Benefits Of Business Plan

The benefits of a business plan are as follows:

1. Risk Management
With the help of business plan, all aspects of the new venture are carefully analyzed. This helps the entrepreneur to deal with risks and uncertainties that may arise. Business plan also provides contingency plans for such situations.

2. Objectivity
 A business plan helps the entrepreneur to view the venture objectively and critically. Close scrutiny of assumptions made about the venture's success is done.

3. Communication
The completed business plan helps entrepreneur to communicate with outside parties. Financial sources can use it for investment purposes.

4. Implementation
The business plan serves as a tool for guiding the implementation of new venture toward success.

5. Control
The business plan establishes standards for performance as bench marks. Actual performance can be compared with standards to take corrective actions.

6. Efficiency
The business plan improves efficiency of new venture by minimizing waste. Results can be achieved

Practice Of Relationship Marketing


Relationship marketing may not be equally effective in all market situations. It is extremely effective with customers who have longer time horizons and high switching costs. Strategically, the level of investment (time and money) on building customer relationship should be matched with the number of customers and size of profit from the transaction.

A firm selling mass merchandised consumer items of low to medium profit margin, the firm may adopt accountable marketing. A firm selling a product with high profit margin to a medium number of customers may adopt proactive marketing. If a product gives medium profit margin and its size of customer is small, the firm may again adopt proactive marketing. Partnership marketing, the most advanced form of relationship marketing is feasible only when a firm is selling a product with high profit margin to a small number of customers.

Relationship Building Process In Relationship Marketing

Relationship marketing involves a long-term process of building satisfied and loyal customers. This process cannot be executed in a short period of time. It requires sustained enduring efforts on the marketer to convert customers with different levels of commitment towards the firm's product or service. The process is as follows:

1. Suspects
Most firms start from the pool of suspects. Suspects constitute of every one who has the possibility of buying the firm's product or service.

2. Prospects
From the pool of suspects, the firm identifies customer groups who are most likely to buy the product or service.

3. Customers
This group has positive experience with the first trial and have purchased the firm's product or service for the second and third time. This group has the potential to be become loyal customers if the firm tries to build relationship. In absence of the firm's effort to build the relationship the repeat customers may switch to competing firm's products or services.

4. Client
The group consist of the loyal and satisfied customers who normally buy the firm's product or service for a longer period of time. Marketers need to work closely with clients so that they make long-term loyalty.

5. Supporter
In relationship marketing, some firms organize business clubs from among their loyal customers and offer the members of the club several benefits so that they remain loyal for ever.

6. Advocate
From among the members of the business club, the firm tries to convert some customers into advocates who are vocal and who openly recommend the firm's product or service to prospects and first time users.

7. Partner
The ultimate objective of relationship marketing is to convert some of the advocates into the firm's partners who work together with the firm for mutual benefits.

Levels Of Relationship Marketing

Different levels of relationship can be developed with customers. The extent to which an organization practices relationship marketing depends on its investment (time and money) in building the relationship.

1. Basic Marketing
The marketer simply sells the product without call backs or feed-back from the customers. Here, there is no effort to build the relationship.

2. Reactive Marketing
 After selling the product, the marketer encourages customers to report their comments, complaints, and suggestions. Here, there is some effort to build the relationship.

3. Accountable Marketing
After selling the product, the marketer calls back the customer after a short time to find out if the customer is satisfied or not. Here, there is increased level of effort in building the relationship.

4. Proactive Marketing
After selling the product, the marketer remains in regular contact with the customer and provide suggestions for better use of the product, servicing, and repairs. The marketer also informs the customer about the firm's new products, improved quality and services. Here, the marketer is working harder to enhance the level of relationship.

5. Partnership Marketing
Under partnership marketing, the marketer continuously works with its customers and other stakeholders for mutual benefits. Here, the marketer works jointly with the customer to find ways and means to help customer perform better, effect savings, and increase the level of satisfaction. Thus, partnership marketing is the best form of relationship marketing.

Dimensions Of Relationship Marketing

Relationship marketing has three dimensions as follows:

1. The view of companies about customers is changing. The emphasis is shifting from transaction-based marketing to relationship-based marketing.

2. A broader view is emerging of the markets with which a company interacts. In addition to their relationship with customers, companies are increasingly concerned about their enduring relationships with suppliers, middlemen, stakeholders, and other influence groups. The focus is also on internal marketing where all employees are trained and motivated to work for customers' satisfaction.

3. A strategy to bring the three key elements- quality, customer service, and marketing activities - to work together in order to produce synergistic effects for the benefit of customers and external agencies.

Meaning Of Relationship Marketing

Relationship marketing has emerged from the 1980s as a key concept in marketing literature and widely adopted by organizations in the contemporary business world. Relationship marketing shifts attention from short-term transaction and immediate profits toward a process of creating customer value through long-term relationships with customers.

