QUESTION 1

En Suhaimy Shuib plans to produce a new beverage product-chocolate fantasy. To reduce the
cost, he plans not to use any brand name or ny marketing strategy for the new beverage.
En Suhaimy Shuib should uses a Product Life Cycle (PLC) stage in order to increase his sales
and to retain his product in the market
Stage;
1) Introduction
Introduction stage starts when the new product is first launched. A period of slow
sales growth as the product is introduced in the market. Profits are non- existent in
this stage because of the heavy expanses of introduction.
Strategies that be used in the introduction stage
a) Skimming and Penetration Strategies
A Rapid Skimming Strategy
Involve launching the new product at a high price and high promotion level.
The firm charge a high price to recover as much profit per units as possible.
This strategy makes sense when a large part of the product , those who become

aware are eager to have the product and can pay the asking price.
A Slow Skimming Strategy
Launching the new product at a high price and low promotion. The high price
helps recover as much profits per unit as possible and the low level of
promotion keep marketing expenses down. This strategy makes sense when
the market is limited in size, most of the market is aware of the product buyers

are willing to pay a high price and potential competition is not imminent.
A- Rapid Penetration Strategy
Involve launching the new product at a low price and high promotion. This
strategy promises to bring about the fastest market penetration and the largest
market share . This strategy make sense when the market is large, the market
is unaware of the product, most buyers are price-sensitive, there is strong
potential competition.

A Slow Penetration Strategy

Involve launching the new product at a low price and low level of promotion.
The low price will encourage rapid product acceptance and low promotion
costs bring profits up. This strategy makes sense when the market is large, the

market is highly aware of the product, the market is price sensitive and there is
some potential competition
b) Market Pioneers
Companies that plan to introduce a new product must decide on when they
will enter the market. The market pioneers gains the most advantages such
customer often refer pioneering brands to other brands. The pioneers brand
also establish and the attributes of the product can satisfy the customer it is
because the pioneers brand normally aims at the middle of the market, it
capture more users
c) Competitive cycle
The pioneer knows that competition will eventually enter and cause prices and
its market share to fall.
There five stages of competitive cycle that the pioneer has to anticipate:
1.
Stage 1- sole supplier
The pioneer is the sole supplier, with 100% of the production capacity
2.

and sales.
Stage 2- competitive Penetration
Start when a new competitors has built production capacity and begins
commercial sales. Other competitors entre as well and the pioneers

3.

share of production capacity and share of sales fall.

Stage 3 Share Stability
Capacity tends to be overbuilt during the rapid growth stage, so that
when a cyclical slowdown occurs, industry overcapacity drives down
margins to more normal levels. This stage, capacity shares and market

4.

share stabilize.
Stage 4 Commodity competition
The product is viewed as a commodity, buyer no longer pay a price
premium and the suppliers earn only an average rate of return.

5.

Stage 5 Withdrawal
The pioneer might decide to build share further as other firm withdraw.
As a pioneer moves through the various stages of this competitive
cycle, it must continuously formulate new pricing and marketing
strategies

2) Growth
A period of rapid market acceptance and substantial profit improvement. If consumers
clearly feel that this product will benefits them in some ways and they accept it. The
organization will see a period of rapid sales growth with sale start climbing quickly.

Profits increase during the growth stage, has promotion costs spread over a large
volume and as unit manufacturing costs fall.
3) Maturity
A period of a slowdown in sales growth because the product has achieved acceptance
by most potential buyers. Profits stabilize or decline because of increased marketing
out lays defend the product again competition.
Strategies that be used in maturity stage;
a) Market modification
The company can try to expand the number of brand users in three ways:
1) Convert nonuser attract nonusers to the product.
2) Enter new market segments
3) Win competitors customers company can attract competitors customer

to try adopt the brand.

Strategies increase number of volume:
1) More frequent use the company can try to get customers to use the
product more frequently.
2) More usage per occasion the company can try to interest users in
using more of the product on each occasion.
3) New and more varied uses the company can try to discover new
product uses and convince people to use the product in more varied
way.

b) Product modification
1) Quality improvement
This strategy aims at increasing the functional performance of the product (its

durability, reliability, speed and taste)

The company can overtake its competitors by launching a new and improved

version of the product.

2) Features improvement
This strategy aims at adding new features (size, weight, materials,
accessories) that

expand

the

products versatility, safety or

convenience.
News features build an image of company innovativeness.
3) Style improvement
This strategy aims at increasing the aesthetic appeal of the product.
The periodic introduction of new car models amounts to style
competition rather than quality or feature competition.
c) Marketing-mix modification
Product managers might also try to stimulate sales by modifying one or
more marketing mix elements.

A major problem with marketing- mix modifications is that they are highly
imitable by competition, especially price reductions and additional
services.

4) Decline
The period when sales show a down ward drive and profits erode. Sales may decline
for many reasons, including technological advances, shifts in consumers taste and
increased competition.
Strategies that be used in Decline stage;
a) Identifying the weak product
The company appoints a product- review committee with representatives from
marketing, R&D, Manufacturing and finance to develop a system for
identifying week products

b) Determining market strategies

-increase it investment (to dominate or strengthen its competitive position)
- maintain its investment level until the uncertainties about the industry are
resolved .
- decrease its investment level selectively by drop unprofitable customer groups
-harvest its investment to recover cash quickly
- divest the business quickly by disposing of its assets as advantageously as
possible.
c) Drop decision
- when a company decides to drop a product, its faces further decision. If the
product has strong distribution and residual goodwill, the company can
probably sell it to another firm.
- If the company cannot find any buyers. It must decide whether to liquidate
the brand quickly or slowly.