chapter 2 human resource planning & strategy · decision while other managers have fewer power...

Ibrahim Sameer (MBA - Specialized in Finance, B.Com – Specialized in Accounting & Marketing)

NATURE OF PRODUCT & SERVICES

Define product?


Skinner defines a product as "anything that satisfies a

need or want and can be offered in an exchange".


Product can be catagorise under the following heads:

Core or generic product

What the product does – its function. For a

refrigerator, for example, this could be that it stores,

preserves and cools.


Tangible product

What is offered –the features, style, quality, packaging,

etc. For the refrigerator, this could be that it fits under

worktop, is self-cleaning and is offered in a range of

colours.


Augmented product

The add-on benefits provided along with the product –

after-sales service, guarantees and warranties, credit

facilities, availability in the market, delivery, etc. For

our fridge, this might include image, guarantee, free

credit and the particulars of the after-sales service.

Services and Products

Difference between service and product?

Services and Products Services differ from physical products, in terms of their:

Intangibility–they cannot be seen, touched or tried before

purchase.

Inseparability–they are used or "consumed" at the time of

purchase and, as such, cannot be separated from the

provider.

Services and Products

Perishability–they cannot be stored for use at a later

time.

Variability–they are dependent on the person who is

providing the service and, as such, will vary from time

to time.

Classifications of Products Consumer Products

Consumer products are classified in three ways:

Convenience: The minimum of effort is needed

because the customer knows about the product before

they shop. They are the products which are bought

repetitively, e.g. butter in a supermarket.

Classifications of Products Shopping: Those products where customers do not

have full knowledge and where they can be influenced

to accept an alternative product (during their "search"

phase) by the benefits being offered. They are higher

in "value" than the convenience type of product and

therefore involve more risk in purchase.

Classifications of Products Specialty: This type of purchase is where customers

have hard and fast ideas of which product, outlet,

brand, provider, etc. they wish to use. These purchases

are high in "value" and therefore carry the greatest

element of risk to the buyer.

Classifications of Products Industrial Products

Industrial products can also be classified into three

categories:

Raw Materials and Components: The actual fabric, etc.

from which an end product is made. Manufacturers buy

these items from suppliers and buying tends to be on a

regular, repetitive basis once a production line is

established.

Classifications of Products Equipment/Plant: Computer systems, production plant

and other types of equipment needed in the operation

of a business fall into this category. The nature of the

purchases often involves high prices.

Classifications of Products Supplies: The "consumable" items that are needed for

day-to-day operations. These products are similar in

nature to convenience goods in the consumer sector.

PRODUCT MANAGEMENT The level of responsibility and autonomy given to

managers of products will vary in accordance with the

size of the organisation.

Some managers have all the autonomy in taking

decision while other managers have fewer power in

decision making.

Main concerns of Product Management

Product management is concerned with both existing

and potential products.

Maintenance of existing products

Products need support in terms of other marketing

activities –promotion, pricing exercises, distribution

management, etc. Product managers must constantly

monitor product performance.


Maintenance of existing products (cont…)

In cases of poor revenue generation, it may be that a

product needs to be dropped or extra promotional

activity is called for. Decisions such as these are made

on a regular basis in the process of product

management.


Development and introduction of new products

We know that not every product is blessed with a

never-ending life and, if only because of changing

customer requirements, new products will be needed.

We will cover new


Product positioning

Product management is concerned with getting the

positioning right, keeping it right, or changing it until it is

right.

Customer is the person who influences on positioning. At

this point we should be asking why these influencing

factors are so important to a product manager.


Product positioning (cont…)

The whole idea of marketing is to satisfy customer

requirements. By understanding the influences on

buying behaviour, a manager can fine-tune his product

and position it in such a way that it will not only

satisfy, but "delight" the customer. This is what most

product managers want to achieve.


Improving Customer Loyalty

There is an expression quoted in marketing and selling

which says:

"We want customers that come back, buying products

that don't".

What does it mean?


Improving Customer Loyalty (cont…)

we want good quality products and satisfied

customers.



Reasons for establishing customer loyalty:

The cost of gaining new customers is much higher

than keeping existing customers happy

It is easier to promote to existing customers than to

unidentified buyers



It is easier to encourage satisfied customers through

the buying process than to start from scratch with new

prospects

It is easier to manage the product range when buyer

needs are known.



• Long-lasting relationships MEAN customer loyalty.

The stronger the ties are between a seller and a buyer,

the less likely the breakdown of the relationship.

