In addition to the information required on the market for product in question, further research will be needed. It is important to establish what additional information is required. In simply terms market research can also be used to collect data to establish:
- Who are likely the consumers?
- What do they require?
- Why do they require such a product?
- When do they wish to purchase?
- Where do they wish to purchase the product?
This source or method of collection can simple is divided into two categories, primary/field research and secondary/desk research.
Secondary research – it is the gathering and analysis of already available information: in my secondary research, I collected statistical information from the government actuary’s department ONS based on consumers’ annual expenditure on non-alcohol drink, demographic trends and projections. Additional information’s was obtained from the local library including industry research report, magazines and journal articles and newspaper clippings as well as information on the Internet.
Secondary research is the cheapest form of marketing research. It is mainly external data and is in form of published materials, this data can give a broader dimension to data previously collected. External information can be use to compare against coca cola other competitors such as Pepsi, it can also be used to compare against the economy as a whole.
The secondary data shows advertisements sold in spot and the daytime spot cost less because there are little audiences. In the evening between 5.30 P.M. to 10.30 P.M. there is a much bigger audience due to the fact that many workers and student would have finish for the day and be home to relax and watch television.
In the UK, TV adverts are shown between programmes and within the programme intervals. Others way of advertising can be through radio programme. There are about 240 commercial stations, licensed and regulated by the Radio Authority.
Out door advertising poster sited in Britain are mainly in big cities alongside main roads, this include on the buses, taxis, bus shelters, banners and billboard. Posters are often using to remind people of a particular brand name and its products.
From my secondary research I can get information on how coca cola are during in terms of market-shares and sales figure compare against its competitors, and then I can base my marketing strategy on the outcome of the data (qualitative and quantitative data).
Primary research – is the gathering of fresh information specifically tailored to the business’s own requirements. For the information on primary research, I designed and distributed questionnaires to existing and potential customers. This allowed us to find and identify the target market they needed. For this primary research questionnaire will be based on the four P’s, which makes up the marketing mix (place, price, promotion, and product). The result of our questionnaires will help us to decide on the product differentiation, penetrating pricing and the promotion.
Using questionnaires have many advantages. First of all it is probably the most important form of getting data because it is easy to understand and the answers give the consumers opinion on what they exactly think, which a survey does not do.
A questionnaire also allows a business to see what consumers are critical and happy with so they can either make changes or leave it as it is. The problems with questionnaire are that sometimes not all of them are returned, some not completed and other do not answer the question required.
The overall research objectives are to find out what people think about my new product form a non-bias point of view. I will use a question so that I could input the exact what I want and how I want the data.
My primary market research objectives are to find out what people of the new coca cola’s product (Organic lemon coke). How they rate it against other product and how the public feels about the company as a whole. The way that I have achieved this is, by distributing a questionnaire asking the public about their opinion on the company and the product.
My secondary market research objectives are to find out what other companies such as Pepsi rate coca cola compare to other company and other brand name and also to find out if the company is at growth, maturity or if it is on the decline. All these are achieved in my secondary research through the available information such as Internet and journalist.
I am conducting a survey on soft drinks. I would be obliged if you would tick the appropriate box.
1. Age 2. Gender
13 – 18
18 – 23
23 – 28
28 – 33
3. What is your weekly expenditure on soft drink?
£5.00 - £10.00
4. Are you?
Employed Unemployed Student
4b.If employed what is your occupation
5a.What is your favourite drink?
5b. Reason for favourite
6. Are you satisfied with your favourite drink?
Yes No Sometimes
7. How did you hear about your favourite soft drink?
Television Radio Newspaper
Others (please specify) ……………………………
8.What do you dislike about your present soft drink
Too fizzy too sweet too sparkling other, please specify ……………...
9. Where do you buy your soft drink?
Supermarket Local shop Vending Machine
Other, (please specify) ………………………
10.What taste do you prefer in a drink
Lemon Orange Blackcurrant
Others, (please specify)……………………….
