Figure 3: Product Life Cycle Stages
This is the first stage of the product life cycle. In this stage, an organization needs to introduce a product by creating product awareness among the customers (Stark 2015). For example, CISCO Flip camera was introduced first in San Francisco in 2007. In the introduction phase, the organizations develop a market for CISCO Flip camera in both the domestic and international market. Selection of pricing strategy in this stage is crucial as in this stage either the company sets a high price to cover its production cost or low price to attract the consumers. For CISCO Flip camera the firm sets a competitive pricing strategy to cover a large number of consumers. In the context of the typical electric jug,, the organization also gives special emphasis on creating awareness for this product by improving the advertisement strategy. However, the pricing is high as the manufacturer of this product wants to cover its production cost.
The growth phase is the most important phase of the product life cycle as this stage indicates whether the service or product can create a positive image or not in the market (Holzbauret al. 2016). In this stage, an organization focuses on lowering its product or service cost. This is due to gaining competitive advantages in the market. In this stage, an organization has to face challenges of substitute products, which leads the organization to export its product. For example, CISCO Flip camera had high revenue of around $15 million in its growth phase. However, there was a threat of substitute product like Sony’s Bloggie camera, Kodak video camera, and other digital cameras.To deal with these challenges Cisco started to decrease its product price and export the products to other countries. In the context of the electric jug,, the manufacturer sets high price during its introduction phase. In the growth phase, they also decrease the price to gain competitive advantages. There are many substitute products of the electric jug in the market that are offered by competitors at a reasonable price. This situation forces the manufacturer as well as the raw material suppliers of this product to lower its cost.
Maturity phase is the longest phase of the product life cycle where the growth starts to decline due to high competition in foreign markets (Restucciaet al. 2016). In the context of CISCO Flip camera, the sale becomes slowdown in this phase and the organization has decided to shift its manufacturing to the developing countries. In developing countries, the labor cost and material cost is low as a result CISO was able to reduce its production cost. To save the product from being destroyed the manufacturer of electric jug shifted this product development to Asian Pacific region, where the operating cost is low. However, the electric jug company has faced less challenge compared to CISCO Flip camera. However, the electric jug is a household product that meets the daily need of customers but the CISCO flip cameras are replacing day by day with an advanced digital camera. Hence, in the maturity phase, CISCO Flip camera faced a worse situation compared to the electric jug.
In this stage, the business will lose its market share due to high production cost and low sales revenue (Marcinkowskiand Zych 2017). In the context of CISCO Flip camera, the same situation has been observed, which affected the existence of such a product. However, in the context of the electric jug, the situation is quite different in this phase. By decreasing the purchasing cost of raw materials the manufacturers are able to maintain the product portfolio.
This is the last stage of the product life cycle where a product or service starts to decline (Stark 2015). However, every product or service has to go through these four stages including the decline phase. In the context of CISCO Flip camera, the sales and profit start to decrease because of alternative products and advanced technologies are launched in a market. However, a product can face different stages of its life cycle in different countries. For example, electric jug faced growth in one country and decline in another country, which allows the organization to cover the damage. However, in the context of CISCO Flip camera, this product faced a decline phase in many countries at the same time, which affects the revenue generation.
To deal with this situation the manufacturers of electric jug harvest their products by reducing its cost and offering the product in a loyal niche market. However, in the context of CISCO Flip camera, Cisco discontinued the product by announcing that this company is going to shut down its Flip video camera division (Bbc.com 2019). Therefore, they start to liquidate their cash, which was helpful to save this business.
SWOT analysis and the concept of ‘fit’ and ‘stretch’
SWOT analysis stands for strengths, weaknesses, opportunities and threats where strengths and weaknesses are internal factors depend on a company i.e. they have full control over factors and circumstances which can be changed. But, on the other hand, opportunities and weaknesses are the external factors depend fully on the environment. It is a technique which helps to track a record on the performance of a company whether they are successful or not among the other competitors. A SWOT analysis is often used at the beginning of the planning or analysis of an organization.
The ‘Strengths’ denotes the better outcome of an organization than other competitors. A strong brand is popularity among consumers, a unique technology that return market-beating results. It then helps the company to attract new employees in a company (Bull et al. 2016).
The ‘Weaknesses’ denotes the areas that organization need to improve for better performance. It stops an organization to perform at its best. Weak brands, lack of capital, higher debt are the key factors where an organization needs to look at.
