Product Life Cycle Marketing Model - Essay Example

? Marketing Planning: Product Life Cycle marketing model Introduction In marketing planning, various tools and techniques are employed in ensuring that the planning process is both smooth and successful. The strategies adopted need to encompass models that make them effective in their implementation. In marketing planning, there is a deployment of interrelated phases, one after the other that are in line with the accomplishment as well as use of the product in question (Hata, et al., 2000, pp.34-39). This process begins from the point where the raw materials of such a product are acquired for the manufacturing process up to the level where finished goods are output from the system into the market as well as the phase that marks post utilization process. At this point, it is essential to note that customer satisfaction and sustained marketing of a product could still alter the life of a product in the market by extending its relevance. When marketing planning is considered in terms of the product life cycle aspect, there are two things that come into play and these are theories as well as practices regarding the marketing phenomenon and the characteristics of how viable the product may be regarded to be (Drummond & Ensor, 2001, pp.112-118). The whole argument is based on the fact that products generically do show a number of elements that are both abstract and concrete which do define the claims that a user has over the product, expectations on use, and the degree at which he or she is satisfied. This paper takes a look at marketing planning through the model of product life cycle. The organization in practice is Samsung. Analysis In marketing planning, product life cycle consist of five major phases. These phases include product development, introduction of the product into the market, growth of the product, maturity of the product in question, and eventually the decline of the product which is either followed by rebranding or withdrawal of the product from the market (Drummond & Ensor, 2001, pp.112-118). It is worth noting that these phases are however not rigid and could vary from one product to the other depending on the size of the product and marketers need to consider this variation when introducing a new product into the market because the product life cycle directly affects the sales volumes or performance (Hata, et al., 2000, pp.34-39). Samsung does take its product marketing planning through the above phases and when a product reaches the decline phase, it is re-engineered through R&D to extend its life cycle (Westkamper, 2000, pp.501–522). Figure 1: Product Life Cycle Product development phase This starts with the company finding and developing a new idea about a product. At this stage different aspects of information regarding a product are translated and incorporated into a single or unified product that is considered new. The product is taken through various changes that demand more time and money at this development phase and this must be done before exposing the product to ultimate consumers through pilot projects (Rose & Ishii, 1999, pp.41-51). When a product does successfully go through the test market, it is introduced into the actual marketplace and this does initiate the introduction stage for the product where marketing activities pick up intensively. This product development phase exhibits zero sales as well as negative revenues are experienced, marking a period of absolute spending without any form of monetary returns. In the case of Samsung, the product development process is very intense with a lot of consumer consultation in order to incorporate all or most of the specifications needed by the customer where possible (Olhager, 2003, pp.319-329). Introduction phase Introduction of the product into the market is done after the development phase. At this point, Samsung’s electronic products normally will exhibit low sales volumes because the customers are not well aware of the product’s existence in the market while some are not even conversant with its use and benefits (Stankovski, et al., 2010, pp.281-296). What Samsung does to reduce the risk of low product sales at this stage is by early announcement of its product before it is introduced into the market. The effect of such a move is to elicit high expectation from the customers and this anticipation leads to them lining up to buy the product when the announced launch day comes into effect. This is done in a very strategic manner since it eliminates the element of surprise that is supposed to hit the competitors. Samsung normally experiences higher costs of advertising with the view of increasing the awareness of customers. Initial distribution of the product is also an additional cost incurred (Drummond & Ensor, 2001, pp.112-118). The basic goal at this point is to establish a formidable market and trigger primary demand for this class of product. Marketing mix comes into play and implications are that product is normally one and is also relatively not differentiated; price for the product is usually high because a skim pricing strategy is made use of because of the need to have a higher profit margin to recoup the costs in a short while; distribution is quite selective and scattered; and promotion is normally targeted at building awareness of the brand (Cao, et al., 2009, pp.616-637). Samsung normally gives free samples of its product are given to the first say 100 customers to access the stores. Growth of the product phase At this phase, Samsung is offered with the much needed satisfaction of seeing the product pick up its position in the marketplace. The company has to do a thorough timing that is aimed at increasing its share of the market within a short period of time. For first kinds of