Unit - III

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Unit III: Product Decision 10 Hrs

Level of knowledge: Conceptual


Product Levels, Product Characteristics and Classifications, New product
development stages, categories of new product, reasons for launching new
products and its failure. Product life cycle strategies and its extension,
Ansoff’s Matrix, meaning of services, unique characteristics of services, 7Ps
of service marketing, Service delivery process.

Product Levels

What is a Product in Marketing?


A product is something that is made with the purpose of being sold in the
marketplace. The use of products satisfies the needs of customers. All
marketing operations centre around the product, which is one of the most
important aspects of marketing.
There are two types of products: tangible and intangible. Intangible
products are referred to as services, while physical things are referred to as
goods.
According to Perreault, Cannon and McCarthy “A product is the need-
satisfying offering of a firm.”
According to Grewal and Levy “A product is anything that is of value to a
consumer and can be offered through a voluntary marketing exchange.”
According to Kerin, Hartley and Rudelius “A product is a good, service or
idea consisting of a bundle or tangible and intangible attributes that satisfies
consumers’ needs and is received and exchanged for money or something else
of value.”

What makes up a Product?


In marketing, a product is any item or service sold to customers or clients.
For this purpose, it is important to understand the components that make
up a product. These generally include:
 The Core Item or Service

 Accessories to the Core Item

 Packaging

 Elements of Branding

 Warranties
All these together will make up or define what a product really is.
Product Levels:

What are the FIVE levels of product?


1. Core Product: The Core Product is the fundamental service or
benefits that the customer is really interested in buying. (Eg: Hotel:
Rest & sleep)
2. Basic Product: The Core product is converted to Basic Product
(Hotel: bed, bathroom, towels, desk, dresser, closet)
3. Expected Product: A set of attributes that the buyer is expecting
from the product (Hotel: Clean bed, fresh towels, working lamps,
water supply)
4. Augmented Product: The customer wishes beyond the expectation
towards a particular product. (Hotel: remote control television, fresh
flowers, rapid check-in, chocolates, good room services)
5. Potential Product: What all possible augmentation and
transformation the product might undergo in future. (Augmented
product-included in the product today. Potential product-how to
develop that product)

Eg: Air Conditioner


1. Core Benefit: Cooling and comfort.
2. Generic Product: Sufficient cooling capacity (Btu per hour), an
acceptable energy efficiency rating, adequate air intakes and exhausts, and
so on.
3. Expected Product: Consumers expect at least two cooling speeds,
expandable plastic side panels, adjustable louvers, removable air filter, vent
for exhausting air, environmentally friendly R-410A refrigerant, power
cord at least 60 inches long, one year parts-and-labour warranty on the
entire unit, and a five-year parts-and-labour warranty on the refrigeration
system.
4. Augmented Product: Optional features might include electric touch-pad
controls, a display to show indoor and outdoor temperatures and the
thermostat setting, an automatic mode to adjust fan speed based on the
thermostat setting and room temperature, a toll-free 800 number for
customer service, and so on.
5. Potential Product: Silently running, completely balanced throughout
the room, and completely energy self-sufficient.

Product Characteristics and Classifications


What is a product?
A product is anything that can be offered to a market that might satisfy a
want or need.
In retail, products are called merchandise. In manufacturing, products are
purchased as raw materials and sold as finished goods.
What are the Characteristics of Product?
Careful analysis of concept of product reveals following 10 characteristics.
1. Product is one of the elements of marketing mix or programme.
2. Different people perceive it differently. Management, society, and
consumers have different expectations.
3. Product includes both good and service.
4. Marketer can actualize its goals by producing, selling, improving, and
modifying the product.
5. Product is a base for entire marketing programme.
6. In marketing terminology, product means a complete product that can be
sold to consumers. That means branding, labelling, colour, services, etc.,
constitute the product.
7. Product includes total offers, including main qualities, features, and
services.
8. It includes tangible and non-tangible features or benefits.
9. It is a vehicle or medium to offer benefits and satisfaction to consumers.
10. Importance lies in services rendered by the product, and not ownership
of product. People buy services, and not the physical object.

Classification of Products:
Classifying products is a good way for marketers to understand how to
market a particular product to their customers. Classifying a product will
let them determine the optimal method for distribution, promotion, and
pricing. How a product is ultimately classified will determine how it will be
marketed and sold to its customers.
There are two (2) main categories of products; Consumer
Products and Business Products. Consumer products are sold to individuals
to satisfy personal or family needs. Business products are sold to
businesses to satisfy their needs or bought by a form to make into other
products. The majority of all products or services fall under these two
categories.

A. Consumer Products
Product purchased to satisfy personal and family needs. An example might
be laundry detergent to clean clothes or a light bulb to light up a room at
night. Each one is used by an individual or family.
 Convenience Products: Relatively inexpensive, frequently
purchased items for which buying exert minimal purchasing efforts.
Examples: toothpaste, soap, paper towels
 Shopping Product: Items for which buyers are willing to expend
considerable effort in planning and making purchases. Example:
tires, food, clothing, furniture
 Specialty Products: Items with unique characteristics that buyers
are willing to expend considerable efforts to obtain. Example: car,
jewelry, house or boat
 Unsought Products: Products purchased to solve a sudden problem,
products of which customers are unaware, and products that people
do not necessarily think of buying. These products can include
emergency products such as bandages and ointment and automobile
parts used to repair a car. These products are not bought until they
are needed.

B. Business Products
Products bought to use in a firm’s operations, to resell, or to make other
products. Example: Plastic that is molded to form the outside shell of a toy
doll or paper that is used to write a contract. [1]
 Installation: Facilities and no portable major equipment. Example:
buildings, warehouses, forklift, dump truck, crane, large equipment.
 Accessory equipment: Equipment that doesn’t become part of the
final physical product but is used in production or office activities.
Example: paper, computers, trucks, conveyor systems used to
transport ram materials, tools, sewing machine
 Raw material: Basic natural materials that become part of a physical
product. Example: sheet metal, plastic, nuts and bolts, fabric, wiring,
glass, electronic components, power supply, wheels, glue, wood.
 Component Parts: Items that become part of a physical product and
are either items that are finished items ready for assembly or items
that need little processing before assembly. Example: Windshield,
tiers, printer ink, antenna, on/off switch, bike chain
 Process Materials: Materials that are used directly in the production
of other products but are not readily identifiable. Example: Flour for
baking bread, glue for building a television set, oil for manufacturing
laundry detergent.
 MRO Supplies: Maintenance, repair, and operating items that
facilitate production and operations but do not become part of the
finished product. Example: paper, pencils, oils, cleaning supplies,
brooms, mops, detergent, paper towels

New product development stages


New Product Development (NPD)

The new product development process is a systematic guide for all budding
businesses and entrepreneurs that will help them come up with a
customer-oriented, high-quality product that has the best chance of doing
well in the highly competitive markets. In an attempt to explain new
product development process, many market experts believe that there exist
6 or 7 stages of new product development process. This number however
can vary based on how detailed the process is from one example to
another.

Idea Generation and screening


(1) Idea Generation:
• First Stage of New Product Development.
• Ideas by Search & Research.
• Ideas come from Customers, Dealers, experienced workforce,
research staff, salesmen or Research Organisations.
• Market Research on Product, Competition & Consumers.
• Ideas generated by creativity techniques like- attribute listing,
morphological analysis, need or problem identification, brain storming, etc.
• Encouraged to think in different possible levels.

Utilizing basic internal and external SWOT analyses, as well as current


marketing trends, one can distance themselves from the competition by
generating ideologies which take affordability, ROI, and widespread
distribution costs into account.
Lean, mean and scalable are the key points to keep in mind. During the NPD
process, keep the system nimble and use flexible discretion over which
activities are executed. You may want to develop multiple versions of your
road map scaled to suit different types and risk levels of projects.

(2) Idea Screening:


• Ideas received during the generation stage are screened or examined
in order to reduce them to a practicable one and to avoid poor ideas as
early as possible.
• Write up of the idea is prepared (project report).
• Consists of idea, estimates the target market, competitions, market
size, project cost, resources required, product price, development time,
costs, rates of return.
• Idea is accepted.

(3) Concept Development & Evaluation


The idea should be developed into product concept and the concept should
be tested.
Difference between Product Idea & Product Concept
Product Idea: Idea for a possible product
Product Concept: Elaborated version of the idea expressed in meaningful
consumer terms.
The Product Concept is tested to know whether:
a) the prospective consumers understand the product idea
b) they need such a product
c) they will buy such products if they are made available in the market
Concept testing is done on a group of target consumers

(4) Marketing Strategy Development:


Develop a strategy for introducing a new product in the market. (Product,
size, packaging, price, positioning, distribution, advertising, sales
promotion, share of target market, etc.)
Business Analysis: Analysis from the point of view of Sales, Cost and Profit.
Estimated sales helps in calculating expected costs and profits of the
venture.

(5) Product Development & Evaluation


• Most important stage in the product development.
• Product concept is given physical shape by R&D or Product
engineers.
• Heavy investment required.
• Get an idea of whether the product is technically and commercially
feasible.

(6) Product Modification


Product Modification includes Product improvements, Cost Reduction and
Re-positioning.
• “New & improved” versions replace existing products by providing
(a) improved performance, (b) enhanced features and (c) greater perceived
value.
• Cost reductions replace existing products by providing similar
performance at lower costs.
• Repositioning modify existing products by targeting new market
segments, offering a new benefit, or assuming a different competitive
position.