11. Do you prefer, still Fizzy
12.Would you buy organic drink?
13a.Would you buy the organic lemon coke?
13b.If no. State why. ………………………………………
14. What price are you prepared to pay for a 500ml bottle of organic drink?
Under £1 £1- £1.50 over £1.50
Others (please specify) …………………….
15. Any other comments on choice of soft drink?
Thank you for completing my questionnaire
The following graphs are the answers to whether or not I should continue with the introduction of the new product ‘organic lemon coke’. This are my maim assurance of the success of the product.
The graph above shows that teenagers and the young adult are our main targets in the marketing of Organic lemon coke. They are the ones who are mostly interested in whatever coca cola’s company is introducing to the market.
The above graph indicate that targeting market will be willing to buy organic lemon coke, so this means that we will definitely launch the product as soon as possible.
The graph above shows that most teenagers and young adult buys their soft drink from local shops and few from the supermarket, therefore my distribution strategy will focus on local shops and supermarket. Since these are the convenient places for my targeting market.
In this section, I am going to examine what external environmental factors that I need to be aware of, which may affect coca-cola in producing their new product, and how these factors will directly or indirectly affect coca-cola.
It is a technique much used in many general management as well as marketing scenarios. It consists of examining the current activities of the organisation. IT Strength, Weakness, then using this, and external research data to set out the Opportunities and Threat that exist.
Strength: Coca-cola has the biggest brand name and market size share. Coca-cola sponsors many sport activities, which gives them more awareness and popularity. They also sponsor youth activities and schools.
The Coca-Cola image is displayed on T-shirts, hats, and collectible memorabilia. This extremely recognizable branding is one of Coca-Cola's greatest strengths.
Additionally, Coca-Cola's bottling system is one of their greatest strengths.
It allows them to conduct business on a global scale while at the same time maintain a local approach. The bottling companies are locally owned and operated by independent business people who are authorized to sell products of the Coca-Cola Company.
Weakness: complaints about the fuzziness in Coca-Cola’s, drink may affect the promotion of their new product ’Organic lemon coke’. Also strong competition may affect the pricing policy of their new product and may be set according to the local going rate rather than a result of a detailed analysis of costs.
Due to a high level of competitor in the industry, the profits of coca cola have been declining. Coke have been forced to spend more money on advertising campaigns and product development for the purposes of maintaining its market share
Some large retailers have exclusive contracts with Pepsi and do not stock Coke i.e. KFC and Burger King only stock Pepsi. This has resulted in a potential loss of revenues.
Opportunities: there is many opportunities open to coca-cola to improve its position. First of all the population is growing so therefore more people are going for their product, moreover young people prefer fizzy drink to water, so coca cola can take the advantage of this to sell their new organic lemon coke and people will buy it. Since the market is growing, therefore more people will go for the drink.
Coca-cola will also have the biggest brand name and the automate ‘thirst quencher’ despite the existence of their competitors and complains from government concerning the effect of ‘coke’ on children.
Threat: Pepsi Company is the biggest threat of all to coca-cola’s company. Pepsi increase their promotion and awareness by sponsoring football clubs, and advertising their products with popular celebrity to attract their fans and youngster to buy their products. For example David Beckham -: every young boy dreams is to be like Beckham and will imitate whatever he does.
The SWOT analyses have enabled me to look at influences affecting my strategy from another prospective. I found out from the outcome of the SWOT analysis that the strength, weakness, opportunities and threats are balanced and therefore my marketing strategy will probably centred on rectifying certain aspects of my SWOT analysis.
The PEST analyses examine changes in the marketplace caused by Political, Economical, Social and Technological factors. It is the management of change in marketing. It is also the mnemonic used to summarise the area, which create change.
Political: Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the operation of manufacturing these products in terms of regulations. There are potential fines set by the government on companies if they do not meet a standard of laws.