Product Portfolio, Range and Mix

Portfolio

What is the meaning of Product Portfolio?

Product Portfolio, Range and Mix Portfolio

If a company has just one product then all its efforts and

resources will be devoted to it. Since all the risks in the

marketing environment will fall on one product, most

companies would try to avoid such dependence.

The idea of a portfolio of products is sensible; if you can

arrange your business so that as one market dwindles away

another is just growing.


Range

Many products are supplied in different sizes, to suit

the needs of different customers; you will have seen

big and small packs of foodstuffs in grocery stores and

there are plenty of examples of size ranges, as in shoes

and clothes.


Mix

Lancaster & Massingham, in Essentials of Marketing,

show a neat description of the concepts "mix", "depth"

and "consistency" in connection with products

adapted in this figure:


Mix (cont…)

In the above example, Lancaster & Massingham go on

to show that the company has 30 items in the

portfolio, in 3 lines, and the average depth of the

product mix is 10. These "ratings" can be used by

managements to assess company strengths.

Product Management Decisions

Ansoff matrix


Ansoff matrix (cont…)

Market penetration strategy: involves getting more

from present markets, possibly by improving or adding

to distribution or extending the service or product to

parts of the country not yet reached.



Product development strategy: is a matter of finding

new products using the same production and

distribution facilities to earn more profit for the

company. Many ideas may come from the customers,

some of which can be used to add to the product

range.



Market development strategy: is a matter of finding

new markets for the products, such as when Amstrad

introduced computer-based word processors to the

home market. At that time "serious" computers were

only used in offices



The four basic strategies shown in the matrix have

different risks:

Product Management Decisions Product Mix and Customer Benefits

The selection of the product mix would be easier if the

decisions depended simply on production management;

but the whole purpose is to satisfy customers, so what they

want comes into the decision-making process. It is

tempting to make decisions just on the profitability of each

item in the range, but to do so could cause a lot of

problems.


Product Mix and Customer Benefits (cont…)

For example, the pack sizes of some food products may

appear expensive to the production manager; yet if the

small sizes were to be withdrawn, there would be

complaints from old people who live alone, or from

couples without big families to feed.


Product Mix and Customer Benefits (cont…)

Hence as a marketing manager you should this that

customers get benefits in several different ways and it

is worth knowing what your customers think about the

features of your products.

PRODUCT BRANDING

What is Branding?

PRODUCT BRANDING According to Kotler:

"...a name, term, sign, symbol or design, or a

combination of them, intended to identify the goods or

services of one seller, or a group of sellers, and to

differentiate them from those of competitors".

PRODUCT BRANDING A brand is a recognition factor which, particularly at

the point of sale, can help a buyer to reach a purchase

decision.

PRODUCT BRANDING Consider the following brands and what they could

mean to you:

PRODUCT BRANDING

Cadbury

PRODUCT BRANDING Cadbury - good quality milk chocolate/fattening

products.

PRODUCT BRANDING

Sony

PRODUCT BRANDING Sony - excellent quality.

PRODUCT BRANDING

Dhiraague

PRODUCT BRANDING Dhiraague – the number one quality brand

PRODUCT BRANDING Marketers try hard to protect a brand image with vast

amounts of money being spent on advertising and

publicity. At the end of the day, marketers see the

brand as being a major asset which works in their

favour. The more loyalty that can be created, the

better it is.

Brand Strategy To develop a brand takes time and involves long-term

planning and investment. This means that decisions

on the type of branding to be used will not be taken at

the operating level. These decisions are strategic in

nature and involve higher-level decision-makers.

Brand strategies that can be followed are:

Brand Strategy Corporate Umbrella Branding

This is where the name of the company is used as the main

"identifier" to the customer, e.g. Sony, Kellogg, Heinz.

Of course, such branding can also be very dangerous. If for

some reason a brand name becomes damaged by adverse

conditions or publicity it can reflect on the entire product

range and, consequently, affect earned revenue.

Brand Strategy Family/Range Branding

This is where a company has products being sold

under a recognised name which is different to the

company name. Family branding can apply to all

products which are sold by the company, (e.g. Marks

and Spencer use "St. Michael").

Brand Strategy Individual Product Branding

This is where the name of the product does not have

any relationship to the company name at all but the

product is recognised for its own merits, e.g. Lucozade,

Seven Up.

