PRODUCT MARKET CYCLICALITY EXERTS A POWERFUL INFLUENCE ON A CAR ASSEMBLER'S SALES, VALUE ADDITION, CASH FLOW, AND PROFIT PERFORMANCE by Author’s Name Name of the Class Name of the Professor Name of the School City, State 6 January, 2013 Introduction All markets for products are cyclical…
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Marketing strategies are guided by the product life cycle stages. This is because as a product moves through its life cycle, competition, pricing, distribution, promotion, and market information strategies need periodic evaluations and alterations. The life cycle of a product begins prior to the product’s entry to the market. It involves the introduction, growth, maturity, and decline phases. 1. Introductory phase. This phase begins when a product is introduced in to the market for the first time. Initial sales for a product are usually rather small, and a high percentage of products characterise this phase. The product however receives approval from its producers followed by purchases from early adopters. “Satisfaction, reinforced by marketing communication, leads to repurchasing and, as soon as sales increase further, the product exits this phase” (Cant, Strydom, Jooste, and Du Plessis, 2006, p.242). 2. Growth phase. During this phase, sales in the target market grow mainly as a result of purchases by many early consumers, and increase in repurchasing. Greater force is impacted to the demand for the product, as competitors with similar products enter the target market. 3. Maturity phase. This phase is characterised by levelling of a product’s sales growth and demand. Additional competitors with similar products enter the target market. ...
4. Decline phase. During this phase, a rapid decline is experienced in sales and the target market. As a result of this, marketers may exclude some products from the product line, to remove products that do not earn profits. The product life cycle is very significant since it helps in the development of new products. This is because through a developed product, management is able to gain knowledge on how to develop a new product, or improve an existing product. It also helps in profit prediction, since the amount of profits depends on the amount of turnover. Therefore’ “the management can well predict the firm’s profits in different stages of the life-cycle of the product” (Bose, 2010, p.70). With good knowledge of the product life cycle, it is possible to prepare marketing programmes. This is necessary in order to highlight the different policies, procedures, and strategies needed to be applied at the different phases of a product life cycle. Influence of the Product Market Cycle on Car Assembler’s Sales Sales and profitability of cars just like other products vary at every phase of their life cycle. By being aware about the market cycle of cars, car assemblers are able to take better advantage of their market positions on motor vehicle sales. Good knowledge of the car life cycles provides crucial indicators to car assemblers on when to launch new cars, when to move to new markets, and when to diversify their car models. This is because through the car life cycle, car assemblers are able to analyse categories of cars, their forms, brands and models. In recent times, there has been a move towards the manufacture and assembly of environmental friendly vehicles. Such vehicles have very little impact on the environment and are
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