Types of Product Modifications:


(1) Market Modification: find new customers and new segments or
increased usage of product. (Johnson & Johnson baby powder-> use for
adults) (Use of soap, detergent, blades, etc,) (Re-position brand to achieve
lager sales. Coca cola)
(2) Market Mix Modification: Reduction in price-discounts, Promotions
like-gifts, foreign trips, move to high volume channel market, etc,
(3) Feature Modification: (Functional modification) Minor changes to
product. (Eg. Mosquito bat with light) or Change in packaging.
(4) Quality Modification: Gradually increase the quality of the basic
product. (Difficult to convey, if the product has a bad image. (Eg; Maggi
Noodles)
(5) Style Modification: Aesthetic change in the product rather than
quality or functional change. Most frequent changes. (Eg: Annual model
change in automobile. Change of grill, colour, interior, etc.)
(6) Image Modification: Style or perceived quality changes. Product or
service remain unchanged. Change in non-product attributes- give the feel
that total package has changed. (Eg. Seven-Up bottle changed to
MallikaSherawath shape)

(7) Test Marketing


What is Test Marketing? The Test marketing is a tool used by the
companies to check the viability of their new product or a marketing
campaign before it is being launched in the market on a large scale.
Test marketing can be used by a business to evaluate factors such as the
performance of the product, customer satisfaction or acceptance of the
product, the required level of material support for the full launch, and
distribution requirements for a full launch.

Through test marketing, a marketer may ascertain the success ratio of the
new product and the marketing campaign and can design the marketing
mix (viz. Product, price, place, promotion) very well before its launch.
Advantages of Test Marketing
• Data provided is from actual customer spending
• Reduces the risk of a full-scale launch – if the product fails a test then
significant costs may be saved
• Provides a way to tweak the marketing mix before full launch
• Can create a promotional "buzz" which supports the main launch
Disadvantages of Test Marketing
• Danger of the competition learning about the product and coming up
with a response before the full launch
• Test market may not be representative of the full target market,
leading to inappropriate decisions
• Delays in full launch may limit the revenue opportunity in markets
subject to rapid change
• Costly and time-consuming to administer
(8) Commercialisation
In market testing, if the product is found acceptable to consumers, the
management of the company has to decide whether to launch the product
into the market on a commercial basis. If the decision of the company is in
favour of Commercialisation, it has to make arrangements for the
manufacturing of the product.

Categories of new product


The six categories of new products range from new-to-the-world
products (sometimes called really new products), as well as a range of
minor re-positioning and cost reductions. The list containing the six
categories of new products may include things you would exclude. For
instance, can we have a new item just by repositioning an old one (telling
customer it is something else)? Yes, we can have a new product then. You
might consider this to be only a new use, but the firm still went through
a process of discovery and development. And a new use may occur in a
completely separate division. For example, the Dove soap name has, by
now, been extended to almost two dozen box soaps and almost as many
liquid body washes.
Table of Contents

The Six Categories of New Products


As you see, we have to broaden our definition of new products to include
the following six categories of new products.

1. New-to-the-world Products (really new Products)


The alternative expression for new-to-the-world products (really new
products) already indicates that this is what most people would define as a
new product. These products are inventions that create a whole new
market.
Examples: Polaroid camera, the iPod and iPad, the laser printer and so on.
2. New-to-the-firm Products (new Product Lines)
Products that take a firm into a category new to it. The products are not
new to the world, but are new to the firm. The new product line raises the
issue of the imitation product: a “me-too”.
Examples: P&G’s first shampoo or coffee, Hallmark gift items, AT&T’s
Universal credit card and so on.

3. Additions to existing Product Lines


These are simple line extensions, designed to flesh out the product line as
offered to the firm’s current markets.
Examples: P&G’s Tide Liquid detergent, Bud Light, Special K line extensions
(drinks, snack bars, and cereals).
4. Improvements and Revisions to existing Products
Current products made better.
Examples: P&G’s Ivory Soap and Tide power laundry detergent have been
revised numerous times throughout their history, and there are countless
other examples.
5. Re-positioning
As we already discussed before, you may have an argument about whether
repositions are actually new products. Yet, they can be considered as new
products, as the firm undertakes a new products process. Repositionings
are products that are retargeted for a new use or application.
Examples:
 Arm & Hammer baking soda repositioned as a drain or refrigerator
deodorant;
 Aspirin repositioned as a safeguard against heart attacks.
Also includes products retargeted to new users or new target markets.
 Marlboro cigarettes were repositioned from a woman’s cigarette to a
man’s cigarette years ago.
6. Cost Reductions
Finally, cost reductions complete the six categories of new products. Cost
reductions refer to new products that simply replace existing products in
the line, providing the customer similar performance but at a lower cost.
May be more of a “new product” in terms of design or production than
marketing.

Differences between the Categories of New Products


All the categories of new products are considered new products, but it is
clear to see that the risks and uncertainties greatly differ, and the
categories need to be managed differently.
In general, if a product is new to the world or new to the firm (the first two
categories of new products), the risks and uncertainties faced by the firm
are higher, as are the associated costs of development and launch. For
instance, it costs Gillette far more to launch its newest shaving system (the
Fusion Flexball for example) than to do upgrades to the earlier Mach 3
system (such as developing the women’s version, named Venus, which used
the same blade technology).
A greater commitment of human and financial resources is clearly often
required to bring the most innovative new products to market successfully.

Source: https://marketing-insider.eu/categories-of-new-products/

Reasons for launching new products and its failure.


Why Develop New Products For Your Business?
Every business needs to innovate to stay ahead of the competition. No
business can continue to offer the same unchanged product; otherwise
sales would decrease and profits reduced. In this article we will explore
some of the reasons why a lack of product development can affect sales and
profit.

The diagram below illustrates the reasons why firms develop new
products.
1. Consumer Needs and Wants Change
Consumer "needs and wants" continuously change. Firms should respond
to these changes through their products and services. Otherwise
consumers will switch to competitor products that satisfy their "needs and
wants". For example consumers are becoming more health conscious, this
is forcing companies to introduce low sugar, salt and fat products.
Coca-Cola Zero which contains no sugar is a classic example of new product
development even though Coca-Cola's existing product range already
contained diet coke. Both diet coke and Coca-Cola Zero contain no sugar
but they taste different.
2. Product Reaches The End Of Its Product Life Cycle
The product maybe at the end of its Product Life Cycle, so the company may
introduce new and improved updated versions.
Microsoft has done this by moving from the Xbox to the Xbox 360 and now
Xbox 360 limited editions allow Microsoft to refresh the product through
small changes.
3. Product Is At The Maturity Stage Of The Product Life Cycle
The product might be at the maturity stage of its Product Life Cycle and
need modifications to stimulate an increase in sales.
Nintendo have replaced its DSi console with the 3DS console which
contains additional features such as an extra camera so that you can film in
3D, a 3D screen which doesn't require glasses, a joystick and motion
sensors.
4. Environmental Changes
There may be environmental changes which the company wants to
capitalise on. Music companies are now selling more music via internet
downloads than through traditional retail shops. Record companies were
pushed into selling music through the internet following the success of the
internet site Napster, which offered illegal music downloads.
In April 2006 the song "Crazy" by Gnarls Barkley made history by becoming
the first song to achieve the number one spot in the UK charts through
music download sales only. In March 2011 Mercury Records stopped
releasing singles on CD as by then 99% of single sales were through
downloads.
5. Competitors
Competitors may force change. This is very apparent in the technology
market, where new products are constantly being introduced to a target
market that welcomes change and innovation. Technology consumers are
not afraid to try new products, in fact they often want the latest gadget to
show to friends and colleagues. If a product is successful then competitors
will attempt to develop similar products.
In fact Google say that they developed the Android operating system to
prevent the technology market for products such as mobile phones and
tablets being dominated by one supplier.
6. All Products Experiencing Problems
If all of your products are experiencing poor sales or suffering from a
negative reputation it is time to change your product offering.
In 2001 the introduction of the Pod MP3 player reversed the fortunes of
Apple Computers. Since then Apple has introduced the successful iPhone
and iPad and increased its share price from $9.07 per share (Oct 2001) to
over $400 per share.
Conclusion
New product development is an essential activity for all businesses. It helps
you stay ahead of the competition. If you do not develop new products
someone else will and steal all of your customers. The number of
businesses that have gone into administration during the current world
recession demonstrate the importance of change management.
Source: https://www.learnmarketing.net/whyNPD.htm

Reasons for Product Failure?