The following are some of the factors that could cause Coca-Cola company's actual results to differ materially from the expected results described in their underlying company's forward statement: -
· Changes in laws and regulations; which includes changes in accounting standards, taxation requirements, tax rate changes, new tax laws, revised tax law interpretations and environmental laws in domestic or foreign jurisdictions.
· Changes in the non-alcoholic business environment. These include, without limitation, competitive product and pricing pressures and their ability to gain or maintain share of sales in the global market because of action by competitors.
· Political conditions, especially in international markets, including civil unrest, government changes and restrictions on the ability to transfer capital across borders.
· Their ability to penetrate developing and emerging markets, which also depends on economic and political conditions, and how well they are able to acquire or form strategic business alliances with local bottlers and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.
Economic: Economic change, for example a recession creating increase activity at the lower ends of product price ranges. The rise of interest rate depresses business and causing redundancies and lower spending levels.
Market growth slowed because of recessions during the early 1990’s. Many consumers reduced the amount of drink they buy and some consumers are particularly likely to stop buying during the time of economic year.
The Federal Reserve is doing all that it can help the economy recover. They have cut the interest rate ten times this year. The rate now lies at a 40-year low of 2%. Lowering the interest rates will ultimately excite consumer demand in the economy.
Companies will expand and increase use of debt because of the low borrowing rates. Coca-Cola can borrow money for investing in other products, as the interest rates are low. It can use the borrowing on research of new products or technology. As researching for new products would cost less the Coca-Cola Company will sell its products for less and the people will spend, as they would get cheap products from Coca-cola
Social: Consumers change of attitudes and lifestyles might change their taste of drink and may affect coca cola industry in that many are switching to bottled water and sophisticated drinks. In addition, the need for bottled water and other more convenient and healthy products are in important in the average day-to-day life.
Consumers are also increasingly concerned with nutrition and this will continue to affect coca cola as a non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages. Since many are reaching an older age in life, they are becoming more concern with increasing their life longer and healthier.
Technological: As we know, it creates opportunities for new products and product improvement and of course new marketing techniques: the Internet, e-commerce etc. Technological has played a major part in the introduction of organic lemon coke
Some factors that cause company's actual results to differ materially from the expected results are as follows:
·The effectiveness of company's advertising, marketing and promotional programs, the new technology of Internet and television uses special effects for advertising through media. They make some products look attractive.
This helps in selling of the products. This advertising makes the product attractive. This technology is use in media to sell their products.
· Introduction of cans and plastic bottles have increased sales for Coca-Cola as these are easier to carry and you can bin them once they are used.
·As the technology is getting advanced there has been introduction of new machineries all the time. Due to introduction of these machineries, the Coca-Cola Company was able to come up with the idea of producing new products.
The PEST Analysis affects many aspect of coca cola’s activities, especially those involved with political and economic influences because these affect national income, interest rate, VAT and overall prices. These might increase the production cost.
Identify and explain of the links between my analysis of internal and external influences on the development of my marketing strategy.
The ability for any organisation to meet its customer’s need is influence by two factors:
- Internal factors
- External factors (Micro and Macro environment)
Internal factors: the factors, which influenced coca cola in marketing strategies;
- Objectives of coca cola -: I have to look at the objectives of the organisation and to make decision according to them. As profit is the organisation’s aim I have to look at the new product development as coca cola is in the maturity stage and the only way to keep the profit increasing is introduction of the new product.
- Stake holder-: the stakeholders are the group or individual of people who are affected directly or indirectly by the performances of the business. The stakeholder includes employee or shareholders or the external stakeholder such as suppliers or customers. The employee who work within the organisation also help in decision making as the step of introducing a new product can affect their pay rate and working conditions.
- Organisational resources-: the production process, finance and human resources influence my strategy as they have a direct link with the product as I have to see the production process for my new product. Finance influence as the new product development will require finance for developing and launching it. The human resources department will influence my strategy as it have to look for after the extra employees which I will be needing for the distribution of the new product.