The ‘Opportunities’ denotes the market trends that lead to increase the sales. An organization needs to grab the advantage in a competitive market by cut-price, increase sales and market shares.
The ‘Threats’ denotes the advantages the competitors grow over the organization.
Firstly, a SWOT analysis requires to identify the objectives they need to achieve for the business, organization and an individual. It should be used to make an analysis of whether it is an individual or an organization that is making an impact in the market and desired to achieve the goal. In other words, once the SWOT factors are identified, it is decided whether further initiative or product is needed to be pursued to make the organization successful. An organization needed to fully focus on the strengths and opportunities which is helpful to achieving the objective (Phadermrod, Crowder and Wills, 2019). On the other hand, an organization needs to look at the weaknesses and threats that can usually harmful to achieving the objective. It is used in planning and prevents the crisis from the management in various fields of the organization. It can be used to build the organizational structure and helps to build strategy-oriented analysis to cope up with the internal and external factors.
Thus, SWOT analysis is a simple but useful tool for framing the organization’s strengths, weaknesses, opportunities and threats that they face. It helps them to focus on the strengths and minimize threats and take the greatest available opportunities available to them.
Porter’s competitive strategy
It is a generic strategy for analyzing competitors and industries. This is described as the company’s competitive advantage in the basis of market scope. It has 3 to 4 generic strategies like lower cost strategy, focus strategy or differentiated strategies. This concept was invented by Michael Porter in 1980. The three main points are overall cost leadership, focus and differentiation which are centred by ‘stuck in the middle concept’. This form of concept is easily usable for any business like small, big or medium. This concept is about re4latin between differentiation strategies of product, cost-effective strategies, and focus towards the market. Porters narrated that the firm should always keep eyes on multiple segments of the industry (Ouma and Oloko, 2017). The main target of the firm should always on the competitive scope of trade. The main research factor of this concept has impacted the purpose of profit on strategies of marketing. The product strategy has three sides like supply side, demand side and profit side. The implementation of this factor has always depended on cost minimization or maximization and value-added differentiation of cost etc. The strategy of low-cost factor gives sustainable advantage in competitive purpose.
Cost Leadership strategy
In this way, the firm takes advantage in two way like experience curve effects and economies of scale. In this strategy, the firm should maintain cost strategy on the different functional groups like information technology, finance and procurement or supply and marketing &inventory etc. It is more important for big firms like Wal-mart or dell (Firoz Suleman, Rashidirad and Firoz Suleman, 2019).
Ex: In starting time an airline chose cost depending strategy but after that when the market was growing then they offer the same strategy which called low-cost attributes and it is called low-cost leadership. Another company like Wal-mart is known for squeezing its suppliers at a low price for goods. Another financial advantage is like maintaining low-cost on the raw material. Dell computer currently achieved a share of the market by making the inventories low. The other factor is they also building computers on the basis of applying procurement or supply chain with the help of differential strategy also.
This about fixes the target market of a specific company. It is also called a segmentation strategy. By the help of this strategy, the company attracts the people on the basis of different factors like price, offers, promotion and other facilities for customer. This strategy always makes competition with other firms (Ouma and Oloko, 2017).
Example: The southwest airlines provide point to point and short-haul flights competition which is opposite of the spoke and hub model of other airlines like United, American and United airlines.
This strategy is not working for a small company. It is more important for big companies. This strategy is not based on the low price that’s why this method more required for a big company. This strategy needs different patents like special technical experts, intellectual property and talented personnel with innovative processes. This strategy has two models like the shareholder value model and unlimited resources model. The shareholder model is about the timing of use of proper knowledge which creates different unique advantages. The other model describes that it utilizes the base of raw material or resources in contrast to other competitive firms.
Ex: GE use always finance factors to improve the quality of the company. This gives more advantages to use this strategy in contrast to a small company. Like Royal crown beverages and Coca-cola has used this strategy which is a good example of this strategy.
This entire piece of work highlights the product portfolio management by showing different product examples. Application of BCG matrix, product life cycle, SWOT analysis, and Porter Five forces are analyzed to understand better management of the business portfolio. It has been received that the use of BCG matrix helps an organization to identify its product positioning, growth and market demand in a specific market segment. On the other hand, product life cycle analysis helps an organization to get a guideline about how to manage its product portfolio in different stages. Moreover, the use of SWOT and Porter five forces model is effective to identify the impact of internal and external factors on a product portfolio management.
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