The modern relationship marketing can be understood if it is contrasted with the traditional transactional marketing. In transactional marketing, the focus is on sales and sales are achieved through the effective implementation of marketing mix. Sales are perceived to be the result of immediate actions such as aggressive selling, sales promotions, or advertising.
Relationship marketing's focus is not on immediate sales; rather it is directed at building a large group of satisfied and loyal customers. Customer retention and winning back lost customers are the key strategy in relationship marketing. Relationship marketing uses sustained long-term efforts in delivering value to the customers and profit to the firm.

In a competitive market, it is not enough to build relationship only with customers; it is equally important to establish relationships with the vendors, intermediaries, and other influence groups. Relationship marketing is adopted by smart marketers who try to build up a long-term trusting, win-win relationship with valued customers, distributors, dealers, suppliers, and other stakeholders.
This approach is directed at building strong economic, technical and social relationship with the parties concerned over a period of time. The objective of relationship marketing is to build a valuable company asset popularly known as marketing network. today, the real competition is not between companies; rather it is between marketing networks.

Principles Of Total Quality Marketing

Total quality marketing can be effectively implemented by adopting the following principles:

1. Quality is in the eyes of customers
Product or service quality means customers' perceived quality. No matter how best the firm thinks its products or service is, if customers feel it is not good enough, it should mean that it needs improvements. Thus, quality must begin with customers' needs and end with customers' perception.

2. Quality must be reflected in every activity of the firm
Quality should be reflected not just on the product but also on sales personnel, advertising services, product literature, delivery, after-sales support, and other marketing activities.

3. Quality requires total employee commitment
Not only the marketing personnel but the total employees of the firm should be fully committed to quality and motivated and trained to deliver it. 

4.Quality requires high quality partners
Quality can be deliver only when firm's partners such as suppliers and distributors also deliver quality.

5. A quality program cannot save a poor product
If customers perceive one of the firm's products as 'poor' it is futile to salvage that product through the quality improvement program.

6. Quality can always be improved
Firm must believe that there is scope for improvement in every product or service.

7. Quality improvement sometimes requires radical jumps
Today the market has become so competitive and unpredictable that continuous quality improvement is not enough. Firms in the present context should ' work smarter' and beat competitors through radical change in quality.

8. Quality does not cost more
The notion that improving quality requires larger investments has outdated. The extra investment in quality improvements programs can be easily recovered through reduction of wastage and increased customer goodwill.

9. Quality alone is not enough
Quality is necessary but it is not enough to make a firm successful in the competitive market. Very often when a firm makes a breakthrough in the quality of its products, competitors also follow suit and neutralize its effects. To be successful in the competitive market, a firm should focus equally on other important marketing strategies.

Meaning Of Total Quality Marketing And Role Of Marketers In It

Meaning Of Total Quality Marketing 

In order to achieve quality based on customer satisfaction a firm needs to do follow the total quality management approach and implement it with modification in the firm of total quality marketing. Total quality management is a popular philosophy of the 1980s that emphasizes that not only production process but also the policies and practices of the organization as a whole should be committed to continuous improvement of quality. Total quality marketing emphasizes that each marketing activity performed by the firm such as marketing research, sales training, advertising, customer service, and others should conform to the highest possible standards. 

Role Of Marketers In Total Quality Marketing

Marketers have three major roles to play in the success of total quality marketing:

1. Correctly identify the customers' needs and requirements and communicate customers' expectations appropriately to product designers.

2. Make sure that the customers' orders are meet in time and see that customers have received proper information, training and technical assistance in the use of the product.

3. Gather customer complaints on the current products and customers' ideas for product or service improvement, and convey them to the proper departments in the firm.

Practice Of Green Marketing

Green marketing practices has been reflected in the following areas:

1. Environmental Awareness
Consumers are becoming more aware of the adverse effect of business practices that damage the environment. Indiscriminate use of polythene bags, plastic packaging, water bottles, and tin containers have become common site of all large cities. City officials around the world face the problem of solid waste disposal and management. Air has already been polluted with high carbon emission and increased dust particles due to excessive use of automobiles and indiscriminate industrialization. Consumers associations around the world have become very active to pressurize governments and businesses to adopt more environmental friendly business practice. Business firms are also responding to calls by adopting less harmful materials and cutting down major pollutants.

2. Resource Conservation
The other area of interest of human society is in resource utilization. The earth is bestowed with two types of resources- renewable and non-renewable resources.The water, air, solar, agricultural resources are renewable resources and can be sustained for a longer period of time with effective management. The oil, minerals and forest resources are non-renewable resources and can be exhausted if used indiscriminately. The society today emphasizes on using more of the renewable resources and conserving the non-renewable resources for the future generations. Use of ethanol (agricultural diesel) and recycled cooking oil for transportation is an example of green marketing. Governments are emphasizing on nuclear, solar, air, and water based energy sources rather than oil and coal based energy.

