International Product Life Cycle 6s5m3w

INTERNATIONAL PRODUCT LIFE CYCLE: It is the life of product in the market with respect to business costs and measures. To say that a product has a life cycle assert four things:  Product has a limited life  Product es through distinct stages, each posing different challenges, opportunities, and problems to the seller.  Profit rise and fall at different stages of the product life cycle.  Product require different marketing, financial, manufacturing, purchasing, and human resource strategies in stages of PLC.

FOUR MAIN STAGES:    

Introduction Growth Maturity (Early maturity Late maturity) Decline

INTRODUCTION STAGE:        

Slow sales growth; offering of basic product Limited distribution Negative or low profits Little or no competition Customers have to be prompted to try the product ( awareness creation) Intensive personal selling to channel hip Promotional expenditures are at their highest ratio to sales Prices tend to be high because costs are high

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Firms focus on those buyers who are most ready to buy

EXAMPLES:   

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EARLY MATURITY: • • • • • •

costs reduced due to economies of scale sales volume increases significantly profitability begins to rise public awareness increases competition begins to increase with a few new players in establishing market increased competition leads to price decreases

EXAMPLES:   

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LATE MATURITY:

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costs are lowered as a result of production volumes increasing and experience curve effects

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sales volume peaks and market saturation is reached

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Industrial profits go down

increase in competitors entering the market prices tend to drop due to the proliferation of competing products brand differentiation and feature diversification is emphasized to maintain or increase market share

EXAMPLES: DECLINE STAGE: • • • •

costs become counter-optimal sales volume decline prices, profitability diminish profit becomes more a challenge of production/distribution efficiency than increased sales

EXAMPLES: Dimensions of the International Product Mix 

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Product mix/portfolio: The total number of products that a company offers its target markets. Product line:

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All the brands the company offers in one product category. Product length: Total number of brands in the product mix. Product width: Total number of product lines the company offers to its target international consumers. Product depth: Total number of different offerings in a product line .

New Product Development: The new product development process consists of a series of activities that firms employ in the complex process of delivering new products to the market. Every new product will through a series of stages. These stages are as follows.  Generating new product idea  Screening new product idea  Developing and evaluating new concept  Product business analysis  Deg/developing the product  Test marketing  Launching product internationally

Generating New Product Ideas: Product and service based firms: firms focus on needs, wants, and desires of consumers. Technology firms: Focus is on research and development. Sources of new ideas: Consumers, Competitive Analyses, Channel , Employees, Top Management, Inventors, Consultants, Researchers.

Screening Ideas:       

USP /Superior consumer fit (needs and values) senior management Lucrative market potential Defined brand strategy and promotional plan Fit between product strategy and technological advantage Likely trade adoption (retailers, supermarkets) Usually a check list is developed in this stage

Developing & Evaluating Product Concepts: Develop detailed description of product. Ask consumers to evaluate and indicate willingness to buy.  Use: Focus Groups

Cont Analysis

Performing a Product Business Analysis: Estimate:  Project costs  Return on investment  Cash flow  Fixed/variable costs  The price level for the product!

Deg and Developing the Product: Create prototypes Create brand identity (name, logo, and packaging) Marketing mix Coordinate strategy across international subsidiaries Product development is increasingly take place in emerging markets

Test Marketing: Testing new product in limited area Determine competitors. Estimate expensive. Time consuming.

Types of test marketing: 

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Simulated Test Marketing Test marketing simulates purchase environment where samples of target consumers are observed during the decision-making process. Controlled Test Marketing Test marketing that involves offering a new product to a group of stores and evaluating market reaction. Actual test Marketing Focus on cities appropriate for the test. Involves selecting distributors and the additional marketing infrastructure. Most costly Leaves the company most exposed to competitive sabotage.

Launching Product Internationally: Introducing a new product to the international market: Quality of launch: High service quality. On-time shipment. Appropriate product availability. Quality sales force and . Quality and amount of promotion. Consumers and countries.

Timing of launch. Marketing mix decisions.

Product Diffusion: Product diffusion means speed of adoption of new product. After launching new international product, product diffusion tells about the product’s market share. Here are some factors who affect the product diffusion. Country market factors: Cultural similarity Economic similarity Product factors: USP (relative advantage) Compatibility with adopters needs Observability Triability

Consumer adopters: Innovators: (2.5% of the total market) Risk takers who can afford to pay a higher price during the introduction stage. Early adopters: (13.5% of the total market) Consumers who purchase the product early in the lifecycle stage and who tend to be opinion leaders in their community. Early majority: (34% of the total). Consumers who enjoy status of being among the first to purchase a popular product Late majority: (34% of the total) Consumers who adopt popular products when the risk associated with them is minimal Laggards: (16%) The last consumers to adopt a product; they are risk averse and conservative in their spending