- Organisation structure and culture-: marketing decision is taken within the context of the internal ‘culture’ of an organisation. This culture consists of underlying value, attitude and assumptions, which an organisational adopts. It influences the way in which an organisation consider new ideas and option, how it react to event around it and how it structure itself.
The distribution of responsibility and authority within the organisation is an important part of its culture. The organisation structure in which result influences all decision making, including marketing.
External Factors: which influence, marketing strategies are;
- Micro Environment
- Macro Environment
Micro Environment-: marketing decisions are affected by a number of external forces, which operate close to an organisation, which include:
- Suppliers – these are people who provide the organisation with the necessary resources, which are needed to meet the requirement of the consumers. These include equipment, materials, premises and finance.
- Intermediary – business do not always deal with the customers directly with their products or services. The intermediary helps in the process of selling and physical delivering products to customers. These intermediaries include sales agents, wholesalers and retailers.
- Customers – they are the people who buy the products of the organisation and the final consumers. If intermediary comes between an organisation and the end users (consumers) of the product, then these intermediary themselves becomes the customers who buys the product. Marketing strategies can target the end users, by aiming to ‘pull’ the product through the trade.
- Competitors – organisations usually have to compete with other organisations for customers. The success of the organisation depends on their ability to satisfy customers needs better than their competitors.
Macro Environment-: the marketing strategy also includes forces, which have a more general impact on an organisation. These are sometimes summarised as PEST.
Political -: the political environment of laws and regulation and intervention by central and local government, political agencies and pressure groups influences marketing strategy. Intervene of government is for the benefit of the people and the businesses; it is to protect the consumers and to ensure full and fare competition.
My marketing strategy can have a great effect if the government puts the taxes up to control inflation because if the product is too expensive then the consumers would not be able or not want to buy the drink, this therefore will decrease the profit margin of coca cola and might not be able to cover the production costs. Consumes might eventually turn to a cheaper drink from coca cola’s competitors.
Economical -: the economic environment affects how much the government have to spend and how they are likely to be spend. Therefore this plays a significant role in determining the likely demand for products and services. Marketing is influence by:
The local economy factor-; it is important when exceptional circumstances create significant variable to national trends.
National economic factor-; interest rate, exchange rate, unemployment level and rate of inflation have implications on products and services in the market. Marketing decisions involves making assumptions about the key statistics and evaluating the impact of any changes.
International economic factor -; they have longer-term significance, which are sometimes difficult to evaluate. Changing growth rate in other national economic affect export and income, which in turn influence national and local economies.
Social Cultural -: social and culture forces condition helps individual translate their need into a specific product and services which they want. This environment can be sub-divided into demographic and cultural aspects.
- The demographic structure of a society describes its human population in terms of a size, location, age, ethnic origin, occupation, sex and other statistical measure.
- The culture of a society is made up of a complex mixture of many beliefs, value, customer’s habit, law and understandings, which are learned, from parents and other members of the society. Some of this culture influences (e.g. observing tradition such as birthday, Christmas, etc) are deeply engrained and take many years to evolve.
Technological -: advances in technology affect the marketing in a numbers of ways: -
- Creation of new opportunities for product and service is the most obvious impact of technological change.
- Our consumption patterns and lifestyle evolve as a result of change in technology.
- Marketing techniques have change as a result of technological possibilities. New ways to gathering information have a significant impact on customers marketing.
Technology will be use in the production and introduction of the new product, this will not only saves money but also improve the quality of the product.
As seen from the above internal and external factors that affects every organisation while planning their strategy. As these factors helps a marketing manager to make decision about the new or existing products. Therefore, environmental influences are an important aspect of marketing decision process.
The above internal and external factors show that their influence in marketing strategy is of important role. With the mixture of the influence of the internal and external factors, a marketing strategy can plan.
