Management Consulting/Marketing Management

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Question
Hi I am Harish pursuing my MBA I HAVE BEEN given this case study and I am unable to solve it can u kindly help me with it ASAP

Case-1 : The use of the marketing mix in product launch
Introduction
NIVEA® is an established name in high quality skin and beauty care products. It is part of a range of brands produced and sold by Beiersdorf. Beiersdorf, founded in 1882, has grown to be a global company specialising in skin and beauty care.
In the UK, Beiersdorf’s continuing goal is to have its products as close as possible to its consumers, regardless of where they live. Its aims are to understand its consumers in its many different markets and delight them with innovative products for their skin and beauty care needs. This strengthens the trust and appeal of Beiersdorf brands. The business prides itself on being consumer-led and this focus has helped it to grow NIVEA into one of the largest skin care brands in the world.
Beiersdorf’s continuing programme of market research showed a gap in the market. This led to the launch of NIVEA VISAGE® Young in 2005 as part of the NIVEA VISAGE range offering a comprehensive selection of products aimed at young women. It carries the strength of the NIVEA brand image to the target market of girls aged 13-19. NIVEA VISAGE Young helps girls to develop a proper skin care routine to help keep their skin looking healthy and beautiful.
The market can be developed by creating a good product/range and introducing it to the market (product-orientated approach) or by finding a gap in the market and developing a product to fill it (market-orientated approach). Having identified a gap in the market, Beiersdorf launched NIVEA VISAGE Young using an effective balance of the right product, price, promotion and place. This is known as the marketing mix or ‘four Ps’. It is vital that a company gets the balance of these four elements correct so that a product will achieve its critical success factors. Beiersdorf needed to develop a mix that suited the product and the target market as well as meeting its own business objectives.
The company re-launched the NIVEA VISAGE Young range in June 2007 further optimising its position in the market. Optimised means the product had a new formula, new design, new packaging and a new name. This case study shows how a carefully balanced marketing mix provides the platform for launching and re-launching a brand onto the market.
Product :
The first stage in building an effective mix is to understand the market. NIVEA uses market research to target key market segments which identifies groups of people with the same characteristics such as age/gender/attitude/lifestyle. The knowledge and understanding from the research helps in the development of new products. NIVEA carries out its market research with consumers in a number of different ways. These include:
• using focus groups to listen to consumers directly
• gathering data from consumers through a variety of different research techniques • product testing with consumers in different markets.
Beiersdorf’s market research identified that younger consumers wanted more specialised face care aimed at their own age group that offered a ‘beautifying’ benefit, rather than a solution to skin problems. NIVEA VISAGE Young is a skin care range targeted at girls who do not want medicated products but want a regime for their normal skin.
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Competitor products tend to be problem focussed and offer medicated solutions. This gives NIVEA competitive advantage. NIVEA VISAGE Young provides a unique bridge between the teenage market and the adult market.
The company improved the product to make it more effective and more consumer-friendly. Beiersdorf tested the improved products on a sample group from its target audience before finalising the range for re-launch. This testing resulted in a number of changes to existing products. Improvements included:
• Changing the formula of some products. For example, it removed alcohol from one product and used natural sea salts and minerals in others.
• Introducing two completely new products.
• A new modern pack design with a flower pattern and softer colours to appeal to younger women. • Changing product descriptions and introducing larger pack sizes.
Each of these changes helped to strengthen the product range, to better meet the needs of the market. Some of these changes reflect NIVEA’s commitment to the environment. Its corporate responsibility approach aims to:
• reduce packaging and waste - by using larger pack sizes
• use more natural products – by including minerals and sea salts in the formula
• increase opportunities for recycling - by using recyclable plastic in its containers.
Price :
Lots of factors affect the end price of a product, for example, the costs of production or the business need to maximise profits or sales. A product’s price also needs to provide value for money in the market and attract consumers to buy.
There are several pricing strategies that a business can use:
• Cost based pricing – this can either simply cover costs or include an element of profit. It focuses on the product and does not take account of consumers.
• Penetration price – an initial low price to ensure that there is a high volume of purchases and market share is quickly won. This strategy encourages consumers to develop a habit of buying.
• Price skimming – an initial high price for a unique product encouraging those who want to be ‘first to buy’ to pay a premium price. This strategy helps a business to gain maximum revenue before a competitor’s product reaches the market.
On re-launch the price for NIVEA VISAGE Young was slightly higher than previously. This reflected its new formulations, packaging and extended product range. However, the company also had to take into account that the target market was both teenage girls and mums buying the product for their daughters. This meant that the price had to offer value for money or it would be out of reach of its target market.
As NIVEA VISAGE Young is one of the leading skin care ranges meeting the beautifying needs of this market segment, it is effectively the price leader. This means that it sets the price level that competitors will follow or undercut. NIVEA needs to regularly review prices should a competitor enter
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the market at the ‘market growth’ point of the product life cycle to ensure that its pricing remains competitive.
The pricing strategy for NIVEA is not the same as that of the retailers. It sells products to retailers at one price. However, retailers have the freedom to use other strategies for sales promotion. These take account of the competitive nature of the high street. They may use:
• loss leader: the retailer sells for less than it cost to attract large volume of sales, for example by supermarkets
• discounting – alongside other special offers, such as ‘Buy one, get one free’ (BOGOF) or ‘two for one’.
NIVEA VISAGE Young’s pricing strategy now generates around 7% of NIVEA VISAGE sales.
Place
Place refers to:
• How the product arrives at the point of sale. This means a business must think about what distribution strategies it will use.