3. Recycled Products
The social consciousness to use more of the recycled products and packaging has brought new opportunities for introducing recycling industries. This trend has also contributed in cost savings and waste reduction benefiting the business as well as the society. The pressure on non-renewable resources has greatly been reduced through recycling of plastics, iron, cooking oil, paper and many other products. 

4. Green Products
Consumers are showing greater health consciousness and increasing consumption of green products. Use of excessive fertilizers, genetically modified grains, fruits and vegetables, and use of pesticides on plants has harmed the general health of people. The growing incidence of cancer is related with excessive use of tobacco. Excessive consumption of alcohol has not only harmed people but also disturbed social harmony. People have already started rejecting junk foods and taking more natural foods. This has promoted organic farming and marketing of organic foods.

Concept And Meaning Of Green Marketing

Green marketing refers to the process of selling products and services based on their environmental benefits. Such a product or service may be environmentally friendly itself, or produced and packaged in an environmentally friendly way. The obvious assumption of green marketing is that potential consumers will view a product or service's 'greenness' as a benefit and base their buying decision accordingly. The not-so-obvious assumption of green marketing is that consumers will be willing to pay more for green products than they would for a less-green comparable alternative products.

Ecological issues have not only become the concerns of society but also of the corporate world. The business firms today are expected to maintain the ecological balance by following environmentally friendly processes and practice. Marketing of products taking into considerations the ecological issues popularly known as green marketing.

This new approach emerged as a part of the societal marketing concept that called for a balance of interest of the firm, customers and society. Human society at large have become concerned about the natural environment when it experienced problems due to mass-production, mass marketing, and mass consumption of environmentally unfriendly products. Green marketing call for business organizations and consumers to show environmental consciousness by modifying business and consumption behavior by favoring green products and practices.

Green marketing concept is growing as increasing numbers of consumers are willing to back their environmental consciousness. The public tends to be skeptical of green claims to begin with and companies can seriously damage their brands and their sales if a green claim is discovered to be false or contradicted by a company's other product or practice. Presenting a product or service as green when it's not is called green-washing.

Concept And Meaning Of On-line Marketing

The on-line marketing is conducted through interactive on-line computer systems. The on-line system links buyers with sellers electronically. There are two types of online marketing channels; commercial on-line marketing and the internet marketing.

1. Commercial On-line Marketing
Commercial online offers on-line information and marketing services to subscribers on the payment of a monthly fee. These services provide information, news, entertainment, shopping services, dialogue access, and e-mail services. On-line subscribers can order a variety of products and services electronically from a variety of sources listed in the commercial on-line service sites. Customers can do on-line banking, make investments, reserve airline tickets, or book hotels. There are unlimited possibilities of on-line marketing.,, the two most popular sites are examples of commercial on-line marketing.

2. Internet Marketing
The internet is gaining popularity in recent years as an important direct marketing channel. The internet is a vast and ever growing global web of computer networks. It connects most of the computer users around the world. Computer users around the world can obtain and share information on any topic, product or service using internet. The application of user friendly World Wide Web (www) browser software (Netscape Navigator, Microsoft Internet Explorer, Google Chrome, Mozilla Firefox etc.) has made the surfing very easy. The use of internet for e-marketing is practiced at four levels:

i. Business to consumer
Business firms sell a variety of goods directly to consumers over the internet. The most frequently sold products are books, music, computer software, air tickets, personal computer peripherals, clothing, home videos, hotel reservations, toys, flowers and consumer electronics.

ii. Business to business
Use of websites targeted at business buyers is more than those targeted at consumers. Internet has changed the structure of the supplier-customer relationship. There are online B2B auction sites, spot exchanges, and product catalogs that facilitate business transactions.

iii. Consumer to consumer
The chat rooms allow a very large number of consumers to exchange information, share experience with products or services and buy or sell products through a mutually beneficial transaction. The e-mail which functions as a digital post office has enhanced the level of consumer to consumer communication. Consumers of a specific product or service have come together and formed their own websites for sharing information and experiences. Consumers create enhanced level of product information and exert considerable buying influence through 'word or web'.

iv. Consumer to business
The internet has also facilitated to establish communication link between the consumers and the company. Consumers can access websites of the company that allows entering a call-me-button that connects to a company employee ready to listen to the consumers' comments, complaints and suggestions. Consumers can also communicate with the company using the e-mail services.

Concept And Meaning Of E-commerce

The e-commerce is a part of the e-business that involves using electronic means and platforms to conduct a firm's business. Today, many companies claim to be operating paperless with the help of electronic means. E-business uses three types of networks for conducting business operations:

1. Internet
The global network through which a firm or an individual can contact, access and share information, order for the products and services to other users of the internet. Internet has greatly increased the ability of companies to conduct their business faster, more accurately, on a wider range of time and space, at reduced costs, and with the ability to customize and personalized customer offerings.

