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International Marketing Mixes

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307 - The Application of Marketing

PART A - The Tools of Marketing

Task Two

Using examples, describe the FOUR stages of the product Life Cycle. What are the main problems facing any product in the maturity stage, and how can they be addressed?

Introduction Stage

When the product is introduced, sales will be low until customers become aware of the product and its benefits such as Microsoft Windows 95. Microsoft announces their product before it is introduced, but such announcements also alert competitors and removes the element of surprise. During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. The following are some of the marketing mix implications of the introduction stage:

Product - one or few products, relatively undifferentiated

Price - Generally high. In some cases a penetration pricing strategy is used and introductory prices are set low to gain market share rapidly.

Distribution - Distribution is selective and scattered as the firm commences implementation of the distribution plan.

Promotion - Promotion is aimed at building brand awareness.

Growth Stage

The growth stage is a period of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted. The marketing team may expand the distribution at this point. When competitors enter the market, often during the later part of the growth stage, there may be price competition and/or increased promotional costs in order to convince consumers that the firm's product is better than that of the competition. During the growth stage, the goal is to gain consumer preference and increase sales. The marketing mix may be modified as follows:

Product - New product features and packaging options; improvement of product quality.

Price - Maintained at a high level if demand is high, or reduced to capture additional customers.

Distribution - Distribution becomes more intensive.

Promotion - Increased advertising to build brand preference.

Maturity Stage

The maturity stage is the most profitable. While sales continue to increase into this stage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. During the maturity stage, the primary goal is to maintain market share and extend the



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