INTEROFFICE MEMORAND UM TO: FROM: SUBJECT: DATE: Introduction Market insight helps in understanding all possible aspects of business

which affects company in short or long run. Understanding the significance and practicing the same is very much important to maintain companys competitive advantage. Market structure, Market and product evolution, Industry forces, and Environmental forces are the four critical aspects of market insight. Evolution of markets and products, product classes, product forms, product lines and product items could be defined with the help of concept of Life Cycles. It helps the firm develop futuristic strategic planning to achieve defined goals. Market life cycle lasts for the longest period. Product line and product item life cycles are the shortest. Product line and product item life cycles are important for product and brand managers as they provide important information about their performance. A typical product life cycle talks about five stages: introduction, early growth, late growth, maturity, and decline. These stages helps in defining marketing mix for the product. This also helps in planning other aspects of business such as, production, supply chain, resource planning and business expansion. Articles To validate my point, I have researched few articles which would be of interest to read. The following articles explore the concept of market insight and product life cycle by using the examples. The first article from the staffs of Deloitte, a consulting firm, would be worth reading which talks about innovative pricing for service parts during different stages of product life cycle. While product in introduction stage, company should define their pricing based on cost of warranty. Competitors starts entry into market during early growth phase of life cycle. This is time for pricing based on competition. Margin and volume plays critical role in deciding pricing. It is wise full to continue with this strategy during late growth phase also. By the time maturity phase in sight, demands for service parts goes up. Competitors which are unable to sustain in market starts existing the business. Few major players remain in market. This is time for captive pricing. The customers cannot avoid purchasing the components. This is the time for making more profits with the help of BARACK OBAMA PRAKASH RANJAN PRODUCT LIFE CYCLE FEBRUARY 19, 2014

higher pricing. Economy of scale also helps in lowering the cost of production. Benefits of economy of scale can also be leveraged during decline phase. During this phase cost of servicing and inventory goes up. Hence it becomes important to manage cost to optimize margins. The second article is from Miller, Orin which talks about planning of 5Ps of marketing mix during product life cycle. During introduction stage, it is necessary for customers to be made aware of its arrival with the help of promotion mix. Creating more awareness helps in sales grow. Companies should spend more on advertising. Growth phase, pricing, placement of product and promotion plays crucial role. Pricing should be in sync with competition. Focus should be more on market penetration with the help of aggressive pricing and intensive distribution strategy. Product should be made available to wider range of outlets. Intensive training to sales staff about functional aspects of products will be an important link between new products and customers. Maturity phase deals with peak sales and steady decline. Expected is intense competition between brands. Some of these competitors will leave the market. Re-launching of product with new promotional and distributional effort is the strategy to follow. During decline, sales drop rapidly. Companies consider removing of products from market. Companies spend less on promotion mix. In continuation to second article, third article talks about extending the product life cycle through positioning. This article talks about repositioning of product Cadbury Snack. This product was launched in 1950s. Brand loyalty is decreasing while comparing with competitors. Perceived as the product for an older, settled person. To re-launch the same new target group identified is male and female career builders, aged between 25 and 35 years. In order to reach this new and younger target market, the repositioned snack should stand for playfulness, sharing and nibbling while you natter. There are exceptions to product life cycle. My next article talks in detail about that. It say that A well-managed brand can live forever. American Express, Budweiser, Camel, Coca-Cola, Western Union and Wells-Fargo thrive in their respective categories after years on the market. Author also talks about Customer Equity. She says The more customer equity a brand has relative to its competitors, the longer it is likely to live. Fifth articles talks about stages involved in adoption of products during their life cycle. This also helps in defining marketing mix. Innovators, Early adopters, Early majority, Late majority, and Laggards are classification of people based on their product adoption during the product life cycle. Based on their percentage contribution, company plans their penetration, pricing, and production.

Conclusion

Product life cycle is a good tool for product/brand managers in defining their marketing mix. This is also helpful in planning of various activities, like sales, production and financial. Customer equity value plays a supporting role in making decisions. References 1. Eric Savitz. Product Lifecycle Management: A new path to shareholder value, (accessed February 18, 2014), available at http://www.forbes.com/sites/ciocentral/2011/08/05/product-lifecyclemanagement-a-new-path-to-shareholder-value/ 2. Schwartz, Barry. "The Tyranny of Choice." The Economist 16 Dec. 2010: n. pag. Web. <http://www.economist.com/node/17723028>. 3. Clemons, Erick K. "Six Strategies for Successful Niche Marketing." Wall Street Journal 24 May 2010: n. pag. Web. <http://online.wsj.com/article/SB100014240527487041309045746440842058584 24.html > 4. VISWANATHAN, MADHUBALAN, JOS ANTONIO ROSA, and JULIE A. RUTH. "Emerging Lessons." Wall Street Journal 20 Oct. 2008: n. pag. Wall Street Journal. Web. <http://online.wsj.com/article/SB122427233015845347.html>. 5. Chironga, Mutsa, Acha Leke, Arend Van Wamelen, and Susan Lund. "May 2011." The Globe: Cracking the Next Growth Market: Africa. N.p., n.d. Web. 24 Sept. 2013. <http://hbr.org/2011/05/the-globe-cracking-the-next-growth-marketafrica>. 6. "Logoland." The Economist 13 Jan. 2011: n. pag. The Economist. Web. <http://www.economist.com/node/17900472>.