means that ASOS.com must plan a season ahead. Fashion designers launch their new clothes collections in the same way. So, during winter 2008, ASOS.com would already have chosen and been planning for the promotion of its summer 2009 collection. However ASOS.com enjoys an extended product life cycle due to the fact that the business has a large international market. In the southern hemisphere the seasons are the other way round to the UK.
This, combined with an increasing trend to take winter holidays in sunny countries, means that summer items, such as swimwear, sell right through the year. Other items sell at unexpected times. For example, Ugg sheepskin boots would normally be considered a winter product. However, a few years ago, celebrities wearing them at pop festivals in the summer means they now sell all year round.
Also the knowledge of the individual product life circle will enable Asos.com determine the level of capital investment for its product individually.This knowledge will enable the company to forecast expected cost and potential contribution with seasonality of sales in view. Thus facilitating an effective cost benefit analysis.
This implies that, such knowledge will help Asos.com managers to accurately evaluate the product life cycle of its products in terms of timing revenue and expenditure, thus knowing when to increase investment on a particular product. This investment increase will usually occur during the growth face of the product development life cycle. Such investment cost could include expansion and publicity. It will also enable it to time when to focus on control cost. This will usually occur during the maturity face of the product. This becomes necessary due to the fact that growth has stop. Hence any new investment will amount to a waste of resources as the product cannot add any future value or contribution.
Accurate knowledge of the product development life cycle will further help Asos.com managers in the timing of promotional activities and advertisement. This in vital as poor timing will result in the reduction of the company’s value as the expected return may never be realised
Accurate knowledge of the product development life cycle will aid planning. Planning is defined in this contest as the representation of business activities in quantifiable terms. Managers will obtain internal and external data about the product,analyse such data which will aid decision making. Internal data include those obtained from the company such as cost of production while external data include market research study and those obtained from competitors websites.
knowledge of the product development life cycle will help managers in the coordination of product activities. Coordination in this contest can be defined as keeping abreast of ongoing activities so that it doesn’t drift. This will enable managers determine the exact time to lunch the new product and determine the exact type of support required for existing product. Knowledge of the product development life cycle will help managers in the control of product activities. Comparing budgeted performance against actual to determine variance
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A process of promotion in the marketing includes lots of objectives like increase in total sales, new product acceptance, brand equity creation, development of corporate image and positioning. Mainly, there are three main reasons for which an organization conducts promotion of its products or services, such as to create awareness among the customers, increase the demand of its commodities and differentiate their offerings from competitors. Several approaches for the promotion of clothing range on online have been adopted by website ASOS.com, which can be viewed by visiting on its site .
The promotional strategies are:
Assortment of information from buyers – With the help of users information ASOS.com collect information about its clients with regards to their trends, purchasing behavior, patterns, taste, type of products they like, attitude, spending power, etc. Moreover, it also helps in identifying demographic factor of individual, so that company can design or supply their product accordingly.
Fashion blog – A fashion blog is also runs by website along with articles in relation to entertainment and celebrities, which is linked with items provided on it. In such blogs videos of models and heroes are posted who are dressed with the ASOS.om apparels.
Advertisements in magazine, newspaper and several other publications – The department of public relations of website has targeted towards the wide range of publications like advertisements in few leading number one magazines of world, i.e. Elle, Vogue, GQ, etc, advertisement in Harper’s Bazaar and articles in The Times newspaper. The website also publishes a monthly magazine as well as launched an application for the users of facebook where interested customers can access directly on the website and make purchase of their liked products .
Software for customers – Software is specially developed for customers, where they can be able to see the image that how clothes would be looking on themselves and then can make purchase of it from the online store. Customers who wishes to try out the clothes before making actual purchase of it are perfectly satisfied with this particular option of website, which also makes the site enough competent to make strong competition from actual stores presented in the market.
Segmentation of buyers – The website segments its target customers on the distinct basis, such as if the range of clothing is for young clients then mainly they are from the students group. Hence, to them site offers students discount coupon. Furthermore, in order to bring loyalty among the customers, ASOS.com provides discount and gift vouchers on their birthdays. This adequately pulls their interest towards making shopping from this website, which adds in enhancement in sales of ASOS.com .
Promoting a clothing by making use of Celebrities – The company in order to endorse its websites takes assistance of Celebrities, inspired by Kate Middleton, Lady Gaga and several other singers. The use of celebrities encourages customers to buy products, which is wear by their favorite stars.
Response measurement – In order to measure the response of customers on particular mail, the website evaluate suggestion and feedback box. This reveals about reaction of buyers upon products, services and offers provided by organization.
Effective use of SEO – The ASOS.com makes adequate use of Search Engine Optimization for making promotion of its website, as it is very simple to learn and apply the basics to the site. By working on SEO of website, page ranking of pages can be improved and more traffic can be drive to visit the particular site .
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As per the above study, product life cycle is considered as a universal concept of marketing. Product life cycle has an important impact on decisions which are related to the use of media. The different stages of product life cycle start with the awareness of new product and ends with the capability to maintain that awareness. Product life cycle helps to meet the needs of the audience targeted by providing them quality services. It will help to increase the profitability of the business. According to product life cycle theory, each product or service has a limited duration.
As the product reaches to the last stage i.e. decline stage the competitor of same product may take advantage of that product and will try to increase his sells. Generally the factors which affect the demand are taste and fashion. The perception of people towards clothes changes because the fashion of clothes is rapidly changing.
With the help of the product life cycle theory, company can find its level of capital investment invested in a particular product. Appropriate facts of product development life cycle help in promotional activities and timely advertisement of a product. Product development life cycle helps in comparing budget of product against the actual budget to conclude inconsistency. The promotional activities help in achieving various objectives like increase in total sales, brand equity creation and to develop corporate image and positioning of product. It will improve the profitability and financial performance of a company. Promotion helps to create awareness among the customer and to differentiate themselves from competitors.
Various promotional strategies have been designed by targeting different segments of audience. The promotional strategies help in increasing the publicity of a product and reason behind the strategies is only to increase the sales of a commodity. Promotional strategies are designed for exploring the information of commodities by targeting various audiences.
Chatterjee, P., 2011. Framing online promotions: shipping price inflation and deal value perceptions.Journal of Product & Brand Management.
Fyffe, R., 2007. Communicating Total Reward at O2.Human Resource Management International Digest.
Harris, L. and Rae, A., 2010. The online connection: transforming marketing strategy for small businesses. Journal of Business Strategy.
Steve, R., 2013. Information Systems Strategy: The case of Inked Apparel. GRIN Verlag.
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