Top 10 Reasons for Product Failure | Measures to prevent failure
Why do some products fail?
In spite of the efforts made by the marketer, some products fail. Product
failure can be attributed to any one or more of the following causes:
1. Poor product quality: Obviously, a product, which is of poor quality,
cannot be sold in the market.
2. Higher price: Another reason for the failure of certain products is the
price factor. Higher production and distribution costs may lead to higher
price. Such a product cannot be sold in a market consisting of middle and
lower income buyers.
3. Poor timing: It is important that a product, to be successful, is
introduced in the market at the correct time. If it is introduced at an
unsuitable time it may turn out to be a failure.
Example: Publishers of textbooks usually bring out books in the beginning
of the academic year.
4. Inherent defect: There may be an inherent defect in the product, which
may affect its market potentialities. Such a product may not be preferred by
the buyers even if the defect is rectified later.
5. Extent of competition: A monopolist may not have any difficulty in
marketing his product. In the case of a market where there are a large
number of sellers for a particular product, the buyer will have many
alternatives. Therefore, in such a condition unless the marketer brings out
the product to the satisfaction of the buyers, he cannot be successful.
6. Lack of promotional measures: Popularizing the brand, particularly, in
the introduction stage of a product is essential. Such a step will ensure
repeated buying and bring long-term benefits for the marketer. Failure to
do so will ‘prove to be disastrous for the product.
7. Faulty distribution policy: It is important that a product reaches the
right market at the right time and at the right price. The faulty distribution
policy of the marketer may lead to many problems, i.e., the goods may not
be available when required, may lead to higher price and so on.
8. Unavailability of spare parts: In the case of durable goods like
televisions sets, Air-conditioners, etc., and also in the case of two wheeler
and cars, easy availability of spare parts is an important requirement.
Unavailability of spares may frustrate the buyers. Such buyers would not
recommend the product to their friends and relatives.
9. Poor after-sale service: The quality of after sale service is yet another
important cause. Most marketers, particularly those marketing durables,
two-wheeler, etc., are courteous while making sale. When the customer
requires service later and approaches the seller, the latter may show
indifference.
10. Imitation products: Last, but not the least, the presence of a number of
imitation products in the market makes the genuine products vulnerable.
An average buyer may not be able to distinguish between the genuine
product and the fake one.

Measures to prevent product failures


1. The marketer shall ensure that the product he markets is in demand.
2. He can determine the price at which the retailers must sell the product to
the buyers. This will prevent manipulation of the price.
3. Before launching the product, steps must be taken to ensure that there
are no inherent defects.
4. All efforts must be made to popularize the brand name particularly in the
introduction stage.
5. The marketer shall select the right distribution network so that there is
no delay in the consumer getting the product.
6. It is also important to make available genuine spare parts in the market
at fair prices.
7. The quality of after-sale service must conform to high standards.
8. In the case of consumer and industrial goods, it is beneficial to get the
quality certified by the Indian standards Institution (ISI) and/or by the
International Standards Organization (ISO).
9. The product may constantly be updated to incorporate all the features
that the buyers expect in it. Taking the case of MarutiUdayog, the company
has updated all its models over a period of time, which is probably one of
the main reasons for its success.
10. Steps must be taken to eliminate duplicate goods in the market. This
may be done by cautioning the buyers on spurious goods. The problem may
also be legally approached.

Source: https://accountlearning.com/top-10-reasons-product-failure-
measures-prevent-failure/
Product life cycle strategies and its extension
Product Life Cycle
Every product has a lifespan, whether it is one week or a decade. By better
understanding the lifespan of a product, businesses can make smarter
decisions. Product Life Cycle Theory is a term that refers to the stages of a
product's lifespan. In this article, we discuss what the Product Life Cycle
Theory is, including the stages, and provide some real-world examples.

What is the Product Life Cycle Theory?


The Product Life Cycle Theory is a marketing strategy developed by
Raymond Vernon in 1966. It is still widely used today to help companies
plan out the progress of their new products. The Product Life Cycle Theory
describes the stages that all products go through.
There are four stages within the Product Life Cycle Theory. The length of
each stage can vary from product to product, with some taking a day and
others taking months or years. Many factors go into determining how
quickly a product goes through the four stages, including how the product
is marketed, the demand for the product and the product itself.
Stages of the Product Life Cycle Theory
There are four stages in the Product Life Cycle Theory: introduction,
growth, maturity and decline:
Examples of the product life cycle
To demonstrate how the product life cycle works, here are a few examples:
VCRs
A VCR is a device for the recording and playback of video on a television.
These devices were once very popular but have significantly decreased in
sales with the invention of more technologically advanced products. The
product life cycle for a VCR may look like this:
 Introduction: The VCR is first released in 1977. As a new device, it
allowed the playback of video on television screens. Users could also
record their favourite TV shows and watch them again.
 Growth: As more people learned of the VCR, sales increased.
Eventually, multiple companies began to produce their own VCR
devices.
 Maturity: The VCR became a common household item. Producers had
to find ways to reduce costs and add features to keep selling their
VCRs.
 Decline: As technology improved, VCRs became less popular. Most
households now rely on streaming services to watch content.
Smartphones
A new smartphone model is released every couple of months as providers
look to improve upon their competitors. Here is a typical product life cycle
for a new smartphone device:
 Introduction: The new smartphone is released to the market. Due to
previous models of this device being released, anticipation is very
high. The result is immediate sales from the day of launch, quickly
moving the product into the growth stage.
 Growth: Demand continues to rise for the newest smartphone as
more people begin to use it. Competitors study its latest features and
begin planning their own devices that can improve upon this model.
 Maturity: The smartphone has lost some of the initial excitement that
followed the launch, and sales have plateaued. Customers continue to
buy the product, but they are also increasingly looking at other
alternatives. New features in this smartphone are now being included
in other models as standard, making this model stand out less.
 Decline: Eventually, this newest smartphone model is seen as out of
date. Competition has found a way to produce a better product, and
consumers want the latest model. The original phone's company may
even have developed a newer version of their model, replacing it in
the marketplace. The company continues to sell its older model until
demand diminishes entirely.

https://www.indeed.com/career-advice/career-development/product-
life-cycle-theory

PLC as a tool for Marketing Strategy


Every product launched in the market will have a life, the span of which can
not be known earlier. However, companies want their products to enjoy
long lives and expect lucrative profits out of their sales.
Companies recognize that each product will have a life cycle, although its
exact shape and length can not be anticipated. A product life cycle (PLC) is
the course that a product’s sales and profits take over its lifetime.
A product life cycle normally looks like a bell-shaped curve showing four
stages at different points of the curve. The four stages of the product life
cycle are;
1. Introduction.
2. Growth.
3. Maturity.
4. Decline.

However, before the ‘introduction’ stage of the product life cycle.


The product must be defined and developed.
Many consider ‘product development’ as the first step of the product life
cycle. Still, it is a different world altogether, so ‘product development is not
considered part of PLC. During product development, there are no sales,
and the company’s investment costs rise.
The introduction stage shows low sales numbers as the product is being
introduced in the market. Profit is zero or negative in this stage because of
the heavy expenses of product introduction.
With proper marketing, a product can go into the growth stage. During the
growth stage, sales rise rapidly as consumers begin to accept the product.
The production runs become longer, and economies of scale are achieved,
reducing per-unit cost and also helping profits to increase rapidly.
During the maturity stage of the product life cycle, the sharp growth in
sales begins to slow, and profits at the beginning of this stage decline.
The most notable characteristic of this stage is the peaking of the product’s
sales and profit curves. At the beginning of the maturity stage, sales
continue to grow but at a much slower rate.
Towards the end of this stage, sales and profits will start to fall fairly
rapidly. This stage is characterized by severe competition as many brands
enter the market. To combat competition, marketing costs increase
substantially results in a reduction in profits.
For any product, its PLC will go to the decline stage, where the product’s
sales and profits fall very quickly, and most competitors leave the market.
Some products face quick death, and some remain in the mature stage for a
long time; some products reverted to the growth stage through aggressive
promotion or repositioning.
New technology or a new social trend may cause the product to turn
downward in sales sharply. When this happens, marketers consider
removing items from the product line to eliminate those not yielding a
profit.

Product Life Cycle Stages and Marketing Strategies

Introduction Growth Maturity Decline

Characteristics

Rapidly Declining
Sales Low sales Peak sales
rising sales sales

The average
High cost per Low cost per Low cost per
Costs cost per
customer customer customer
customer

Rising Declining
Profits Negative High profits
profits profits

Early Middle
Customers Innovators Laggards
adopters majority
Stable
Growing number Declining
Competitors Few
number beginning to number
decline

Strategies

Offer
product Diversify
Offer a basic Phase-out
Product extensions, brand and
product weak items
service, models
warranty

Price to
Price to
match or
Price Use cost-plus penetrate Cut-price
beat
the market
competitors

Go selective:
Build Build Build more
phase out
Distribution selective intensive intensive
unprofitable
distribution distribution distribution
outlets

Build Reduce to
Build
product the level
awareness Stress brand
awareness needed to
Advertising and interest differences
among early retain the
in the mass and benefits
adopters and most loyal
market
innovators customers

Reduce to
Use heavy take Increase to
Reduce to a
sales advantage encourage
Sales Promotion minimal
promotion to of heavy brand
level
entice trial consumer switching
demand
Let’s try to understand better each of the stages and the corresponding
marketing strategies of the product life cycle.

Stage 1: Introduction
When a product is commercialized, the product will enter the introduction
stage of its life cycle. Sales growth of a product is likely to be low at the
introductory stage due to several reasons.
 It may take time to make the product available in different markets.

 It may take time for a company to expand its production capacity.

 The company may experience technical difficulties at the initial stage.

 Establishing adequate distribution may consume a fairly long time.