Brand Strategy Brand strategy decisions will be based on the type of

products which are being manufactured. If they are

broadly similar the company may choose to be known

for its corporate name rather than for individual

products. Where the product range is diverse and

aimed at different target sectors they may choose to

adopt a policy of "family" or "individual" branding.

Threats to Branding Brand attack: where the brand or image is knowingly

attacked by others who might have a vested interest in the

demise or decay of your business.

Price wars: where competition necessitates narrow profit

margins that prove to be unsustainable without

compromising other aspects of the product or service.

Brand confusion: where one brand is confused with

another and suffers as a result of the confusion.

PRODUCT PACKAGING We can look at packaging from three aspects:

practical, decorative and informative, to get a

better view of the importance of packaging to the

marketing manager.

PRODUCT PACKAGING Practical Aspects

Some aspects are obvious, such as containing the right

quantity of product and keeping it safe during transit from

factory to warehouse, then to the store shelves and finally

to the customer's home. It is equally important for the

packaging to protect distribution staff, customers and

associated people from the product, if it is hazardous.

PRODUCT PACKAGING Decorative Aspects

The obvious "prettiness" of packages is not the important matter

here. A package can carry the logo or symbol of the brand, which

adds to the message appearing in advertisements. Repetition of

a logo helps identify the product to customers with some

satisfactory experience of the same brand. It also "reinforces" the

message in the advertisements and helps persuade customers to

buy the product.

PRODUCT PACKAGING Informative Aspects

This really is important in view of the potentially

dangerous products sold over the counter these days.

The information can be simply how to open the

package –not easy with some of the "protection"

devices which appear for our benefit!

THE PRODUCT LIFE CYCLE

THE PRODUCT LIFE CYCLE Development

Naturally, during this phase no sales are made. As time

progresses, development costs accrue as can be seen

on the lower negative cash-flow curve. Promotion for

awareness may commence in advance of introduction

of the product to the marketplace.

THE PRODUCT LIFE CYCLE Introduction

This is another heavily expensive stage with promotion

being intensive even though it may be selective initially. If

the product is truly innovative there may be little or no

competition at this stage, but market education will be

required so promotion costs may be even higher. The

distribution network will have to be established with dealer

incentives being offered to secure business.

THE PRODUCT LIFE CYCLE Growth

If the product is taken up by the market, this stage will produce

the greatest increase in sales and profit. The competition will be

catching up and promotion will be aimed at creating favourable

attitudes to the product as well as establishing buyer loyalty. The

growth stage gives opportunities to solve problems which may

have been found in the marketing effort (distribution,

packaging, etc.)

THE PRODUCT LIFE CYCLE Maturity/Saturation

The market has matured and competition will be at the maximum.

Profit levels may begin to show falling trends as market share is lost to

the competition or the market becomes saturated. At this stage

promotion will be aimed at reminding the target audience about the

product and at overcoming the competition. There may still be good

revenue to be earned from the product and managers may extend the

life cycle by marketing effort –new packaging, increased promotion,

new market sectors, regions, etc.

THE PRODUCT LIFE CYCLE Decline

The market is falling and results in low profits. There is a

possibility of high support costs and considerable

management time spent in considering the merits and

demerits of the product. The product may need to be

withdrawn if new markets/uses cannot be found or if

adaptations to the mix are not effective in increasing sales.

Usefulness of the Product Life Cycle

Planning and control

Using a desired product life cycle will show what

possible sales could be achieved based on sales force

capabilities (number of customer visits: likely

conversion rate, etc.). It also means that the manager

can liase with the production department on

schedules and product availability.


Strategy formulation

The stages of the product life cycle give good general

guidelines on the characteristics which can be

expected for aspects of the marketing activity and

consequently aid decisions on the type of marketing

strategy that might be appropriate.


Targeting and Positioning

The diffusion of innovation is a concept which was

introduced by Rogers and it refers to the

characteristics of buyers.



Innovators

These are buyers who are always at the forefront of the

market. They buy new products as they like to experiment

and be seen to be first. These people are the "opinion

leaders" of society. If this category can be convinced of the

value of a product, and they buy, there will almost certainly

be a growth rate for the product.



Early Adopters

These buyers are never the first to try new products,

but they always follow opinion leaders fairly closely.

They are not confident or adventurous enough to be

leaders, but like to be "fashionable".



Early Majority

Once a product is established, the early majority will

take it up and buy. By the time the early majority are

buying, the product has been on the market for some

time and has been proven to be successful or useful in

some way.