A realistic rationale for the development of a coherent marketing mix for coca cola’s product or service
The primary objective for Organic lemon coke is to be the UK’s best selling soft drink. In order to achieve this, I have to develop a marketing strategy that will take into account all the elements of the marketing mix. This will involve individual strategies for pricing, product development, promotion and distribution. For an established brand name, these strategies must be flexible and relevant to each new generation of consumers, but at the same time, great care must be taken not to damage the perception of the product built up over decade of marketing.
The marketing mix of my strategy is very dependant on the environment; therefore we need to sell organic lemon coke at the right place by looking at the economy regularly to see if the public can afford to buy the product at our target price. This is where the market research will help us define what customers think about our product and how it affects the organisations. We also need to know what demographic think about the product. People of all gender, age and sex can be targeted easily by using the media to promote all of these different people will be able to hear about our new product ‘organic lemon coke’.
The unemployment level at the moment is low likewise the interest rate, which place the economy in a good position. By looking at this, it has an influence on my marketing strategies to take advantage of advertising more as people are able to spend more due to their good disposable income. If they see more advertising they will be encourage buying more.
People lifestyle changes as they get older, they may want to drink healthy and sophisticated drink and this might have effect on sales. On the other hand, demand for organic lemon coke might be inelastic because consumers might not give up if they really like it, no matter the consequences.
Market segmentation is the breaking down of a total market into segments or sub-group. The following are ways in segmenting consumers product market:
Behavioural: many occasion for purchase as Christmas, Easter, birthdays and usage status, beneficial sought. Loyalty, this is when consumer are loyal to a brand.
An organisation cannot satisfy the needs and want of all customers. To do so may result in a massive drain in company resources. There are numbers of segmentation variables that allows an organisation to divide their market into homogenous group.
Demographic: these are based on target age group (15-35+), sex (female or male), income and Product size for family consumption. As people age their needs and want change, some organisation develops specific products aimed at particular age group. Gender segmentation is commonly used within the cosmetics, clothing and magazines industries.
Psychographics: this can be broken down into lifestyle, social class and personality. As the lifestyle of consumers change, they might to watch their weight and start drinking sophisticated drink instead of fizzy drink.
Marketing planning is about developing the right marketing mix for the target market. The marketing mix is also known as the 4p’s, because it not only involves the physical product but also the price, promotion and place.
In order to implement a marketing strategy, which meets customer needs, I will pay attention to the basic ingredients of the ‘marketing mix’. This involves matching the product (organic lemon coke) to consumer needs, determining the price, deciding where the product should be placed in the market and promoting it through publicity, advertising and sales techniques.
The marketing department will develop an appropriate marketing strategy by identifying the most important components of the marketing operation, so as to determine the best marketing mix for its target market. By targeting a specific segment of the market, and it will also be possible to develop a marketing mix, which satisfies the needs of a clearly defined set of customers.
Many competitions in the market produce similar product to coca-cola. I have to make sure that the new product ‘organic lemon coke’ is portrayed consistently in all communication that is nurtured and where appropriate, that it grows.
I acknowledge the fact that providing more than just a drink for our customers but reinforce customer’s loyalty to the product by increasing productivity and reducing the risk of supply shortage.
Coca cola being a fizzy drink tend to be popular within the young generation. It is also one of the best brands sold, which is very well known all over the world. It is sold in many styles; plastic bottles, cans, glass bottles and also sold in different quantities such as in a litre, 2 litre, and 3 litre bottle.
By looking at my questionnaire, a lot of amendments are not needed as a whole. A few people have emphasised on the promotion whereas a few others on the product and price. Therefore, I decided that my strategy would not base on the product since Organic lemon coke will be as the other coca cola’s product, in quantity and package.
My strategy is to price the organic lemon coke at a level comparably to our competitors. My strategy take into account production cost, competitive pricing strategies and consumer price sensitivity. ‘Soft drink’ market is very competitive and the price conscious consumer market is looking for good value. My goal is to provide excellent quality service for a reasonable price which still maintaining healthy profit margins.
Consumer will be offered a number of special offers and loyalty incentives particularly when our competitors is strong, due to the facts that we take a great pride in our work and reputation and prepared to go considerably lengths to ensure customers satisfaction.