 The company may also face difficulties changing consumers’


established behavioural patterns to buy its product.
New products usually do not earn a profit in the introductory stage.
Investments in research, manufacturing, and marketing often exceed
revenues until sales have grown to sizable figures.
The company needs to spend a significant amount of money on obtaining
an adequate distribution of the product.
During this stage, potential buyers must be aware of the product’s features,
uses, and advantages, which cost a substantial amount of money to the
firm.
Companies focus on the high-income group at the introductory stage to buy
their products because products are priced higher at this stage.
High prices are diseconomies of scale of production at this stage and higher
expenditures in areas mentioned above. The high price results in low sales
during this stage. As a result, the profit curve is typically negative.
Because of this unprofitability, the new product’s development and
production must often be subsidized by the cash and profits generated by
older products.

Marketing Strategies in the Introduction Stage


Marketing managers need to formulate strategies regarding marketing mix
elements for the introductory stage of the product. You know that the basic
marketing mix elements are: product, price, promotion, and distribution.
Regarding the marketing mix elements, a company may decide to pursue a
skimming or penetration strategy. It may either go for rapid skimming or
slow skimming strategy. Similarly, the company may decide to pursue
rapid penetration or slow penetration strategy.
1. Rapid Skimming Strategy
In case the company decides to follow the rapid skimming strategy, it sets
the price arbitrarily high to capture the early purchaser of the product. This
strategy is used to maximize short-term profit.
Companies under this strategy may also go for producing higher quality
products, promoting them aggressively, and distributing them through
selective distribution channels.
This strategy may work well;
 if a substantial percentage of potential buyers are unaware of the
product;
 they will be willing to buy it once they are informed of the product’s
existence;
 they will be ready to pay a premium price since the product is of
higher quality; and,
 The distribution matches their requirements.

2. Slow Skimming Strategy


Under the slow skimming strategy, a product is offered to the market at a
high price, but the promotion is not as aggressive as the rapid skimming
strategy. The company can gain a substantial amount of profit following
such a strategy. Since the promotion costs are lower but the price is high, it
enables the firm to make a sizeable profit.
A company may be successful in using the slow skimming strategy;
 if most potential buyers are informed of the product,

 ready to pay a premium price, and

 Competition is either non-existent or slim.

3. Rapid Penetration Strategy


In contrast, in the rapid penetration strategy, the firm sets the price at a
low level but aggressively promotes it. The intention is to discourage
competition and appeal to a greater portion of the segment on the onset.
A company may effectively use this strategy if the market size is
significantly large, the majority of the market is unaware of the product and
is very much price-sensitive, and there is a small potential competition.
By lowering the price and earning a smaller gross margin, fewer
competitors will be attracted to the marketplace than if a skim strategy
were used. The executive has extra time to solidify its position in the
market and capture a greater market share.
4. Slow Penetration Strategy
Under the slow penetration strategy, a product is introduced in the
marketplace at a low price. The promotion under this policy is not
aggressive as well.
If the company senses that the size of the market is substantially large,
buyers are mostly aware of the product and price-sensitive, and
competition is existent, it may decide to pursue the slow-penetration
strategy. It will help the company capture a significant portion of the
market, taking advantage of its high price and low promotion costs.
Penetration strategy is normally used when the executive intends to keep
the product on the market through all or most of the life cycle. Instead of
quickly recouping costs and generating profits as would occur with a skim
strategy, the marketing executive hopes for even greater long-term profits.
Although firms have used both strategies successfully, penetration is the
most common. It is used for nearly all types of products, while skim is
typically reserved for fashion, fad, and novelty items with fairly short life
spans.

Stage 2: Growth
During the growth stage, sales rise rapidly; profits reach a peak and then
start to decline. The growth stage of the product life-cycle is characterized
by several new factors.
 Sales and profits grow rapidly.

 Competitors have attracted to the growing market often more


competitors enter than will survive.
 Cash flow may still be negative because of the firm’s efforts to
establish a strong market share ahead of competitors.
In this stage, the product enjoys a high degree of prosperity.
Marketing Strategies in the Growth Stage
Since the competition is increasing and the market is expanding during the
growth stage, the marketing executive moves away from a strategy of
cultivating demand to one of market entrenchment – the struggle for brand
acceptance and market share.
In a related sense, the increased competition and the desire to build a
larger market share tend to reduce some slight price reductions. However,
the price still stays relatively high, and the company reaps substantial
profits.
The marketer’s role during the growth stage becomes one of persuading
consumers and constantly reminding them about the product’s benefits,
ensuring convenience of purchase by maximizing distributive outlets,
manipulating price to keep the product competitive, and reinforcing the
brand image associated with the product.
The growth stage is critical to a product’s survival because competitive
reactions to the product’s success during this period will affect its life
expectancy.
In the growth stage;
 A firm implements a marketing strategy to encourage strong brand
loyalty and competes with aggressive emulators of the product.
 An enterprise tries to strengthen its market share by identifying the
product’s benefits and by emphasizing these benefits.
 A company at this stage may also go for aggressive price cuts. It may
also expand product lines and offer greater variety to combat
competition.
 Another possibility is to follow a strategy of market
segmentation and sell the product under a variety of brands owned
by distributors or other producers.
 A company may also engage in a creative promotional campaign to
attract potential buyers.
 Marketers may also modify warranty and service conditions to make
them more attractive than before.
 The other option could be to make the product widely available to
reach the mass market.
Following one or more of these strategies can place the company in
competitive standing.

Stage 3: Maturity
In almost all of the products, there will be a time when sales growth will
slow down. This is the stage that we term the maturity stage of a product’s
life cycle.
At this stage, products have levelling demand, and competition will
minimize the profit potential. At this stage, a company requires a highly
efficient organization, such as a functional pyramid type, to maximize
profits from steady sales.
Marketing Strategies in the Maturity Stage
To compete in this type of market environment effectively, the marketing
executive will expand the product line by making a variety of models
and styles to broaden the product’s appeal, producing something for
everybody in hopes of sustaining sales.
By doing this, however, the product’s costs increase as shorter
manufacturing runs are needed for each model, and style and inventories
are built up, all of which create diseconomies of scale. The combined effect
of lower prices and higher costs results in a declining profit curve.
In fact, during the latter part of the maturity stage, some competitors will
withdraw their products because insufficient or no profits remain.
Those who remain in the market make fresh promotional and distribution
efforts; advertising and dealer-oriented promotion are common during this
stage.
There is no reason to think that a mature product is static; improvements
can be made on the basic product, and variations can be offered.
Although market leaders generally have the resources to expand their
offerings, gaining market share is difficult and expensive.
Therefore, the best-managed companies try to hold and improve their
share slightly while diverting profits from successful mature products into
the development and introduction of new ones.
A company at this point has to look at the merits for revitalizing the
product or allowing it to decline slowly or killing it off and planning a
replacement.
There are many ways a company can rejuvenate its products, and the
method it will choose will depend on the reason or reasons for the
product’s initial decline.
Suppose this occurred through the introduction of a new competitive
product with additional benefits. In that case, the company might choose to
add similar benefits to its product, to add new but different services, or to
reduce the present price and emphasize its value for money, perhaps trying
to reach a new, more price-sensitive market in doing so.
On the other hand, in the company’s view, the competitive product is not
superior to its own, the decision may be taken merely to increase
advertising spending or introduce a sales promotion to regain market
share.
The purpose of any one of the above strategies is to expand the market size.
A company can do this by converting nonusers into users, entering into
the new market segment(s), winning competitors’ customers, ensuring
repeat sales, increasing the volume of usage peruse by the customers, and
broadening the product’s uses.

Stage 4: Decline
At some point in time, the sale of a product is bound to decline. This point is
termed as the decline or the final stage of the product’s life cycle.
Most products eventually pass from maturity to a fourth stage of the life-
cycle: decline and eventual elimination. This stage is characterized by a
further dropout of competitors until only a few remain.
At this stage, profits begin to fall sharply, often because of the excess
capacity of the firm.
The promotion of the product is reduced or discontinued. Any remaining
profit will not be reinvested in the product; no attempt will be made to
rebuild demand.
However, careful management can extend a declining product’s life for
some time to come. There are several reasons why a product declines.
 One of the important reasons is the availability of new innovative
products as a result of technological development.
 The other could be the change in social trends or customers’ habits,
which may cause the product to take a sharp turn downward in
terms of sales.
Because of the declining profits, firms change their approach;
 Some of the firms are found to withdraw themselves from the
marketplace. The remaining firms may reduce the variety they offer
to make their operations more economical.
 Others may withdraw themselves from unprofitable segments. Yet
some others may reduce their promotion budgets significantly to
reduce the prices of their offers further.
 Some of the companies may also decide to increase their product’s
price because consumers buying the product are frequently buying it
as a replacement or a specialty need.
Only when firms begin to clear out inventories to withdraw the product
will they decrease price.
A marketer can follow the harvesting strategy, divestiture strategy, niche
or focus strategy, differentiation strategy, low-cost strategy for
a declining industry.
Marketing Strategies in the Decline Stage
Although there is little that can be done about basic shifts in consumer
preferences and the entry of competitive items, the firm has a wide range of
alternatives that can be exercised for products with falling sales.
Before one decides on alternatives, it is imperative to identify the marginal
products. After they are identified, managers need to arrive at decisions
regarding their fate.
This analysis will help the company decide on the strategies regarding the
products. These strategies could be;
 Perhaps the easiest solution to declining sales is to move the product
into new foreign or domestic markets.
 This may require the addition of new distributors or the enlargement
of the existing sales force.
 Companies may try to find new uses of the product among the
current users.
 Companies may try to revive aging products by redesigning packages
and increasing convenience for the customers.
 Companies may also spend heavily on different consumer deals,
displays, and so on.
 Companies may also try to revive declining products by changing the
ad firm with the hope of a more creative advertisement campaign to
be developed and launched by the new firm.
Based on the analysis made by the product review committee, a company
may decide to drop an existing item from its product line (s). The first
strategy that a company may pursue regarding this is to do nothing and
wait until there are no longer any orders for the item.
Here the company can drop all promotional activities and rely solely on
repeat purchases from current customers. Another strategy could be to
continue selling a declining product but contract with another company to
manufacture it.
Yet, another option could be to produce the item but selling through other
under licensing arrangements. The other strategy is to sell the product to
another firm and let them worry about manufacturing and marketing the
item.
When none of the above strategies is suitable, the firm should dispose of
the product with minimal inconvenience to the parties concerned.
https://www.iedunote.com/product-life-cycle
Ansoff’s Matrix
The Ansoff matrix is a strategic planning tool that provides a framework
to help executives, senior managers, and marketers devise strategies for
future business growth.It is named after Russian American Igor Ansoff, an
applied mathematician and business manager, who created the concept.