Late Majority

The late majority buyers are those who wait until the

product is almost at maturity stage. They require

much persuasion and it is often only when a product is

widely available that they will buy.



Laggards

These buyers are behind the time. They buy products when

they are going out of fashion or may even have been

outdated by new technology. They are the most resistant

buyers to convince as they are the most risk-aversive.


Management of the Product Life Cycle

By constructing a desired product life cycle at the

beginning of a campaign, monitoring results and then

plotting actual figures, a manager can see how any product

is performing. The visual representation helps in planning

ahead to phase out obsolete products and in knowing when

to introduce new products.

Problems in PLC

In reality very few products follow such a prescriptive

cycle.

The length of each stage varies enormously.

Not all products go through each stage. Some go from

introduction to decline.

It is not easy to tell which stage the product is in.

EXTENDING AND EXPANDING THE PRODUCT LIFECYCLE

When a new product is introduced to the market there is

usually a lot of expensive investment involved, on which

management must try to get the best possible return.

Managers cannot control markets, which consist of

customers who have their own ideas, but skillful managers

can influence customers in such a way as to lengthen the

life of a product by extending or expanding the market.


Extension: involves maintaining production levels by

seeking a wider market as demand begins to fall in the

existing market. No new investment in manufacturing

operations is required.


Expansion: involves trying to increase demand for an

existing product and thus increase production levels.

Hence it is a strategy which does require additional

investment, either in support of local manufacture or

foreign market facilities.

NEW PRODUCT DEVELOPMENT The process of new product development goes through

a logical series of steps from the inception of the idea

to the actual launch of the product.

NEW PRODUCT DEVELOPMENT Idea generation

Can come from a variety of sources. In innovative companies,

such ideas tend to be research driven. The notion of marketing

orientation tells us that we should look to our customers first

(through marketing research) before embarking upon new

product development. A culture should exist within the

organisation that encourages new product ideas amongst more

than simply the Research and Development function.

NEW PRODUCT DEVELOPMENT Idea generation (cont…)

The sales force should be a regular source of new product

ideas, and such data can be gathered from the company’s

marketing information system. Brainstorming is a good

method of producing new product ideas as long as it is

chaired competently, but regular meetings of planning

committees should have this at the head of their agenda.

Venture teams can then be set up to progress likely ideas.

NEW PRODUCT DEVELOPMENT

Screening

Is the first stage of sifting viable ideas from less viable

ones and obvious issues are addressed at this stage in

terms of potential demand, the company’s capability

in terms of development and production and the profit

potential.


Screening (cont…)

This is an important stage at which ‘Go’ or ‘Drop’

decisions are made. This screening process should

have due regard to whether or not the new product will

fit into the range of products that the company

produces and markets.

NEW PRODUCT DEVELOPMENT Business analysis

Is where the new product idea’s financial viability is

appraised. By this phase only ‘serious’ contenders will

remain and here a critical stage has been reached.

Such analysis needs to take into consideration total

costs rather than simply development and production

costs.


Product development

Is the point at which the company has committed itself

and indeed this is when costs start to increase sharply.

Where appropriate, prototypes (models) will be

developed. These can be assessed by marketing

research through product appraisal tests.

NEW PRODUCT DEVELOPMENT Product development (cont…)

It is also here that product refinement and modification

will be possible through feedback from marketing

research. It might also be the point at which the product is

abandoned (give up) if expectations do not match up to

reality, rather than risk a ‘high exposure’ failure in the

marketplace.

NEW PRODUCT DEVELOPMENT Test marketing

Is the penultimate (second last) stage. This might be appropriate

where the product is a fast moving consumer good when it can

be tested in test towns or television test areas before going

‘national’, but this is not always appropriate for more durable

products. Here, product placement tests with members of the

general public are probably more appropriate.


Test marketing (cont…)

The only problem with full scale test marketing is that

it allows your competitors to see what you are doing, so

clearly this disadvantage must be weighed against the

advantages of simulating a National launch before full

scale commitment.

NEW PRODUCT DEVELOPMENT Commercialisation

Is where the product is to be launched on the market.

All of the various filters have taken place, but even at

this stage success is not guaranteed. However, there is

a far greater likelihood of success if the procedure just

described has been undertaken.

Decay curve of new product ideas

An American firm of consultants, Booz, Allen and

Hamilton first put forward the notion of the decay

curve of new product ideas, which is illustrated below:

Decay curve of new product ideas

Decay curve of new product ideas In their original research Booz, Allen and Hamilton found

that it took 58 new product ideas to produce one

potentially successful product. However, even during the

‘commercialisation’ stage there was still a 50/50 chance that

the product would not be successful. The results of later

research suggested that it took considerably fewer new

product ideas to produce a successful product.