products, growth could be very rapid or slow depending on the product and how well marketing operations have been carried out (Sarin & O’Connor, 2009, pp.188–205). There is a possibility of triggering competition in the market. At this point, Samsung has to differentiate its product from those offered by competitors in order to remain relevant in the market as an outstanding competitor. There is to be high and rapid growth in revenues since the sales do increase and more customers become aware of the product through the on-going marketing campaigns. The company has to target new market segments and expand the distribution network. Risks of price wars due to entry of other competitors in the later stages of product growth are eminent. The goal of the organization at this point is to achieve higher consumer preference and meet increased sales volumes (Westkamper, 2000, pp.501–522). The marketing mix has product with new features and outlook as a show of high quality; price could be maintained or fluctuated depending on the demand levels; intensive distribution is done; and promotion is increased through advertising and brand positioning (Churchill, 1979, pp.64-73; Cooper, 1994, pp.60-76). Maturity of the product phase This is the most profitable of all stages. The sales of products increase albeit in slow pace. The brand awareness at this point is stronger thus costs to do with promotion, especially advertising are lowered (William & McCarthy, 1997, pp.78-88). The level of competition will be higher at this point and thus market share as well as product price is decreased. Differentiation could be very difficult because of the high volumes of similar products in the market. Emphasis of Samsung at this point should be to encourage the customers of its competitors to switch to the product offered by Samsung and thus switching costs are incurred while non-users are converted (Cateora, et al., 2009). The company could offer sales promotions so as to encourage its retailers to offer a larger shelf space as is opposed to that given to competitors. The marketing mix at this point has the product being modified and more features added to differentiate the product and meet the emerging customer demands; price may be reduced so as to respond to competition; distribution could be widened through addition of new channels and giving incentives to the retailers; and promotion puts a lot of emphasis on differentiating the product while at the same time building loyalty to the brand. Decline phase The decline stage sees much reduced sales of the product in the market. This is because the market is fully saturated, the product reaches obsolescence levels, and customers end up changing their tastes (Saaksvuori & Immonen, 2004, pp.45-56). Samsung tries to sustain product loyalty from its customers so that at this declining stage, the company could still maintain its profitability for quite some time. The unit costs are however on an increase since volumes of production are reduced and in the long run profits are very negligible (Ameri & Dutta, 2005, pp.577-590). At this point, Samsung will be faced with three options which include: maintaining the product hoping that the competitors will pull out due to poor performance, reduce its costs and add new users who need the product; harvest it, cut on marketing support, and coasting along to a level where no profits could be made; or simply discontinue the product, rebrand it, or come up with a new product to succeed the current one. This is where the R&D of Samsung becomes even more useful (Cateora, et al., 2009). Conclusion Marketing planning requires that marketing managers understand the concept of product life cycle in order to ensure that they do make informed decisions at each stage. This is because the model helps them plan on alternative marketing strategies that are aimed at resolving challenges faced by their products at each and every phase (Drummond & Ensor, 2001, pp.112-118). It is a useful model for investigating and monitoring the results of sales over a given period of time and these are compared to products that exhibit the same life cycle. Samsung has been known to fully understand its product life cycle and as such it employs this concept it all its marketing planning processes in order to beat its competitors. As has been noted, every product exhibits a life period where it is launched, shows growth, matures, and eventually dies or may be rejuvenated. Marketing planners must understand the way management of products works; be able to maintain the product or market balance; and consider the management of a product as a discipline (Olhager, 2003, pp.319-329). A successful incorporation of product life cycle model into the marketing planning process is very crucial for the success of such a venture. List of References Ameri F & Dutta D (2005). Product Lifecycle Management: Closing the Knowledge Loops. Comput.-Aided Des. Appl., 2(5): 577-590 Cao H, Folan J, Mascolo J, & Browne J (2009). RFID in product lifecycle management: a case in the automotive industry, Int. J. Comput. Integr. Man., 22(7): 616-637 Cateora P, Gilly M, & Graham J (2009). International Marketing. 14th edition: McGraw-Hill, Irwin. Churchill, Gilbert Jr A (1979). A Paradigm for Developing Better Measures of Marketing Constucts. J. Mark. Res., 16: 64-73. Cooper, Robert G (1994). New Products: The Factors that Drive Success. Inter. Mark. Rev., 11(1): 60-76 Drummond G. & Ensor J. (2001) Strategic Marketing: Planning and Control, Butterworth – Heinemann, 112-118 Hata T. Sakamoto H. Kato S. Kimura F. & Suzuki H. 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(1997) Product Life Cycle: Essentials of Marketing, Richard D Irwin Company, 78-88 Internet Sources http://www.samsung.com/us/aboutsamsung/ http://www.netmba.com/ Read More