2. Intranet
This is an in-company network that allows employees to access and share information with each other in order to improve the company's performance.

3. Extranet
This is a network of the company with its suppliers, distributors, and major customers facilitating exchange of information, execution of orders, transactions and payments.

E-commerce is more specific than e-business and focuses more specifically on selling products and services electronically. Thus, e-commerce is the marketers' effort to inform, communicate, promote and sell its products and services through the internet. The e-commerce is executed through on-line marketing.

Traditional Methods Of Direct Marketing

1. In-home Retailing
This is the oldest form of direct marketing in which the salesperson visits the customer's residence or office with products or catalogs, takes order for the product, and finally delivers it immediately or on the next day. This form of marketing, also known as door-to-door selling or face-to-face selling is still popular.

2. Mail-order Marketing
Mail-order marketing involves sending promotion materials such as letters, advertisements, and folders to prospects, the interested customer orders the product by the mail, and finally receives the ordered product by mail or courier. Mail-order business is still growing in developed countries where home videos, video games, computer software and a variety of light-weight items are sold through the mail-order marketing.

3. Catalog Marketing
Catalog marketing involves sending product catalogs to pre-selected target customers and receiving orders through telephone or mail. Catalog marketing is more popular on selling specialized items such as fashion jewelry, home tool kits, holiday travel packages, and toys.It is also popular in the business-to-business marketing where office equipments, stationary, and variety of product are sold.

4. Telemarketing
Telemarketing mainly uses telephone communication to sell directly to consumers and business buyers. Outbound telephone is used to contact and communicate with prospects and toll-free inbound telephone lines are used for receiving queries and orders from the customers. This form of marketing is growing very rapidly in the developed countries.

5. Television Marketing
In television marketing, the direct marketers air television programs of about 30 minutes describing and demonstrating the use and benefits of their products. The interested customers use the given telephone numbers to enquire or order for the products.

Concept And Meaning Of Direct Marketing

Direct Marketing

Direct marketing is one of the rapidly emerging concepts in the contemporary marketing world. Direct marketing is a form of non-store retailing in which the marketer uses non-personal media to introduce products to consumers and consumers purchase the product without visiting a store. Direct marketers contact consumers through radio, telephone, television, newspapers, magazines, catalogs, or direct mails. Consumers order products by telephone, regular mail, or e-mail. The ordered products are delivered to the consumers' addresses.

Direct marketing has grown into big business in USA and Europe where consumers are found to be too busy to visit retail outlets to purchase consumable items. This approach is slowly picking up in urban areas of developing countries.

Direct marketing includes a variety of retailing practices such as the traditional methods of in-home retailing, mail-order retailing, telemarketing, and television marketing to the modern approaches of database marketing, and electronic marketing.

Responding To The Marketing Environment

There are two approaches organizations can follow while responding to the environmental forces of marketing forces. These are popularly known as reactive marketing and proactive marketing:

1. Reactive Marketing
The reactive marketing views marketing environmental forces as totally uncontrollable and difficult to predict. This is a passive approach, under which, the organization tries to adjust its marketing mix and program according to the changes in the environment. The adjustments take place only after changes occur in the environment. The organization analyses the environmental changes and finds suitable way to avoid the threat and utilize the new opportunities in the market. In essence, they wait for the environment to change and react only after the change takes place.

2. Proactive Marketing
Organizations that adopt the environmental management perspective follows proactive marketing. Proactive marketing believes that although many of the environmental forces such as demography, economy, culture and natural factors are not controllable, the environmental forces such as politics, law and technology can be influenced by correct and calculated moves. Proactive marketing uses political, psychological, economic and public relations skills ti influence the environmental forces to the organization's benefits. The technique of political lobbying, financing political parties and elections, using publicity to shape public opinion and many others are used by organizations to bring the environmental forces to their favor.

Scanning The Marketing Environment

The marketing environmental forces are normally uncontrollable. Marketing managers have to design their marketing activities according to the influence of the environmental forces. Moreover, all the environmental forces are dynamic. Some forces like technology and politics change faster than others like culture, demography and natural forces. Every change in the marketing environment creates a climate of uncertainty, threat and opportunities for the marketing organizations.
For successful marketing, the organization should be able to anticipate and predict the changes in the environment. Marketing managers should be able to anticipate the following key factors:

- Which technology will dominate in the near future?
- How consumers' taste and preferences are changing?
- Which political party will come to power?
- What the trends in the macro-economics indicators are?