A market orientated business, treat pricing as a key creative decision are and not an accounting or cost responsibility. Before making a price decision, it is also very important that some fact taken into consideration.
- Ability of the customers to pay
- Value of the product perceived by the customer
- Willingness of the customers to buy, or elasticity i.e. the supply and demand
- Reputation of our competitors
- Market share enjoyed by our competitors
- Price flexibility in the market
- What other companies are charging for their own brand
- Political decision e.g. VAT
- Legal limitation imposed
- Local, national and international e.g. European Policy
- Production cost involved
- Product life circle
- Strategy adopted e.g. market share and profit level
- Volume of sale required
In order to create awareness of the new product ‘Organic lemon coke’ I have establish a technique to persuade the potential customer to make the buying decision. This involves all communication with actual and potential consumers.
This will be done by media campaign, involving television advertisement and a phone site campaign (all part of the on-street presence-branded phone booths, swing signs outside store, store fascias etc).
In order for promotion to take place effectively the following must be observed:
- Improve brand recognition
- Stabilise demand and sales
- Improve and maintain market share
- Improve promotional activities
- Create a competitive difference from rival offering
The main promotional tools I will use for the new product are:
Advertising: this is an important of promotional activities. It is one of the most effective of promotional tools and will be used to inform, persuade, publicise to potential and existing customers about the new organic lemon coke. In deciding on an appropriate method of advertising I will:
- Decide on the purpose of advertisement, whether it is concerned essentially with imparting information, persuading new customers and reminding existing ones.
- Fix the budget for the campaign in the context of sales and amount spent by competitors.
- Identify, design and evaluate the require message, a task often carried out by the company contracted advertising agency.
- Evaluate the effectiveness of the advertisement in term of communication and sales.
Television: over 90% of the population watches television; therefore, the advertisement of coca cola on their new product ‘Organic lemon coke’ is effective and will be able to attract their target market.
Billboard: billboard advertisement would provide the company a national medium for placing it’s advertising, particularly those the company aimed at. Billboard advertising is a rapid growing advertisement that has the advantage over television of having much lower production cost.
Newspaper: to advertise coca cola new product (organic lemon coke) on a local or national newspaper is a great advantage of awareness because majority of the population reads newspaper and especially the target market. Therefore it will create awareness to the new and existing customers about the new product.
Physical distribution is an important part of the marketing mix. It helps an organisation meet customer needs profitably and efficiently. In doing so it enables manufacturers and distributors to provide goods for customers at the right time, in the place and in the condition required.
With the physical distribution system, I will have to make sure that there is enough Organic lemon coke to go around, therefore my strategy will be to have enough warehouse to stock the product.
In my questionnaires most people purchase their drink from a local shop except for people who buys in bulk, they purchase theirs from supermarkets. So therefore my advantage of choosing a location over the competitors is that Organic lemon coke will be available in every supermarkets, corner shops and newsagents. The product will be put in specific places where the customers will be attracted to it easily. This will help to generate a good reputation in the manufacturing industry.
This relate closely to product life cycle. They identify four types of product in an organisation’s portfolio.
Boston consultancy group (BCG Matrix), this product portfolio matrix classified product lines into four categories. The BCG models suggest that organisation should have a healthy balance of product within their range.
Star -: is the product that has successfully reached the growth stage in the life cycle. Although these products will also require a great deal of financial support, they will also provide a neutral cash flow and are good prospects for the future.
Star has a high market share that operates in growing markets. The product at this stage should be generating positive returns for the company
Question Mark/Problem child -: these are products with a low share but operate in high market growth rate. The company puts a lot of resources in this product in the hope that it will eventually increase market share and generate cash returns in the future.
It is possible to develop this product and turn them into the star and cash cow for the future. But first a lot of financial support and commitment is required.