The Ansoff Matrix

Also known as the Corporate Ansoff Matrix and the Product/Market


Expansion Grid, the Matrix shows four strategies you can use to grow your
business. It also helps you analyze the risks associated with each one. The
idea is that each time you move into a new quadrant (horizontally or
vertically), risk increases.

The Four Quadrants of the Ansoff Matrix


Let's examine each quadrant of the Matrix in more detail.
 Market Penetration (top left quadrant). This is the safest of the
four options. Here, you focus on expanding sales of your existing
product in your existing market: you know the product works, and
the market holds few surprises for you.
 Product Development (top right quadrant). This area is slightly
more risky, because you're introducing a new product into your
existing market.
 Market Development (lower left quadrant). Here, you're putting
an existing product into an entirely new market. You can do this by
finding a new use for the product, or by adding new features or
benefits to it.
 Diversification (lower right quadrant). This is the riskiest of the
four options, because you're introducing a new, unproven product
into an entirely new market that you may not fully understand.

Source: https://www.mindtools.com/a2gy5ya/the-ansoff-matrix

Meaning of services
Services are the non-physical, intangible parts of our economy, as opposed
to goods, which we can touch or handle.
Services, such as banking, education, medical treatment, and transportation
make up the majority of the economies of the rich nations. They also
represent most of the emerging nations’ economies.

Services marketing is a form of marketing businesses that provide a service


to their customers use to increase brand awareness and sales. Unlike
product marketing, services marketing focuses on advertising intangible
transactions that provide value to customers.
Service marketing is simply the process of promoting and selling a service
or an intangible good to a specific group of people. It is a new way of
marketing that has become very popular and helps companies all over the
world promote their services.
Service marketing is different from product marketing, which involves
promoting a product that can be seen. Instead, service marketing involves
promoting a service that can’t be seen but is still sold to customers.

How can you differentiate between a product and a service?


A product is anything tangible and non-perishable that you can see, touch,
and feel. It is uniform and constant across all individuals. Production and
consumption of a product happen at separate times.
A service is a perishable, diverse, and intangible good, and a service's
creation and consumption occur simultaneously.

What is Service Marketing Mix?


It is the marketing of economic activity that a company provides to its
customers, whether individuals or corporations. Telecommunication
services, financial services, expert services, entertainment services, health
care services, etc., are some examples of the services.

What is a target audience?


Your target audience is the particular category of customers most likely to
be interested in your good or service. The target audience may be selected
based on various factors such as age, income, gender, location, and hobbies.
For simplicity, separate the audiences into three groups based on their
demographics, interests, and intended purchases

Source: https://khatabook.com/blog/7-ps-of-service-
marketing/#:~:text=The%207%20Ps%20of%20service%20marketing%2
0are%20product%2C%20price%2C%20promotion,%2C%20process%2C
%20and%20physical%20evidence.

Unique characteristics of services


Some of the important characteristics of services are as follows:
1.Perishability 2. Fluctuating Demand 3. Intangibility 4. Inseparability 5.
Heterogeneity 6. Pricing of Services 7. Service quality is not statistically
measurable.

1. Perishability:
Service is highly perishable and time element has great significance in
service marketing.
Service if not used in time is lost forever. Service cannot stored.
2. Fluctuating Demand:
Service demand has high degree of fluctuations. The changes in demand
can be seasonal or by weeks, days or even hours. Most of the services have
peak demand in peak hours, normal demand and low demand on off-period
time.
3. Intangibility:
Unlike product, service cannot be touched or sensed, tested or felt before
they are availed. A service is an abstract phenomenon.
4. Inseparability:
Personal service cannot be separated from the individual and some
personalised services are created and consumed simultaneously.
For example hair cut is not possible without the presence of an individual.
A doctor can only treat when his patient is present.
5. Heterogeneity:
The features of service by a provider cannot be uniform or standardised. A
Doctor can charge much higher fee to a rich client and take much low from
a poor patient.
6. Pricing of Services:
Pricing decision about services are influenced by perishability, fluctuation
in demand and inseparability. Quality of a service cannot be carefully
standardised. Pricing of services is dependent on demand and competition
where variable pricing may be used.

7. Service quality is not statistically measurable:


It is defined in form of reliability, responsiveness, empathy and assurance
all of which are in control of employee’s direction interacting with
customers. For service, customer’s satisfaction and delight are very
important. Employees directly interacting with customers are to be very
special and important. People include internal marketing, external
marketing and interactive marketing.

7Ps of service marketing


The 7 Ps of service marketing are product, price, promotion, place, people,
process, and physical evidence. These seven elements will facilitate in
enhancing customer satisfaction and increasing brand awareness. These
marketing elements also help establish the marketing strategy and, thus,
increase the sales of products and services.
Marketing mix acts as a method for facilitating the sales of products and
services in the market. In the 1960s, there were only 4Ps which later added
additional 3Ps in the 1980s.

One of the marketing techniques that businesses have historically used to


sell their goods is the marketing mix. The marketing mix can be described
as a combination of various marketing strategies that a business uses to sell
its products and services in the market.
The strategy was often built based on the four marketing pillars of product,
pricing, location, and promotion. However, the strategies have advanced
along with marketing. Later, it was expanded to include People, Process,
and Physical Evidence, making it the 7Ps of marketing.

7Ps of Service Marketing Mix


The key internal component on which the strategy for marketing services
will be formed is the service marketing mix. The 7 elements of the
marketing mix help the firms to properly plan and implement the various
process for enhancing the sales of their product and fulfilling the business
objectives. Marketing mix enables various businesses to examine the
numerous marketing elements. This helps them to identify the most
feasible way to deploy their resources. Also, this allows the firms to grow
and market their products and services.
You may apply the 7 Ps of service marketing to every element of your
marketing mix in the following manner:
1. Product
The first P of the service marketing mix is the Product which includes
quality, packaging, design, and brand. When creating a product, it is
essential to consider whether the target market or audience wants it. From
the business perspective, the services typically fall under intangible
products. Every marketing mix component should focus on the service or
good you are selling.
Here are a few things to think about while developing product mix
strategies:
 What do consumers anticipate from a good or service?

 How will they use it, and what will they do with it?

 What characteristics are necessary to satisfy the client's needs?

 Is the name of the product memorable?

 What makes your product better than the competitors?


2. Price
In the 7 Ps of service marketing the second P of the marketing mix is Price,
which indicates the amount of money the buyer is ready to spend to obtain
your product. How the intended market behaves to prices, fees, and other
discounts depends on the company's pricing tactics. Consumers consider
the cost as a measure of the quality of the good or service.
The sales, demand, and perception of your brand are all significantly
impacted by pricing changes.
Therefore, while deciding on a price, marketers should consider the
product's worth and consider the various aspects of different pricing
strategies.
 What is the price of your product?

 The cost of the services offered by competitors

 Does the customer have to adhere to any credit terms?

 Costs of materials, labour, and overhead for the company.

3. Promotion
The service marketing mix's promotion mix component refers to what is
communicated, who receives it, how that audience is reached, and how
often it is advertised.
Successful marketing plans often include promotional tactics, including
advertising, direct marketing, and in-store promotions.
The purpose and guiding principle of the promotion mix are to raise sales
and brand recognition. Creating a promotion strategy won't be as difficult if
you can affirmatively respond to these questions:
 When and where can you deliver your marketing messaging to your
target audience?
 How do your rivals market their businesses?

 How do your competitors' marketing strategies affect the ones you


choose?
 When should your product be marketed for maximum effect?

4. Place
Place in the context of the service marketing mix refers to the distribution
and accessibility of your products to potential customers. Direct client
feedback should decide the location and method of sale of your product.
Once you have a good grasp of their purchasing habits and can target them
at the appropriate stage in their buying cycle, you will know where to
promote and display your products and services. This can be both in the
digital space and in the physical market.
The following are some factors that the business should consider when it
comes to location and place:
 What locations do buyers look for your product?

 How can I locate the finest distribution channels?