In order to anticipate the changes, marketing organization constantly engages in environmental monitoring and scanning activities. Environmental monitoring involves keeping track of the major trends in the environmental forces. Environmental monitoring helps the organization to prepare and capitalize on every opportunity arising out of the changes taking place in any of the environmental forces. Environmental scanning involves collection of vital data and information about the various environmental forces. Scanning involves observation, use of secondary sources of information and marketing research to understand the changes in the environment.

Scope Of Marketing Environment

Marketing environment is a broad concept embracing various entities, activities, ideas, forces, resources, exchange processes, values norms, and laws. everything that matters to marketing is under marketing environment. The scope of marketing environment includes the following aspects:

1. Entities
Various types of entities are involved in marketing environment. The entities include international agencies, governments, trade associations, business organizations, labor unions and social organizations.International agencies such as UN organizations, World Bank, International Monetary Fund and WTO play detrimental role in the development process of a country and supervise and regulate business and trade on a global basis.  National governments are involved in regulating the marketing process through legislation and directives. Trade associations set norms of business behavior. They work for promotion of trade and industry in the country. Business organizations convert the resources and inputs into products and services. Labor unions determine industrial productions and productivity.

2. Activities
The economic, social, political and individual activities are part of the marketing environment. Economic activities directly influence marketing by expanding and contracting the size of market. The market size expand when the economy grows and marketing suffers when the economy slows down. Social activities such as festivals, social events, cross-cultural activities also expand the market. Increase in political events like strike, demonstrations and band decrease marketing activities. Individual activities of consumers are also part of the marketing environment as it determines level of consumption.

3. Resources
Key resources of the country such as natural resources ( mineral, water and solar, technological resources(research and development) , human ( education, knowledge, skill and entrepreneurship) are also under the scope of marketing environment.

4. Dynamism
The dynamism in the marketing environment is a part of the scope. All environmental forces- demography, economy, politics, laws, technology, and socio-culture of all countries are changing. The changes are bringing in new business opportunities and new challenges. 

5. Exchange Process
The process of exchange of information, inputs, technology, ideas, products, and services between the environment and the business firm is also under the scope of marketing environment. The firm receives valuable inputs from the environment in the form of money, raw materials, human resources, technology, and management ideas and converts the inputs into useful products and services. This interaction is important both for marketing and the environment. It helps both entities to grow and sustain in the society.

Concept And Meaning Of Marketing Environment

Marketing environment consists of forces that directly or indirectly influence the firm's marketing activities. Marketing receives various inputs from the environment in the form of personnel, finance, raw materials and information. Marketing provides various outputs to the environment in the form goods, services, ideas, product images and communication. Marketing environment forces influence this process of exchange of inputs and outputs.Marketing environment can be classified into two groups; micro environment and macro environment.

The micro environment is made up of forces close to the company. These forces affect the company's ability to serve its customers. The micro environment consists of the company, suppliers, marketing channels, customers, competitors, and public.

The macro environment operates at a broader level and affects the marketing operation as a whole. External environment variables are located outside the organization and include such macro-environmental forces as demography, economy, politics, law and natural forces.

Reasons For Product Failures

Firms today launch hundreds of products in the market. Some products become successful and many others fail to gain market acceptance. Marketers are forced to work in an uncertain environment. They often develop and launch products without knowing how consumers will react to the new products. Even with the support of market research new product failures have haunted companies from large multinationals to small local firms. There have been several reasons for product failures, the common ones are as follows:

1. Technology
The most common reasons for product failures have been technical problems resulting in less than satisfactory performance of the product in actual use situation.The solar powered vehicle, wind-based power generation, and many drugs failed mainly because they couldn't perform as expected by the buyers.

2. Buyer Acceptance
Many new products fail to gain consumer acceptance and fail miserably in the market. Consumers often reject products if they are too complex to handle. This is the reason for the popularity of user friendly products such as the Microsoft software and aim and shoots cameras. Products that go against the culture and tradition of consumers are also rejected. 

3. Inadequate Market Demand
Firms often overestimate the market demand for new products. When the products are launched in the market firms find the demand to be very slow. The slow demand often forces financially weak companies to withdraw the new product from the market.

4. Inappropriate Marketing Strategies
Many new products fail due to wrong selection of product positions, prices and inadequate promotional support. Wrong positioning of a product often creates problems for new products.

Need For Product Innovation

Product innovation is a continuous process in a  business firm. If a firm fails to develop new products it will be hard for it to compete and survive in the market. "Innovate or die" is a popular saying in marketing. There are several reasons for investing on new product innovation. They are as follows:

1. Growth
Every firm desires to grow and dominate the market. A firm's growth is only possible if it is able to bring new products in the market. Japanese and American companies spend huge sums of money on research and development on product innovations. 

2. New Technologies
The introduction of new technology in every field provides several opportunities for product innovation. The technological revolution in communication, medicine, and office automation has brought thousands of new products in the market.

