Product Life Cycle of the Fossil Company - Essay Example

FOSSIL INC. Introduction The notion of having watches that were functional to style and fashion was introduced by an American brand, known as Fossil.Fossil was established in 1984 and unsurprisingly was the first American brand. The nature of the company is that it designs, develops, markets and distributes specialized consumer products which are based on fashion and value. The main offerings of Fossil among other things comprise of watches which depict fashion, choice of small leather goods and apparel, jewellery, shades, belts, jeans and t-shirts. The products that are offered by Fossil can be clearly construed as heterogeneous in nature, which is so because the customers would tend to search for the products first and then chose the one which suits them best and satisfies their wants. The essential characteristics of such products and the consumer decision making is listed below. The time spent by customers on planning and deciding the purchase is lengthy, however, loyalty if there is brand awareness, may lead to lesser time being spent when reaching a decision. When compared with convenience products, the time and effort that is devoted is less frequent. The needs for a retailer are important in such shopping. The producers as well as the resellers are actively involved in advertising and personal selling The customer compares brands by weighing different traits, that is aptness, quality of the product, the style and the pricing. The main objective To expand the product lifecycle of Fossil during the maturity stage: Product Lifecycle The sequence of product lifecycle is where a new product evolves through series of stages over a period of time. These stages are the development of the product, moving to introduction, then growth, maturity and finally decline. There reason that has been associated with the changes in the product life cycle and the creation of such a sequence is change in the situation of marketing which resultantly affects the marketing strategy and marketing mix,. 1. Introduction At the initial stage of a product life cycle, some product development is done prior to the introduction of the product. This development involves massive research on the product. The introduction stage comprises of the product launch in accordance with its requirements. The business then moves on to create product awareness and build a market for the specific product. The sales are lower than what they are during the decline stage. 2. Growth The company then goes on to create brand preference. The focus is shifted to increase market share. Sales tend to incline and the rate increases. The product is in what is known as a star stage 3. Maturity The maturity stage is when the market becomes drenched with the basic product, with a slight variation and the competitors are symbolized by an alternative product. If the sales are increasing in decreasing rates and the products are in a cash cow stage, it is known as early maturity. Late maturity is when there is an increase at constant rate and the market saturates. 4. Decline The dog stage can be identified when there is a decline in sales This is the stage where the company usually generates very minute amount of revenue or it leads to heavy losses for the company. Alternatives Alternative (1): Modify product mix Alternative (2): Modify marketing mix Alternative (3): Licensing agreements Alternative (1): Modify product mix Product mix width: (this can be done by adjusting the number of product lines that a company can offer) Currently, Fossil has watches, sunglasses, leather goods and apparel and on their website they offer jeans, t-shirts, bags and watches. Product line depth: (The number of product items in a product line of a company). Watches: At the moment Fossil is offering more than 500 styles for men, women, children as well as collectors. Focus on watches: The company has a diversified option in the watches segment in which it offers its customers many options. Introducing new watches for collectors Expansion of Fossil Collectors’ Club More than 500 styles of watches provided The quality of the product being used as a product strategy Segmentation Advantages: More options for the customers leading to an increase in the number of customers. The target market is enhanced by focusing on different customer with different tastes and attributes Increase in revenue and ultimately the profit earned. Fixed costs are divided amongst the increased products leading to reduction in the cost/unit. Disadvantages: Higher risk of failure due to the modification of the existing product mix. Alternative (2): Modify marketing mix Marketing mix is commonly referred to as the 4 P’s of marketing. These 4 P’s are the parameters that the marketing manager can control subject to the internal and external constraints of the marketing environment. Pricing : Pricing is a main feature of the marketing mix and the only one which generates revenue. It would be better for the company to increase the buying capability of the customers to gather larger revenue by: Reducing prices occasionally or seasonally on major eventful days e.g. Easters, Christmas reducing the average price Placing This is to ascertain a proper place for the product. The company should increase this by: Entering into newer markets Target those markets where the company is most popular. Promotion(Advertising, Sales Promotion, etc) More efficient advertising would help in the promotion of the product. Better and improved personal seller skills Newer products launched by attributing the product to some special event or person, e.g. Tissot’s Michael Owen watch. Providing schemes or other incentives for the customers e.g. gift vouchers, coupons, etc. Introducing physical changes in their offerings. Alternatively, new packing & labels with updated images & slogans can help revitalize a product Distribution :. Increase sales of products in new geographic and demographic markets. More countries and cities need to be explored and after proper market research, more distribution centers should be opened up in such cities. Advantages: Reducing the average price for the products would lead to increased revenue. Increase in the number of customer leading to major profitable benefits. Wide broader distribution will increase revenue Increased promotion would lead to better awareness amongst the customers. Newer markets would lead to increased customers Risk or losses of one particular under-performing market would be compensated by the additional benefit or profits earned in some other profitable markets Disadvantages: Costs would be high The reduction of prices would not be possible in all the different markets. Different rules and regulation in different countries of operation would make it difficult to avail the profit earned in the home market. Alternative (3): Entering into licensing agreements with foreign companies like Armani & London Fog A licensing agreement is a commercial contract whereby the licenser gives something of value to the licensee in exchange for performance and payments. These payments are known as royalties. Advantages: Newer customers would be attracted with the enhanced quality products. This would help Fossil to increase the value of their products. This would help Fossil to increase its markets. Fossil would gain a competitive edge by having such brand names affiliated with its products. Disadvantages: The licensing agreement may cause a conflict of interest between Fossil and Armani or London Fog Higher costs would be involved to indulge into such licensing activities. The Americana theme of Fossil might get suppressed due to the licensing agreement. Fossil’s existing product range might get affected by these renowned and powerful brands SWOT analysis: Read More