 The placement of rival businesses

 Will you sell your goods just on your business's website or on


external online marketplaces like Amazon and eBay?

5. People
The fifth P of the service marketing mix is People and it refers to those who
work for the company and provide customer service. In addition to
generating sales, providing satisfactory customer service helps increase
your customers and increase sales.
Anyone who interacts with customers and represents your brand, even
chatbots that aren't people, needs to be an adequately qualified sales
expert with good knowledge of your product and how it can better their
lives or resolve their issues.
Various strategies can be implemented to improve customer services, such
as:
 giving the employees vital information regarding their interests,
careers, and recurring clients
 teaching salespeople how to solve problems with the product or
service
 establishing a framework for the sale of goods or services to
customers that will make them feel at ease

6. Process
The sixth P in the services marketing mix is the Process which includes
how your goods and services are introduced to the customers. Some of the
crucial components of the marketing mix, as a result of the development of
online buying, are digital partnerships and logistics.
Because of the following, the process mapping should be consistent:
 Regular process revision to reinforce existing company procedures
and introduce new ones
 Symbols at different stages of the process make it simpler for the
workers to follow
 Diagram of the process and changes from one step to another.

7. Physical Evidence
The seventh and last P in the marketing mix is the Physical Evidence, which
refers to the physical proof of whether the business exists and whether the
transactions have occurred. In the period of digitalisation, digital
techniques and strategies are playing an essential role in providing
physical evidence.
Invoices, follow-up emails, Receipts, and newsletters you send to your
customers are a few examples of proof of purchases.
Everything your customer can see, listen to, and even smell about your
product must be considered in relation to the marketing mix.
Naturally, this includes the products' packaging and branding, but it should
also cover how things are exhibited in stores, where they are situated, and
other factors.
Conclusion
It's crucial to comprehend how the 7 Ps of service marketing fit into the
overall picture when developing a strong and effective marketing mix. The
7Ps help businesses identify the essential elements that impact the
marketing and sale of their goods and services. Companies and businesses
should follow these elements to enhance their marketing and sales. To
meet the needs of customers in the service sector, marketers strive to blend
these 7 Ps properly.

What are the benefits of using the 7 Ps of services marketing?


A marketing mix's seven components all work together to ensure your
company is successful. It offers the business the necessary variables to
produce value and gain a competitive marketing advantage. The 7 Ps of
service marketing are crucial since they can assist you in organising and
directing talks about a company's marketing strategies.

Service delivery process.


Service delivery is a vital part of running a business. It invites the
opportunity to impress your customers and show them the value you offer.
It can help to create a great relationship with clients and secure
retention.By creating value and engaging with your employees as well as
your customers, you can develop a service delivery culture that ticks every
box.

WHAT IS SERVICE DELIVERY?


Service delivery is a business idea and framework, the main goal of which is
to provide services from a vendor to a customer. This includes the regular
interactions between the two parties throughout the entire process of the
business supplying the service and the client purchasing it. This includes
the initial interaction, on boarding, set up, and any follow-up interactions.

WHY IS SERVICE DELIVERY IMPORTANT?


Service delivery is so important because it helps to bridge the gap between
a business or an individual not having the means to perform a task, and a
service provider looking to sell their product. Companies can tailor their
service delivery to meet the needs of each customer either through price or
function. Companies who engage in efficient, customer-focused service
delivery may also be able to distinguish themselves from the competition
by providing a higher quality service.

TYPES OF SERVICE DELIVERY EXAMPLES


There are a wide range of industries that provide a multitude of service
delivery that cover many products. Some of these service delivery
examples are shown below.
1. Consultancy / Professional Services Delivery
A consulting service that businesses provide could be anything from
business turnaround to IT consultancy. They help a wide array of
businesses that need it, and can bring in unique expertise and skills that
the customer does not usually have access to. A key benefit of a
consultant is that they can often provide a view from the outside of the
company, and give unbiased advice, two things which the customer may
not see due to the fact that they are too close to the business.

2. Support Services Delivery


An effective customer support service involves assisting customers
during both the pre and post-sale journey. Any issues customers run into
or any questions they have, your support team will be on hand to provide
answers and help them understand your product better. While your
support team is crucial to the success of your customers with your
product, the way in which your support can be delivered can go beyond
your team.

3. Onboarding Services Delivery


Onboarding is the first opportunity to create a great and truly memorable
customer experience. You only get one chance to make a good first
impression and this is that chance!
Unfortunately, many companies don’t instill a solid onboarding into their
culture. In many cases, just one person will cover multiple roles, aiming to
satisfy the demands of Support, Account Management AND Customer
Onboarding. This is not a future-focused strategy and will eventually
succumb to the weight of demand. Keeping customer success at the heart of
the business goals will allow onboarding to take its rightful place in your
organization’s strategy.

4.Management Consulting Service Delivery


Effective service delivery is at the heart of any management consulting
firm. The question on all of their lips will be how they can structure their
processes to be successful in service delivery. This can be broken down into
five key areas:
 Realistic and measurable milestones

 Clear and consistent communication

 Quality assurance

 Timely reporting

 Effective collaboration

Only with the above in place can they deliver their client promise and
provide the best service possible. With management consulting firms,
testimonials and positive customer feedback will be the backbone of their
strategy to increase their customer base and by extension, their own
business.

5. IT Services Delivery
IT service providers can offer a wide range of services, some of which
include standard IT support, which can be anything from password and
network management, cloud transfers, and regular backups. IT specialized
skills are another big part companies can offer, such as software
development, AI services, cyber security, and website management.
Source: https://www.precursive.com/post/our-guide-to-service-delivery
Service Delivery Process:

A 7 Step Process for Managing Service Processes


The service process is the backbone of the business.
The basic framework for the service process is given below.
Step # 1. Flowcharting
Flowcharting refers to creating a diagram that shows the steps in a process
and their relation. The flowchart outlines all steps involved in the process.
Businesses can gain valuable insights by looking at the process from a high-
level perspective and seeing how all steps fit together. It shows where
improvements can be made and help train new employees.
Step # 2. Service Blueprinting
After creating a flowchart, a service blueprint is developed. The service
blueprint shows how the customer interacts with the service process. It
includes steps in the process and shows what happens at each step.
The service blueprint can help identify potential problems and areas where
improvements can be made. It will also help organizations understand how
the customer interacts with the process and their experience.
Step # 3. Identify Failure Points
The next step is to identify failure points in the process. A failure point is a
place where issues can occur. Failure can be caused by human error,
equipment failure, etc.
Identifying failure points is key to improving the service process. It also
helps in creating contingency plans for when things go wrong.
Examples of failure can be a lack of:
 Staff to handle customer demands

 The right tools to finish the job

 A clear understanding of the process

Step # 4. Failure Proofing


After identifying the failure points in the process, the next step is to failure
proof them. Failure proofing making changes to the process to stop failures
from happening.
There are different ways to failure proof a service process.
Some common methods include:
 Adding additional staff to handle customer demands

 Providing more training to employees


 Installing better equipment or tools
 Creating clearer instructions for the process

Step # 5. Setting Service Targets


The next step is to set service targets. Service targets are goals that
businesses want to achieve. They can be customer satisfaction, quality,
speed of service, etc.
Setting service targets is important because it helps track progress and
ensure that goals are being met. It also helps to identify areas where
modifications are required.
Step # 6. Service Process Redesign
Once service targets have been set, the next step is to redesign the process
to meet those targets. Here, processes are redesigned to improve quality,
speed of service, customer satisfaction, etc.
This step can change:
 The way tasks are performed

 The order of tasks

 The tools and equipment used

 The training provided to employees

 The customer interface

Step # 7. Managing Customers Effectively


When it comes to providing service, managing customers is the key.
Customers can be valuable assets or liabilities. It is important to know how
to manage them effectively, so they become an asset.
There are many ways to manage customers effectively.
Below are steps to follow.
 Recruitment and Selection: Recruit people with the right skills and
attitude for the job.
 Job Analysis: Understand the job and customers’ requirements.

 On-boarding: Train customers on how to use the service.

 Coaching and Feedback: Provide coaching and feedback to help


customers improve their performance. Give them opportunities to
develop their skills further.
 Motivate the Best Performer: Recognize and reward good
performance. Help them see how their efforts contribute to the
company’s success.
 Appraisal: Review customer performance regularly. Take action to
improve their performance if necessary.
Competitive Dynamics: Competitive Strategies for Market,
Competitors are firms competing in the same market, offering similar
products, and targeting similar customers.

The competitive rivalry is the ongoing set of competitive actions and


competitive responses occurring between competitors as they compete
against each other for an advantageous market position.

The outcomes of competitive rivalry influence the firm’s ability to sustain


its competitive advantages as well as the level (average, below average, or
above average) of its financial returns.

The set of competitive actions and responses that an individual firm


takes while engaged in competitive rivalry is called competitive
behaviour.

Competitive dynamics is the set of actions and responses taken by all


firms that are competitors within a particular market.

So, firms study competitive rivalry in order to predict the competitive


actions and responses that each of their competitors likely will take.
Competitive actions are either strategic or tactical in nature.

The firm takes competitive actions to defend or build its competitive


advantages or to improve its market position. Competitive responses are
taken to counter the effects of a competitor’s competitive action.