Factors for successful innovation

McKinsey & Co conducted research in 1980 which

investigated a number of large multinational

organisations. The research examined factors that

were deemed to be essential in their successful

operation and eight factors were highlighted:

Factors for successful innovation

a bias towards action

simple line and team staff organisation

continued contact with customers

productivity improvement via people

simultaneous loose and tight controls

Factors for successful innovation operational autonomy and the encouragement of

entrepreneurship

stress on one key business value

an emphasis on sticking to what it knows best

This research has stood the test of time and it is still

cited today as being the critical success formula for

successful international enterprise.

Advantages of NPD The advantages of NPD are that it can:

Give advantages over the competition

Mean increased customer loyalty

Lead to increased sales/stability of profits

Spread investment risks

Increase the prestige of the company

Disadvantages of NPD The disadvantages of NPD are:

Money

Time and

Risks

Past Paper Review December 2008 / Q 4

Describe and explain one appropriate process of new

product development (NPD) that marketing

management should follow to reduce the possibility of

product failure at the commercialisation stage of the

NPD programme. (25 marks)


List the stages in the new product development

process (NPDP) and analyse the marketing activities

that management is likely to undertake at each stage.

(13 marks)

Past Paper Review June 2008 / Q 1

By means of a flow diagram, show the sequential

stages in the New Product Development (NPD)

process. Examine the management decisions that have

to be made at each stage. (25 marks)

Past Paper Review November 2011 / Q 4

Describe the New Product Development (NPD)

process from the start of the product idea to the post-

launch evaluation, and discuss the activities that take

place at each stage of the process. (25 marks)

Past Paper Review Answer

Slide 81 - 97


(a) Evaluate the concept of the product life cycle (PLC)

as a strategic management tool. (13 marks)

(b) Use examples to show how the components of the

marketing mix alter and change in relative importance

within each stage of the PLC. (12 marks) (Total 25

marks)


Explain the concept of the product life cycle (PLC) and

evaluate its usefulness as a strategic marketing tool.

Give examples to support your answer. (25 marks)


(a) Explain the concept of the product life cycle (PLC) and

evaluate its practical usefulness as a strategic marketing

tool. (13 marks)

(b) Show, using specific examples, how the importance of

the components of the marketing mix changes within each

stage of the PLC. (12 marks) (Total 25 marks)


(a) Identify and briefly discuss the four stages of the

product life cycle (PLC) model. (8 marks)

(b) Explain three ways in which the PLC model may

be useful to marketers. Use examples to support your

answer. (7 marks) (Total 15 marks)

Past Paper Review Answer

Product life cycle

Marketing people have found it to be a useful planning

tool. The principal problem with this theory is that it is so

neat as to be totally “believable” and some product

managers tend to expect that every product will fit this

neat curve.

Past Paper Review Answer (cont…)

Marketing academics have therefore criticised the concept

on the basis that when a product is launched it is often

killed off prematurely because sales suggest that it has gone

into a quick decline, whereas the reality is probably only a

slight hiccup in the growth curve of the product.


On the diagram below is superimposed the revenue curve

which shows the product recovering its costs of

development and launch and then moving into

profitability. Naturally, all products will behave differently,

but as a tool of planning this theory has much to commend

it.

Past Paper Review

Answer (cont…)


The product life cycle can thus be applied to the

industry as a whole (which will include a summation

of all manufacturers’ sales that are marketing that

particular product) or it can apply only to the sales of a

specific product for an individual company.


This is one of the positive benefits of the PLC as a

strategic analytical tool; it can be applied at various

levels of disaggregation. For example, for a product in

the world economy as a whole, by individual country,

by industry, by product type, product form or even by

individual brand.


The time span of the product life cycle can range from

say a fashion season to many years. In this latter case

the maturity and saturation stages will be considerably

lengthened. It is now acknowledged that different

categories of life cycle exist.


Product category life cycles describe a generic

product like soap or shoes. Life cycles here tend to be

long or infinite.

Product form life cycles describe the type of product

like perfumed soap or plastic shoes. Here the life cycle

is shorter.


Brand life cycles describe the various manufacturers’

brands of perfumed soap or plastic shoes. This might,

in the case of plastic shoes, be linked to a single

fashion season with a new brand coming out shortly

afterwards, so this kind of life cycle is the shortest of

all.