3. Product Life Cycle
The product life cycle concept suggests that every product has a finite life period at the end of which it is eliminated from the market. Products become obsolete due to introduction of technology and changes in consumer taste and preferences. Since human needs have very long life cycles, products must be constantly developed and introduced to the market in order to meet those needs.

4. Competition
Competition in the market forces many firms to constantly introduce new products. In the current competitive environment a firm can only survive and make profit if it is able to constantly innovate, develop, produce and launch new products into the market.

Concept And Meaning Of A New Product

The term "new Product" may convey several meanings when it is viewed from the prospective of firms, market, customers and products.

1. Firm's Perspective
Firm perceives a product to be new if the firm is manufacturing it for the first time. firms often consider copies of a competitor's product as new.

2. Market Perspective
Form the view point of market, if the product has been introduced to the market for the first time it is a new product.

3. Customer Perspective
It suggests that newness of a product should be based on customer's perception. If a customer group feels that a product is new it should be treated as new.

4. Product perspective
From the product perspective a new product is viewed on its disruptive effects on the current consumption pattern. This classification is more relevant and strategically important in marketing. It categorized new product into three types- innovations, modified products and copies of me-too products

Innovations are original products that are introduced to the human race for the first time. During the last half of the current century buyers have been bombarded with new innovations, such as computers, video-recorders, contraceptives, Polaroid cameras etc.
Many innovative products are introduced into the market every day. In the current decade alone the market has received several innovative products, such as the electric cars run by batteries, email and internet services, telephone-based on fiber optics etc.
Innovative products entail high costs and risks. Innovation involves considerable time as well as money. Currently, billions of dollars are being spent on the research to find cures for cancer and AIDS.

Many organizations avoid innovation due to the high cost and risk factors and adopt a product modification strategy as long as possible. Modified product can be termed as a new product as it requires major change in the marketing mixes.
Product modification entails quality modification, functional modification and style modification

Copies or me-too products
Some organizations find the innovation and modification efforts too costly and risky. They adopt a product imitation strategy by copying and introducing successful products under a different brand name. Such products are introduced to capture a part of the market share of the original product. From the viewpoint of a market the imitated or me-too product may not be a new product, but from the organization's perspective it is a new product.

Marketing Strategies In The Decline Stage Of Product Life Cycle

The major objective of the firm that continues with the product in the decline stage of product life cycle is to survive and make some profit out of the product. The following strategic considerations are important during this phase of product life cycle

1. Contraction Of The Product Line
Firms normally reduce their product lines to a minimum during this stage. They analyze the sales and future demand potentials of the various brands to identify the weak and strong brands. Normally, they drop the weak brands and continues with one or two of the stronger brands.

2. Withdrawal Of All Promotions
During the decline period non of the promotional tools have any significant effect on sales. Therefore, it is normal to withdraw all forms of promotions. This strategy can reduce expenses and decrease the price of the product to attract price sensitive buyers.

3. Adopt Single Distribution Channel
Firms generally adopt a single distribution network policy during the decline phase. Often this happens as many distributors do not show any interest to deal on  a decaying product. Normally, the firm retains the higher volume-cost effective marketing channel and withdraws from the lower volume channels.

4. Abandon The Product
If any of the three strategies does not work, a firm is forced to fully abandon the product. Abandon-decision may become painful for some companies who are emotionally attached with the product. However, product abandonment is a wise decision than continuing with a terminally ill product.

Marketing Strategies In The Maturity Stage Of Product Life Cycle

During the maturity stage of product life cycle, an organization's efforts are directed at avoiding fast decline in sales. The organization may prolong the maturity period by adopting a modification strategy:

1. Market Modification
The market modification strategy searches new buyers for the product. A firm can attract new buyers in three ways:

i. Convert non-users into users
The firm may enlarge the size of its market by inviting non-users to use the product. This may be achieved by introducing new sales promotional tools or price cuts targeted at the non-users.

ii. Enter into new market segments
This involves search for new market segments that were neglected in the growth period because they were small in size, had lower growth rates, and provided small profit opportunities. Market expansion to some extent can be achieved by entering into these new segments.

iii. Win competitor's customers

A firm may launch a promotion campaign targeted at competitor's customers and tempt them to switch their brand in favor of firm's brand. This can help to get some more buyers for the product.

2. Product Modification
During maturity period, several organizations modify their product to satisfy the needs of the buyers. Product modification involves the following:

i. Flanking
Manufacturers often re-launch an existing product with flanking that involves adding something new to the product. For example, Horlicks has brought its original product with extra calcium and chocolate flavor.

ii. Product revitalization 
Manufacturers often add an adjective on the brand name such as plus, super, deluxe, extra and new to suggest to buyers that something extra has been added on the product. Changing product features, designs, and packaging is a popular strategy during the maturity period.