Cash Cow -: this operates in a matured stage of the lifecycle. They generate high amount of cash for the company, but growth rate is slowing. There are chances that the product may slip into decline; appropriate marketing mix strategies should be employed to prevent this from happening. The cash generated by cash cow may be used to help the question marks.
Dog -: these are products, which have low market shares and low market growth rates. The options for many companies is to phrase these products out, however some organisation do go for the strategy of re-inventing and generate cash returns in the future.
To maintain an effective portfolio development, it is important to have a balance of product at any time. Organisation will require developing the cash cow of the future by investing in the question mark.
Understanding the Boston Matrix especially the star, indicate that my marketing strategy will work as coca cola as a product has successfully reached the growth stage so therefore have a positive cash flow and good prospect for the future. Also looking at the cash cow, I can tell that coca cola has reached the maturity stage where they have a high market share and exist in a market where it is no longer expanding. In this case it will be a good idea to promote the organic lemon coke.
Dog may affect my strategy because if coca cola have a weak market share there is no point improving the product because we will be wasting our time trying to improve something which customer don’t want. Therefore, I will have to look at how well the new product is doing before I decide on a marketing strategy.
Ansoff matrix looks not just at the management of a product portfolio but also widely at market development and opportunities. It matches existing and new product strategies with existing and new markets.
Market Penetration -: this involves increase sales of an existing product and penetrating the market further by either promoting the product heavily or reducing prices to increase sales. My organic lemon coke is in the stage of market penetration, which I am going to do by promoting it heavily to create a big awareness in the public.
Product Development -: the organisation develops new product to aim within their existing market, in the hope that they will gain more customers and market share. In the case of my product organic lemon coke, it is in the product development within an existing market (coca cola).
Market development -: this adopts a strategy of selling existing product to new market. Better targeting, market research and further segmentation will identify these new market.
Diversification -: moving away from what you are selling. This might involve some form of integration of production into related activities.
In this portfolio, it is certain that I cannot use Ansoff Matrix, since I am not using an old product to increase the market share but introducing a new product to an existing market.
Product life cycle
Sales and profits
Stage 1 Stage 2 Stage 3 Stages 4
My organic lemon coke is at the first stage of the life cycle, which might eventually develop to the stage of growth after my promotion strategies.
Product life cycle stages
The life of a product is the period over which it appeals to customers. The sales performance of any product rises from the introduction of the product until it goes into decline.
The stage in the PLC also describes different appropriate promotion mix variation. Introduction utilises advertising and public relations to build awareness and personal selling to facilitate motivation channel member to carry it. In growth, the need for personal selling diminishes. In maturity, personal selling helps differentiate it again in distribution. In decline, sale promotion may be the most emphasised of the promotion mix tools.
Businesses theory suggests that products follow a life cycle, going through phases of development as follow:
- The conception of an idea/product
- Research and development
- Introduction to the market
Most products have a limited life cycle. Initially the product may grow, the market will mature and finally, the product will move towards decline. At each stage of the product life cycle, there is a close relationship between the sales and profit so as an organisation or product goes into declined their profitability decreased.
The life cycle can be broken down into distinct stages. In the introductory phase, growth is slow and volume is low because of a limit awareness of the product existence. Sales then rise rapidly during the period of growth. Towards the end of this phase, the competitors enter the market to promote their own product, which reduces the rate of sales of the initial product
The life cycle may last for a few months. To prolong the life cycle of a product, this where the marketing mix comes in, creating a new ideas, product improvement, line extensions or promotion improvement.
The most useful model is my analysis is Boston Matrix. The Boston matrix is reliable as it consists of information, which is quite ordinary. A firm can determine how well their product is doing by basing it on this strategy it also helps the organisation to see if they are doing well in the market by referring to things like star, cash cow, dog and question mark. For example question mark are product that financially need many help to be succeed.
Ansoff Matrix is also reliable as it shows what opportunities and development that could be make to something. Market development can lead to many things; it can be use to increase the market share of the same product by advertising differently or promoting differently.