MODEL ANSWERS ON PBM Q.1) What is the product life cycle? What are its successive stages?

Critically evaluate different marketing strategies adopted by the firm in different stages of PLC. Ans: Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert four things:

that products have a limited life, product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller, profits rise and fall at different stages of product life cycle, and products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage.

There are four stages in product life cycle. These are: Stage 1. Market introduction stage 1. 2. 3. 4. Characteristics costs are high slow sales volumes to start little or no competition demand has to be created

5. customers have to be prompted to try the product 6. makes no money at this stage 1. 2. 3. 4. 5. costs reduced due to economies of scale sales volume increases significantly profitability begins to rise public awareness increases competition begins to increase with a few new players in establishing market

2. Growth stage

6. increased competition leads to price decreases 1. costs are lowered as a result of production volumes increasing and experience curve effects 2. sales volume peaks and market saturation is reached 3. increase in competitors entering the market 4. prices tend to drop due to the proliferation of competing products 5. brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down 1. costs become counter-optimal 2. sales volume decline or stabilize 3. prices, profitability diminish 4. profit becomes more a challenge of production/distribution efficiency than increased sales

3. Maturity stage

4. Saturation and decline stage

Marketing Strategies at Introduction Stage: While launching a new product, marketing mix for each variable can be set at a high or low level with different combinations of price and promotion. Rapid Skimming Strategy Slow Skimming Strategy Rapid Penetration Strategy Slow Penetration Strategy Marketing Strategies at Growth Stage: The overall objective is to sustain the growth rate. Product quality is improved. New models are introduced. Flanker products are introduced. New market segments are trapped. Brand building is resorted to. Prices may be lowered to lure the next layer of price-conscious buyers.

Marketing Strategies at Growth Stage: Market modification. Product modification. o Quality improvement. o Feature improvement. o Style improvement. Marketing Mix Modification o Advertising o Sales promotion o Personal selling o Price o Distribution o Services Marketing Strategies at Maturity Stage: Diversity of models, brands. Competitive parity. More intensive or broad based. Differentiating promotion. Budget increased. Emphasis on price. Marketing Strategies at Decline Stage: Withdrawal of weak products in a phased manner. Prices are cut. Selective unprofitable segments are left out. Minimum promotion. Specialist selling. Emphasis on special applications. Q. 2) Go-error and Drop-error in product development. Ans: Go Error - a failure at any stage (but especially at the screening stage) in the new product
development process when a decision is made to proceed with a product which, in hindsight, should have been abandoned. Drop Error - a mistake made by a company in deciding to abandon a new product idea that, in hindsight, might have been successful if developed. Q.3) Rapid Skimming Ans: A Rapid Skimming

Strategy uses high price and extensive promotion to face competition and establish market share quickly.

Q.4) The GE Model Ans:

Q.5) Product portfolio matrix Ans: BCG matrix

Dogs. These are products with a low share of a low growth market. These are the canine version of 'real turkeys!'. They do not generate cash for the company, they tend to absorb it. Get rid of these products.

Cash Cows. These are products with a high share of a low growth market. Cash Cows generate more than is invested in them. So keep them in your portfolio of products for the time being. Problem Children. These are products with a low share of a high growth market. They consume resources and generate little in return. They absorb most money as you attempt to increase market share. Stars. These are products that are in high growth markets with a relatively high share of that market. Stars tend to generate high amounts of income. Keep and build your stars. Q. 6) What do you understand by product? Ans: Anything received in an exchange to satisfy a need or want is a product.
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A good, a service, or an idea received in an exchange It can be tangible (a good) or intangible (a service or an idea) or a combination of both. It can include functional, social, and psychological utilities or benefits.

Q. 7) What do you understand by consumer products? Ans: Products purchased to satisfy personal and family needs . Types of Consumer Products
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Convenienceinexpensive, frequently purchased items; minimal purchasing effort Shopping--buyers are willing to expend considerable effort in planning and making purchases Specialty--Items with unique characteristics that buyers are willing to expend considerable effort to obtain

Unsought (impulse)--Products purchased to solve a sudden problem, products of which the customers are unaware, and products that people do not necessarily think about buying

Q.8) What is consumer adoption process? Ans: The adoption process is the mental process through which an individual passes from first hearing an innovation to final adoption. Stages in the adoption process: Awareness Interest

Evaluation Trail Adoption

Q.9) Explain the scientific process of developing a new product. What are the reasons that contribute to the failure of new product? Ans: Because introducing new products on a consistent basis is important to the future success of many organizations, marketers in charge of product decisions often follow set procedures for bringing products to market. In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e.g., medicines) while less scientific companies may pull together resources for product development on a less structured timetable. A 7-step process comprising the key elements of new product development is: Step 1. Idea Generation Step 2. Screening Step 3. Concept Development & Testing Step 4. Business Analysis Step 5. Product & Marketing Mix Development Step 6. Market Testing Step 7. Commercialisation Reasons for the failure of new product 1. Lack of organizational team-work 2. Technical problems 3. Poor timing