3. Marketing Mix Modification

The marketing firm may retain current sales volume by changing one or more components of the marketing mix.

i. Sales promotion
Marketers change the promotion mix by reducing persuasive advertising and focusing on sales promotional campaigns targeting both consumers and resellers. Often the firm changes sales promotion schemes every three months. All promotional efforts during this stage are push-sell their matured products.

ii. Reminder advertising
Marketers also change the advertising message during this stage of product life cycle. Most of the advertising themes used during the maturity stage are either to support the sales promotions or provide reminder communication.

iii. Temporary price reduction
Marketers also temporarily reduce the price of the product for one to three months to push sales.

iv. Permanent price reduction
When other modifications do not work marketers start to cut down the price level permanently to attract the price-sensitive buyers.

v. Maintain higher volume channels
Marketers reduce the distribution intensity and shrink their networks in this stage of product life cycle. They try to maintain higher volume cost-effective channels, and withdraw from low-volume high cost channels. Firms often change their dealers frequently in this stage.

Marketing Strategies In The Growth Stage Of Product Life Cycle

During the growth stage of product life cycle, the organization uses the following strategies to sustain the rapid market growth as long as possible:

1.Improve The Quality Of The Product
Many products have technical problems during the introduction stage of product life cycle. These problems need to be solved during the growth stage.The organization has to make every edeavor to improve the overall quality of the product in this stage.

2. Add New Features And Models
Market growth is the best time to introduce new features in the product. A firm may also extend the product line and introduce new models. The reputation of the main product can easily attract buyers for the new models and brands. The new models can be promoted on a minimum of additional promotional costs.

3. Enter Into New Market Segments
In the introduction stage of product life cycle, the organization normally enters and establishes strong foothold in one market segment. During the growth period the organization should move into new market segment for rapid market expansion.

4. Use New Distribution Channel
In the introduction stage of product life cycle, the firm may face difficulty in finding distributors for the new product. During the growth period, many distributors show their interest in the product. This is the appropriate time to use multi-distribution system to achieve wider market coverage.

5. Change Advertising Theme
In the introduction stage of production life cycle, the advertising is targeted at building buyers' awareness and knowledge about the product and its various attributes. During the growth period the advertising objective will be focused on building buyers' conviction and brand loyalty.

Marketing Strategies In The Introduction Stage Of Product Life Cycle

During the introduction stage of product life cycle, the firm has no strategic choice in the area of product and distribution. It has to play with price and promotion tools. With price and promotion variables the firm may adopt one of the following four alternative strategies:

1. High Profile Strategy
A high profile strategy consists of introducing the product with a high price and high promotion levels. Higher price is charged to recover as much gross profit per unit of product as possible. High promotion level is maintained to convince buyers on the merit of the product at the higher price.
This strategy can be applied if potential buyers are not fully aware of the product, and those who become aware of product are ready to pay a higher price for the product. This strategy is implemented to skim the market in a short period of time. Skimming the market means charging high price to a new product.

2. Selective Penetration Strategy
A selective penetration strategy consists of introduction a product with high price and low promotion. Higher price is charged to recover the initial investment and low promotion is maintained to keep the marketing cost down. This strategy can be applied if the market is small, most of the market is aware of the product, and those who want it can afford to pay a higher price.

3. Preemptive Penetration Strategy
A preemptive penetration strategy involves introducing the product at lower price with heavy promotion. This gives the firm rapid market penetration and larger market share in a short period of time. This strategy is suitable if the market is large, the market is relatively unaware of the product, the buyers are price sensitive, there is strong potential competition, and the cost of production declines with increased production levels.

4. Low Profile Strategy
The low profile strategy involves introducing the product under low price and low promotion levels. Low price is targeted at fast market penetration and lower levels of promotion at keeping the marketing costs down. This strategy is suitable if the market is large, the market is aware of the product, the market is price sensitive and there is some potential competition.

Features Of Different Stages Of The Product Life Cycle

Features Of Introduction Stage Of Product Life Cycle

1. Slow growth of sales
The introduction stage of a product life cycle starts once the product is commercially launched. This stage is characterized by slow growth sales. This is mainly because, buyers are not aware of the existence of the new product and they are reluctant to change their established buying habits.

2. Market pioneers buy the products
During this stage only a small group of consumers known as market pioneers buy the new product.

3. Small production level
The firm is unable to predict the success of the product in the market and keeps the production at a low level.

4. Technological problems
Since the product is new there may be several technological problems in the product.

5. Higher price
Price of the product tends to be generally high due to high costs of production, distribution and promotion.

6. Negative profits
Due to high costs and slow growth of sales profits from the product tend to be negative.

7. No competition
The innovator firm faces very little competition during this stage.

Features Of Growth Stage Of The Product Life Cycle
Many new products fail during the introduction stage because they cannot gain buyer acceptance, or are economically and technically unfeasible. If the product can cross the critical stage of introduction, it enters the growth stage.