Factors such as globalization and the advancement of information


technology have opened new avenues for brands to market their goods and
services. There is tough competition across all industries. Companies need
to have competitive strategies in place to beat the competition and gain a
competitive advantage in the market. The question is, what exactly is a
competitive strategy?

Competitive Strategy Definition


A competitive strategy is a comprehensive plan of actions a company
develops to defend its market position and gain a sustainable competitive
advantage in the industry.
Most industries are competitive, and brands are vying for the upper hand
in concentrated markets. From product quality to superior customer
service, companies are fighting each other for every inch in the race. A
competitive strategy is developed by assessing your competition's
strengths and weaknesses and identifying opportunities and threats in the
market. Marketers conduct these analyses with the help of market data
about the competitors and the target audience.

A. Porter's Competitive Strategies


There are four main types of competitive strategies proposed by Michael
Porter.
1. Cost leadership strategy
Businesses that follow this strategy sell products/services at the lowest
prices in the industry. Small-scale businesses cannot afford to follow this
strategy because it requires them to produce and offer products and
services at a lower price in the long term. They make less profit on one unit
of a product, but as products are sold at a lower price, consumers demand
large volumes of their products, thus learning to a large volume of sales and
high revenues. A business needs to have an efficient operation and various
distribution channels. Being a low-cost provider leads to a competitive
advantage.

Walmart is an example of a cost leadership strategy. It focuses on cutting


costs during operations and offers low-priced branded items.

2. Differentiation strategy
Companies that want to gain a competitive advantage by having a unique
identity in the market follow this strategy. It allows them to stand out
among competitors. There must be a unique selling point (USP) that a
company could use to attract more customers and charge premium prices.

In the automotive industry, Tesla has surely made a name for itself. It offers
cars that are energy sustainable, high-tech, and environment friendly.
3. Cost focus strategy
It is like a cost leadership strategy, but the difference is that it focuses on a
specific market segment. It is used to offer low-priced items to a particular
target market. Companies assess the target segment's needs and offer them
the goods or services at a lower price. Since it focuses on specific markets,
it could increase customer satisfaction and brand awareness.
An IT service provider could offer its services to a market like India, where
this industry is growing exponentially.

4. Differentiation focus strategy


Companies that focus on a specific market while maintaining a standout
position in the market follow this strategy. The strategy involves offering
goods and services to a niche market and helps the company keep its USPs
intact.

B. Competitive strategies: Value Disciplines – a strategy tool


Two marketing consultants, Michael Treacy and Fred Wiersema explained
competitive strategies from a customer-centric approach. They suggested
that companies can gain a competitive advantage by delivering superior
value to customers. They called these strategies "value disciplines".

Product leadership – is about giving customers superior value through


innovative products. Companies that follow this strategy must work hard
on product development and innovation. It could be costly as it is a
research and development-intensive strategy.

Customer intimacy – This discipline creates customer relationships


through superior customer service. Companies offer a wide range of
solutions to customers that are tailored to their needs. They try to gain
customers' trust, which is their competitive advantage.

Operational excellence – This discipline is about making operations


efficient by reducing waste and production costs and improving
distribution channels to provide convenient and economical products to
customers.

Other Competitive Strategies– Market Challenger Strategies Market


Follower Strategies, Market Nicher Strategies.

I-Market leader:
Market leader has the largest market share in the relevant product in the
industry. It has a dominant position in the market. Obviously, it leads in
new product development, price change, distribution coverage,
promotional activities, and novel experiments. The leader may or may not
be respected by other firms, but other firms have to acknowledge its
dominance. Other firms can challenge, follow or avoid the market leader.

In India, well-known market leaders are Maruti Suzuki in cars, Hero Honda
in two-wheelers, TCS in Information Technology, HDFC in Banking,
Hindustan Unilever in consumer goods, Coca-Cola in soft-drink, McDonald’s
in fast food, Life Insurance Corporation in life-insurance etc.

A few market leaders enjoy monopoly in the market. They need to remain
alert all the time for maintaining their leadership position. Other firms
constantly challenge leadership position. A little mistake here and there can
force the leader into second or third position. It has to adopt innovative
practices in all the marketing areas. Sometimes, it has to incur excessive
costs to maintain the number-one position.

Marketing Strategies for Market Leaders:


Strategies:
It is hard task to remain the number one in market.
The firm desiring to maintain market- leader position has to adopt one or
more of following three major strategies:

1. Expanding Total Market


2. Defending Current Market Share
3. Expanding Market Share
Alternative strategies for market leaders

1. Expanding Total Market:


The leader normally gains more when the total market expands. Naturally,
when total market or the industry expands, major player will gain more.
Total market can be expanded in four different ways:

i. Add New Users:


The leader firm must try to add new users. Every product class has
potential to attract new buyers who are either not aware of the product or
are resistant due to high price and lack of desired features.
ii. Discover New Uses:
Another option to expand the total market consists of discovering and
promoting new uses of the existing products. The strategy can be applied to
industrial products as well as consumer products. A wise firm can get idea
regarding new uses of product from customers tactfully.

Users are encouraged to suggest the new/innovative uses of the product. In


the same way, the company’s research and development wing can also
contribute in discovering the innovative uses of the product. After
discovering new uses, a heavy advertising and publicity must be
undertaken to popularize new uses of the product.

iii. More Usage per Occasion/Time:


The third strategy to expand the market consists of convincing the present
users to use more of the product per use occasion. It is more applicable to
edible-class products. Similarly, it can be extended to durable products, too.
More usage may be in forms of more quantity, numbers, time, amount,
intensity, and so on. A firm has a lot of promotional offers at its command
to encourage more usage per occasion.

iv. More Frequent Uses:


Sometimes, a company tries to convince users to use the product more
frequently to increase consumption. If a particular product is used once in a
day, it can be used twice or thrice in a day.

For example, in case gift articles, it is very common to discover different


events when gifts can be offered. Likewise, customers can be convinced to
brush the teeth thrice a day or every time after consuming sweets, instead
of once in a day, normally, in the morning.

2. Defending (Maintaining) Current Market Share:


This strategy is based on the theme: ‘Customer-retention is more profitable
than customer- creation.’ At any cost, the current market share must not be
endangered. While expanding total market, a market leader must
continuously defend its current market share against rivals’ attacks.
For example, Coca-Cola guards its market share against Pepsi-Cola.
Hindustan Unilever protects its share against Procter and Gamble. Maruti
Suzuki India tries to protect its market against Tata Motors and Hyundai
Motors. A leader firm has to do everything possible to defend its current
market share. Continuous innovation, better customer service, distribution
effectiveness, and cost-cutting can increase competitiveness.

It has to ‘plague holes’ to keep the enemy away. In short, it must


continuously monitor its operations to avoid weaknesses that can attract
rival attacks. Sometimes, leading firm has to apply the military principle –
The best defense is a good offense.

3. Expanding Market Share:


Instead of expanding total market and defending current market shares,
sometimes, the market leader prefers to improve profitability by increasing
market share. The extent to which the increased market share results into
improved profitability depends on a lot of variables. Here, company must
do something to snatch the market share from the pockets of competitors.

There are several ways to expand market share:


i. Adding New Product Lines:
In order to expand market share, the market leader can add new and
diversified product lines to make the product mix comprehensive and
attractive. However, there must be adequate demand for new product lines.

ii. Expanding Existing Product Lines:


It is a product line extension strategy. It calls upon expanding current
product lines by adding new models, varieties or items with attractive
features (colours, sizes, shapes, weights, get-ups, etc.) and superior
qualities (durability, taste, usefulness, safety, convenience, status, etc.) This
strategy can attract more customers. Research and development
department must be active to grab emerging market opportunities.

iii. Improving Product Qualities:


Market share can be increased by improving qualities of current products
so that customers expecting better qualities can be attracted.

iv. Increasing Promotion Efforts:


Heavy advertising, aggressive sales force, effective sales promotion, and
attractive publicity efforts can help expanding market share faster relative
to competitors.

v. Improving Distribution System:


Market share can be expanded via better distribution system. Both direct
and indirect channels and overall physical distribution system must be
modified so that customers can avail the products with the least difficulties.
Similarly, effective distribution system can bring down overall selling costs
which can further improve profitability.

vi. Deploying Aggressive Sale Force:


Effective personal selling efforts also have positive impact on sales volume,
market share, and profitability as well.

vii. Applying Price-cut:


To attract price-sensitive customers, leader can practice price-cut strategy.
This strategy is profitable only when the per cent of sales-rise is more than
per cent of price-cut.

viii. Improving Production Efficiency:


A leader must improve production efficiency to reduce overall costs. Due to
improved production efficiency, a firm can sell better-quality products even
at low price.

II-Market challenger:
Market challengers are known as runner-up firms. They occupy second,
third or lower ranks in an industry. Bajaj Auto in two-wheelers, Tata
Motors and Hyundai in cars, Reliance Petro and Essar Oils in refineries
challenging ONGC, Pepsi-Cola in soft-drink, Procter and Gamble in
consumer goods, Vodafone in cellular service providers, Sony and Samsung
in cell-phone instruments, etc., are some of the market challengers in India.

Market challengers are capable to attack the leader and other competitors.
Sometimes, capable challengers can overtake the leader. Market
challengers also target smaller, more vulnerable competitors. The
fundamental principles involved are: to assess the strength of the target
competitor, keep searching opportunities to attack the target, to keep a
watch on the amount of support that the target might muster from allies.
Challengers usually choose only one target at a time. Challengers prefer to
attack the target at a vulnerable moment. Challengers usually launch the
attack on narrow front.