Generally the product life cycle is an interesting and potentially useful

concept to the strategic marketing planner. It is obvious to all that, with

the exception of very few products that seem to be impervious to life

cycle pressures, most products do indeed go through some form of

sales and profitability change over time which you could say is

analogous to a form of “life cycle”. However the PLC concept should be

used with great caution as a planning tool.


Evidence from many research studies indicates that the PLC is

insufficiently robust in terms of its time dependency to be used

as a predictive or forecasting tool. The work of Polli and Cook

and many others have alerted users of the PLC to the danger of

bringing about a self-fulfilling prophecy in terms of declining

products. The PLC is an interesting general concept but should

be used with caution when used as a strategic marketing tool.


Strategies suggested by each life cycle stage

If you are looking at a PLC curve plotted on graph

paper you could be said to be trying to identify the

“point of inflection” or change in the direction of the

curve.


If this information can be obtained and successfully

introduced into the PLC model then the product life

cycle can be used strategically and impart an

anticipated course of product development for which

strategies can be planned in advance.


Marketing actions are now suggested which are normally appropriate

to each of these separate stages.

Development is of course the prelaunch phase and it is during this

period that confidentiality will usually have to be maintained in terms

of keeping information away from competitors. It is no secret that in

many larger organisations the research and development function is

housed entirely separately from the main production unit.


In fact, in a lot of cases research and development is on

an entirely different site. As the research and

development process progresses from experimentation

to the tangible product, so, in a marketing orientated

organisation, the involvement of marketing research

will tend to increase.


Introduction is the launch period and the product is slowly

gaining acceptance. There are few (indeed sometimes zero)

competitors at this stage, but this is where a number of new

products fail. The product is seen to be innovative at this stage

and potential buyers must be informed at to what it will do, so

advertising tends to be of an informative nature. Buyers tend to

be what are known as “innovators” and “early adopters”.


The product is new and can normally sustain a high initial price

(skimming), as there are few or no competitors. Indeed, the product

will probably have been expensive to produce and the costs of creating

awareness prior to and during, its launch might have been high, so this

is an opportunity to recoup as many of those costs as the market will

sustain. Distribution is not widespread at this stage and is often

exclusive within a particular geographical location.


Growth is the period during which competitors will start to

appear with similar offerings. Indeed, they might well have been

conducting parallel research and development, but have been

slower in launching their innovative products. Even now, the

product is still exposed to failure, perhaps through competitive

activity, as competitors have been able to learn from your

mistakes during your launch.


They will know your price and might undercut and they will

know the perceived weaknesses of your product, so they can

emphasise the strength of theirs. Although it might seem that

being in the market first is a good policy, it is also a high risk

policy, and unless the company is large enough to sustain a costly

failure at this stage, or has other products to fall back upon, then

such a policy is very high risk indeed.


Maturity and saturation are dealt with together, because the

“maturity” phase is the phase where the product’s sales level off to a

gradual peak over a longer period (often even years or decades) and the

“saturation” phase is from its peak, gradually downwards to the phase

where sales start to decelerate towards the “decline” phase. In fact,

many marketing authors miss out the “saturation” phase altogether and

class all of this phase as “maturity”.


During this phase sales slow down and repeat purchases are prevalent.

There are attempts to “differentiate” products through the addition of

“features”. Price competition is at its maximum as other manufacturers

enter the market. Promotion to the trade is also important, as

manufacturers will wish to retain their distribution outlets. Joint

manufacturer/trade promotions are developed with costs being shared

on an equitable basis. There is generally a move away from a “pull”

strategy of promotion towards a “push” strategy.

Past Paper Review Decline is signalled by steadily and sustained falling sales after

the “saturation” phase. Marketing research should have told the

company that this was due to happen in order that they could

concentrate upon developing new product lines. However,

company management quite often refuses to accept that its

products are about to enter the decline phase and stay with it in

the hope that the inevitable might not happen.

Past Paper Review Such a decline might be a function of a change in customer

preferences, but more likely it is a function of a new product or process

supplanting the existing one. The phase is characterised by competitive

intensity and price-cutting and sales falling continuously. Many

producers decide to abandon the marketplace, or are forced to abandon

because of financial difficulties. Thus, the decision to abandon the

marketplace is a critical one and should theoretically come when the

product moves from a positive to a negative revenue situation.

chapter 2 human resource planning & strategy · decision while other managers have fewer power...

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