1. Sales increase rapidly
Sales increase dramatically during the growth stage of product life cycle.

2. New buyer groups
The early adopters continue to buy the new product and large number of new buyers from the early majority adopt the product.

3. Technological improvement and new features
The firm corrects technical defects in the production process and the product. It also adds new features and refinements on the product.

4. New market segments
The firm moves the product into new market segments.

5. Stable price and promotion levels
Prices tend to remain at introduction level or fall slightly. Promotion is also maintained at the previous level.

6. High profits
The high turnover and constant promotional costs give a high profit per unit to the firm.

Features Of Maturity Stage Of The Product Life Cycle
When the growth in sales down the product enters the maturity period. Initially, the product enters a growing maturity when the growth in sales is lower than in the growth period. When the sales stop to grow, the product enters the saturation stage. Ultimately, sales start to decline slowly in the declining maturity phase. For many products, the maturity stage lasts longer than other stages. During this phase the organization may face several problems and requires major modification in strategical and tactics.

1. Early majority and late majority are major buyers
During the maturity stage, the major buyer group constitute of the early majority and late majority. Although this buying group is very large in number they are mostly price sensitive and seek products at lower price with several benefits.

2. Tough competition
Attracted by the higher sales and profit during the growth stage many new firms enter into the market. As a result, the firm faces stiff competition from similar and substitute products.

3. Slower growth of sales
The competition and overcrowding of the market slows down the growth in sales. This usually creates over capacity in the production and marketing units.

4. Price cuts
Competitors reduce their price forcing the organization into price cuts.

5. Heavy promotion
The organization spends heavily in sales promotion to attract new buyer groups.

6. Lower profits
The slow down in sales, higher marketing costs, and lower revenue result in gradual erosion of profits.

Features Of Decline Stage Of The Product Life Cycle
Most products eventually enter the decline stage. The decline may be very rapid for some products while others may face lower decline. As sales start to decline, intelligent firms withdraw their products from the market. Those who continue, rapidly reduce their prices and try to attract price sensitive buyers, particularly the laggards. Eventually, all products reach a stage of zero sales.

Limitations Of The Product Life Cycle

The product life cycle concept is valuable tool that is used for analysis and interpretation of the market dynamics. Product life cycle concept assists decision makers in planning and strategy formulation for their products according to the stages in the life cycle. In spite of its unquestionable usefulness in decision making, it has following limitations:

1. The product life cycle is a theoretical concept and difficult to implement in real life in relation to a specific product.

2. The life cycle patterns for various products differ to a large extent and a generalization is not possible.

3. It is difficult for the decision maker to find out the exact location of their brands in the product life cycle.

Meaning And Assumptions Of Product Life Cycle

Meaning Of Product Life Cycle
Products are like living beings; they are conceived, born, grow, achieve maturity and finally die. During the conception and development phase, the product is in their pre-natal stage that is explained by the new product development process. After its introduction into the market and until its final elimination it passes through four stages; introduction, growth, maturity and decline.
This process through which products grow over the years, achieves maturity, and finally decline and die is known as product life cycle.
The product life cycle depicts the sales and profit history of a product over a period of time. The sales history of the product is presented graphically in the form of a S shaped curve. Different stages of product life cycle shows different growth rates of sales and profit from a product.

Assumptions Of Product Life Cycle
 The product life cycle is based on the following assumptions:

1. Every product has a limited life
Every product has a limited life span. Different products have different life span. Some die within a month and some other live for hundreds of years. Products have limited life because of changes in consumers' tastes and preferences and change in technology.

2. Product life cycle analysis is conducted for a product category
Although the consumer need, technology, and brands also have their own life cycle, the product life cycle analysis is conducted at the level of a product category such as automobiles, personal computers, radios, television etc.

3. Different buyer groups buy products during different phases
The product life cycle concept is based on the theory of diffusion of innovation. When a new product is introduced into a market, initially a very small group of consumers tries the product, while other consumer groups adopt the product in later stages. This provides different sales volumes during different periods of time in a product's life time.

4. The shape of the product life cycle differs for different types of products
Some products linger in the introduction stage for a long time before they enter the growth stage. Other products like tea, coffee, and hoe beverages have undergone long maturity period. A fad related products such as hip-pop and rap music showed sleep growth and sleep decline without any maturity period. Fashion and style related products usually show a cycle-recycle pattern.

5.The product life cycle stages require different marketing strategy
Change in the sales and profitability during the four stages of the product life cycle pose different challenges, problems and opportunities to the organization. In order to face the challenges and problems and to take benefit of the opportunities, the organization needs to implement separate marketing strategies in the four phase of the product life cycle.