Usually challengers adapt these strategies: price discounts or price cutting,


line extensions, introduce new products, reduce product quality to cut on
costs, increase product quality, improve services, change distribution
strategies and intensify promotional activity.

Marketing Strategies for Market Challengers:


Three stage marketing strategies for market challengers
Strategies:
The challenger can exercise following strategies:

A market challenger can attack any of the following opponents:


i. Attacking the market leader.
ii. Attacking the firms of its own size that are not doing the job well and are
underfinanced.
iii. Attacking the small local and regional firms that are not doing the job
well and are underfinanced.

Once strategic objectives are defined and opponents are selected, the
challenger can apply following attacking options:

i. Frontal Attack:
A frontal or “head-on” attack is an aggressive attack strategy. A challenger
attacks the opponent’s strengths rather than its weaknesses. The outcomes
depend on who has more strengths and endurance. This option is preferred
by the firm with greater resources, otherwise it is proved as a suicide
mission.

ii. Flank Attack:


The challenger concentrates on opponent’s less-secured, rear-side or weak
spots to attack. It is a side-attack rather than a front attack strategy. This
option is particularly attractive to an aggressor with less resources than
opponents.
iii. Encirclement (All-round) Attack:
Encirclement attack is a form of all-rounded and comprehensive attack. It
involves launching a grand offensive attack on several fronts, so that the
opponent must protect its fronts, sides, and rears simultaneously.

iv. Bypass Attack:


It is the most indirect attacking option to harm others. It indicates
bypassing (i.e., ignoring or avoiding) the enemy and attacking easier
markets to broaden one’s resource base. This is the easiest way to face the
leader.

v. Guerrilla Attack:
This type of warfare contains making small and intermittent (sudden and
irregular) attacks on enemy’s different territories. A firm may undertake a
few major attacks or continuous minor attacks for longer time. It is more
preparation for war than war itself.

III-Market follower:
These firms prefer to follow leader rather than to use new strategies and
waste energy and resources. They do not face the leader directly. Some
followers are capable to challenge but they prefer to follow. However,
market followers always react strongly in case of any loss. In some capital
goods industries like steel, cement, chemical, fertilizer, etc., product
differentiation is low, service qualities are similar, and price sensitivity is
high. They decide to provide similar offers by copying the market leader.
But, one glaring fact is that followership is not always satisfying path to
pursue.

Market followers prefer to follow the leader doesn’t mean that they don’t
require specific market strategies. They cannot be simply passive or simply
carbon copy strategies adopted by leaders. They need to hold current
customers and win a fair share of new customers. Followers usually keep
manufacturing cost low and offer better quality products with satisfactory
services. At the same time, they do enter new markets as and when there
are opportunities. Market followers are bound to exist in a mature market.
The market followers are wider in case of online marketing because online
marketing has lower entry barriers and higher returns. Thus, in online
commerce itself, you will see that companies like Snapdeal, Flipkart,
Jabongg have all started one after the other. Off course, the market leaders
were Ebay and Amazon. And, today e-Bay and Amazon are facing tough
competition.

It is a simple way to follow the leader. The follower who wants to be


imitator duplicates the leader’s product as well as package and sells it in
the market through disrepute distributors. Products are marketed secretly
to avoid legal complications. The product seems exactly similar to original
product except basic quality and features. This is common strategy in auto-
parts and electronics products. People, knowingly or unknowingly, buy
such duplicate products as they are made available at low price.

They can also me Emulators. The emulator clones (emulates) the leader’s
products, distribution, advertising and other aspects. Here, product and
packaging may be identical that of leader, but brand name is slightly
different. Market is full of cloned products especially in interiors of the
country. You will find bottled water with labels of Bisleri, Aquafina;
toothpaste tubes with Colgate, Cibaca labels but then the packaging is of
inferior quality. This strategy is widely practiced in computer business also.
The cloned products are openly sold in the market because of fake
practices. The fake brands are pushed in the distribution of firms.

Marketing Strategies for Market Followers:


The firms prefer to follow leader rather than to challenge are called the
followers. They do not face the leader directly. Some followers are capable
to challenge but they prefer to follow. However, market followers always
react strongly in case of any loss.

In some capital goods industries like steel, cement, chemical, fertilizer, etc.,
product differentiation is low, service qualities are similar, and price
sensitivity is high. They decide to provide similar offers by copying the
market leader. But, one must be aware that followership is not always
rewarding path to pursue.

Market followers prefer to follow the leader doesn’t mean that they don’t
require specific market strategies. They cannot be simply passive or a
carbon copy of leaders. They must know how to hold current customers
and win a fair share of new customers. Followers must keep manufacturing
cost low and offer better quality products with satisfactory services. At the
same time, they must enter new markets as and when there are
opportunities.

They have following strategic options:


1. Counterfeiter or Fraudster:
It is a simple way to follow the leader. The follower who wants to be
counterfeiter duplicates the leader’s product as well as package and sells it
in the market through disrepute distributors. Products are marketed
secretly to avoid legal complications.

The product seems exactly similar to original product except basic quality
and features. This is common strategy in auto-parts and electronics
products. People, knowingly or unknowingly, buy such duplicate products
as they are made available at low price.

2. Cloner or Emulator:
The doner clones (emulates) the leader’s products, distribution, advertising
and other aspects. Here, product and packaging may be identical that of
leader, but brand name is slightly different, such as “Colgete” or “Colege”
instead of “Colgate” and “Coka-Cola” instead of “Coca-cola.” This strategy is
widely practiced in computer business also. The cloned products are
openly sold in the market due to different brand names.

3. Imitator:
Some followers prefer to imitate/copy some aspects from the leader, but
maintain differentiation in terms of packaging, advertising, sales
promotion, distribution, pricing, services, and so forth. Customers can
easily distinguish imitated product from original one. The leader doesn’t
care for imitator until imitator attack the leader aggressively. Quite
obviously, such products are sold at low price.

4. Adaptor:
Some followers prefer to adapt the leader’s products and improve them.
They make necessary changes/improvements in the original products and
develop little different products. The adapter may choose to sell the
products in different markets (country or area) to avoid direct
confrontation with the leader. Many Japanese companies have practiced
this strategy and developed superior products. Followers can earn more as
they do not bear innovation expenses. In the same way, they can conserve
advertising and other promotional expenses. However, to be follower of a
leader is not always better option to pursue.

IV-Market specialist or nicher: A niche is a more narrowly defined small


market (limited number of buyers) whose needs are not being well-served
by existing sellers. It is a small segment that has distinctive needs and is,
mostly, ready to pay high price. Marketers can identify niches by dividing a
segment into sub-segments or by dividing a group with a distinctive set of
traits.

They may seek a special combination of benefits. Niches (small groups of


buyers) are fairly small and normally attract a few competing firms. A
nicher is the small firm serving only small specific groups of customers. The
firm’s marketing efforts to serve the niches successfully is called
nichemanship.

Nichers understand their niches’ needs so well and minutely that their
customers are willing to pay a premium price. They design special products
with distinctive features, qualities, uses, and value for special group which
are tailor-made to suit the buyer’s needs. Nichers have special skills to
serve their market in luxury goods segment and fashion industry. They gain
certain economies through specialization. Nichemanship strategy is also
called focus strategy. The objective is focusing marketing efforts on one or
few narrow market segments and tailoring the marketing mix to give those
chosen customers tailored offer. The firm typically looks to gain a
competitive advantage through effectiveness. The most successful nichers
tend to have the following characteristics:

They tend to be in high value (luxury goods) industries and are able to
obtain high margins. They tend to be highly focused on a specific market
segment. They usually market high end products and are able to use a
premium pricing strategy.

IV-Marketing Strategies for Market Nichers (Tiny Firms):


Strategies:
Specialization is the basic idea to serve niches. Nichers can apply
specialization on various aspects.
They can practice one or more of following marketing strategies:
1. End-user Specialist:
It is very popular and widely used option to serve niches. The firm prefers
to operate one-type of end-use customers, for example, a legal advisory
firm can handle only criminal cases, or a fashion designer can work only for
a few film stars.

2. Vertical Level Specialist:


The firm can specialize at vertical level of production or distribution, for
example, producing only raw-materials for specific companies, only
warehousing services, or it may concentrate only on retailing. It can serve
only a part of the total process.

3. Customer Size Specialist:


The firm can sell products only to small, medium, or large size customers.
For example, a firm can supply one or two components only to large
companies.

4. Specific Customer Specialist:


A firm supplies its products only to distinct group of buyers. For example,
designing special two-wheeler for handicapped people or serving special
foods to people who are suffering from certain diseases like diabetes.

5. Geographic Specialist:
The firm serves customers of only specific region or area of the world, for
example, specific need of the people living in the hilly area.

6. Product or Product Line Specialist:


The firm produces or sells only one product or product line, for example, it
sells only socks, ties, or tie pins. A small finance company deals with only
car loans or personal loans.

7. Event Specialist:
The firm concentrates its efforts only on particular events or occasions like
marriage, grand inauguration, birthday, anniversary, or some festivals. It
offers goods or services for celebrating the events of target buyers.

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