The producer still advertises at a high level to fight off competition. Product starts to move into profitability. The cash flow starts to gain more revenue. Maturity: Sales growth begins to slow as market saturation is approached. Sales are kept going by those who are late to adopt new products.
The business will witness higher sales volume as the reduced prices will attract more customers to its products. By lowering prices of the outputs, the business will increase satisfaction of its customers. By boosting customer satisfaction, the business is able to absorb and retain the customers of its products for a long period of time The business should not take the idea of lowering prices lightly. This usually comes with a lot of disadvantages to the business which include; Reducing the prices leads to excess demand which will exceed the company’s total supply of its products. This makes the business incapable of satisfying the high market
In using this approach the initial dollar amount of a product is set lower, then overtime the items will slowly increases in price. This particular strategy helps to rapidly reach a wide fraction of the market to hopefully initiate positive word of mouth throughout our target market. This is our best option as a new business coming into the industry. Our main objective in using this method is to draw in consumers that might be unaware of what products we will be offering. In creating a new company and implementing innovative sales systems, we would like to take some of our competitors business by initially drawing customers in with offering lower prices.
The introduction stage of a life cycle appears to fall outside of the BCG matrix because it is characterized by small market growth but firms can still hold a high level of market share in the new market they are developing. The Growth phase appears to fall within the question mark quadrant because the market is growing at a very high rate but there will still be a large amount of competitors that will be seeking to capture the market leader position. SThe shakeout is a phase that appears to allow business units to be classified as stars because high rates of growth will continue (at decreasing levels) but the industry will begin to consolidate into firms with higher market shares as demand for the products become restricted to replacement or repeat purchases only. The maturity phase of the product life cycle allows business units to be considered cash cows if the firm has capitalized on the consolidation and declining growth discussed in the previous stage. In this stage, market growth will begin to flatten but firms still competing in the market will a hold large share of the market because of the consolidation occurring in the maturity phase that leads to an oligopoly.
In the growth stage, a few similar products might have entered the market, so there may be some competition present. Profits will improve in the growth stage as the sales revenues will rise also leading to inherent economies of scale. The company would still experience high advertising costs in order to attract a larger pool of customers, and in order to promote the superiority of their product over potential competitors (if any). Due to increasing sales volume, production volume will also be raised to keep up with the demand. When this happens, economies of scales will arise.
Product life cycle The product life cycle shows the sales of a product over time. To be able to market a product, Cadbury must be aware of the product life cycle of its products. The cycle can be demonstrated as below: Introduction Following planning and development, the product is introduced onto the market. This stage includes characteristics such as: Low initial sales, due to limited knowledge and no consumer loyalty Heavy promotion to build brand image and consumer confidence Losses (low profits at best) due to heavy development and promotion costs Limited distribution levels, but high stockholding for the manufacturer Growth At this stage, consumer knowledge and loyalty has grown, and the company increases sales and begins to make profits. There may be a growing number of competitors who may introduce similar products or adapt their price and promotion policies.
Upon seeing long of people waiting for the product, sellers either hike the price or bring in more supplies if it were possible. If more suppliers are brought, equilibrium price goes back to normal. If supply cannot be increased, sellers increase the price of the product or service. In an efficient market, price increase brought about by a crisis of otherwise is natural. Due to surge in demand, people cannot get the same product at the original price during shortage.
Boosting productivity As the brand moves out in foreign markets, its customer base increases depending upon the creativity stuffed in its promotional tools. To meet the need of those new clients and keeping them stuck with their business, the need to boost up their production while keeping the rates lower. But that’s not a big problem since the amount lost in selling the product at a lower rate is equaled with the swelling sales number. Decreasing business
Its marketing cost may be high in order to test a market and set up a distribution channel. At the growth stage, the product start making a profit, the sales increase rapidly with some cost on marketing especially brand building. Competitors enter the market, often in large number depending on how attractive the market is. When a profit starts to decline, it’s the sign of ‘Maturity stage’. At maturity stage, the sales continue to increase but at the decreasing rate until become stable, because of price competition.
a. Information is gathered and stored in an internal database. b. Marketers can explore what each customer wants and tailor the marketing processes to meet those needs. C. Consumers as Moving Targets 1.