• Where a product is sold. This includes retail outlets like supermarkets or high street shops. It also includes other ways in which businesses make products directly available to their target market, for example, through direct mail or the Internet.
NIVEA VISAGE Young aims to use as many relevant distribution channels as possible to ensure the widest reach of its products to its target market. The main channels for the product are retail outlets where consumers expect to find skin care ranges. Around 65% of NIVEA VISAGE.
Young sales are through large high street shops such as Boots and Superdrug. Superdrug is particularly important for the ‘young-end’ market. The other 35% of sales mainly comes from large grocery chains that stock beauty products, such as ASDA, Tesco and Sainsbury’s. Market research shows that around 20% of this younger target market buys products for themselves in the high street stores when shopping with friends. Research also shows that the majority of purchasers are actually made by mums, buying for teenagers. Mums are more likely to buy the product from supermarkets whilst doing their grocery shopping.
NIVEA distributes through a range of outlets that are cost effective but that also reach the highest number of consumers. Its distribution strategies also consider the environmental impact of transport. It uses a central distribution point in the UK. Products arrive from European production plants using contract vehicles for efficiency for onward delivery to retail stores. Beiersdorf does not sell direct to smaller retailers as the volume of products sold would not be cost effective to deliver but it uses wholesalers for these smaller accounts. It does not sell directly through its website as the costs of producing small orders would be too high. However, the retailers, like Tesco, feature and sell the NIVEA products in their online stores.
Promotion
Promotion is how the business tells customers that products are available and persuades them to buy. Promotion is either above-the-line or below-the-line. Above-the-line promotion is directly paid for, for example TV or newspaper advertising.
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Below-the-line is where the business uses other promotional methods to get the product message across:
• Events or trade fairs help to launch a product to a wide audience. Events may be business to consumer (B2C) whereas trade fairs are business to business (B2B).
• Direct mail can reach a large number of people but is not easy to target specific consumers cost- effectively.
• Public relations (PR) includes the different ways a business can communicate with its stakeholders, through, for example, newspaper press releases. Other PR activities include sponsorship of high profile events like Formula 1 or the World Cup, as well as donations to or participation in charity events.
Branding – a strong and consistent brand identity differentiates the product and helps consumers to understand and trust the product. This aims to keep consumers buying the product long-term.
• Sales promotions, for example competitions or sampling, encourage consumers to buy products in the short-term.
NIVEA chooses promotional strategies that reflect the lifestyle of its audience and the range of media available. It realises that a ‘one way’ message, using TV or the press, is not as effective as talking directly to its target group of consumers. Therefore NIVEA does not plan to use any above-the-line promotion for NIVEA VISAGE Young.
The promotion of NIVEA VISAGE Young is consumer-led. Using various below-the-line routes, NIVEA identifies ways of talking to teenagers (and their mums) directly.
• A key part of the strategy is the use of product samples. These allow customers to touch, feel, smell and try the products. Over a million samples of NIVEA VISAGE Young products will be given away during 2008. These samples will be available through the website, samples in stores or in ‘goody bags’ given out at VISAGE roadshows up and down the country.
• NIVEA VISAGE Young launched an interactive online magazine called FYI (Fun, Young & Independent) to raise awareness of the brand. The concept behind the magazine is to give teenage girls the confidence to become young women and to enjoy their new-found independence. Communication channels are original and engaging to enable teenagers to identify with NIVEA VISAGE Young. The magazine focuses on ‘first time’ experiences relating to NIVEA VISAGE Young being their first skincare routine. It is promoted using the Hit40UK chart show and the TMF digital TV channel.
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• In connection with FYI, NIVEA VISAGE Young has recognised the power of social network sites for this young audience and also has pages on MySpace, Facebook and Bebo. The company is using the power of new media as part of the mix to grow awareness amongst the target audience.
Conclusion
NIVEA VISAGE Young is a skincare range in the UK market designed to enhance the skin and beauty of the teenage consumer rather than being medicated to treat skin problems. As such, it has created a clear position in the market. This shows that NIVEA understands its consumers and has produced this differentiated product range in order to meet their needs.
To bring the range to market, the business has put together a marketing mix. This mix balances the four elements of product, price, place and promotion. The mix uses traditional methods of place, such as distribution through the high street, alongside more modern methods of promotion, such as through social networking sites. It makes sure that the message of NIVEA VISAGE Young reaches the right people in the right way.
Answer the following questions:
1. Describe what is meant by a business being ‘consumer led’.
2. What are the key parts of the marketing mix? Explain how each works with the others.
3. Explain why the balance of the marketing mix is as important as any single element.
4. Analyse the marketing mix for NIVEA VISAGE Young. What are its strongest points? Explain why you think this is so.

Answer
1. Describe what is meant by a business being ‘consumer led’.
consumer-led is responding to the needs of consumers in the market.
example: NIVEA is a consumer-led business which made it one of the largest skin care brands in the world
In a broad sense it’s a guiding philosophy, whereby a ‘known customer’ is placed at the heart of every decision a company takes. The principle of a known customer is crucial, as Chris Lindsay, general manager Broadband, VoIP and Software Services Propositions, BT Business, explains: ‘By this we mean a type of customer you regard as valued. The key to customer-led marketing is deciding who this type of customer is, then focusing all your activity around them.’
Consumer Influence on Business Growth
The main concern of customer-led marketing is focused around what your valued customer has to say about your company and, more importantly, what your valued customer has to say to potential customers about your company. Dr Paul Marsden, who recently left Enterprise LSE, the commercial arm of the London School of Economics, to join marketing consultancy Brand Genetics, underlines this point when he says, ‘It’s a concept that focuses on achieving increased growth by putting the voice of your customer at the centre of business decisions. ‘It’s all about how likely your customer is to recommend you to a friend; that’s the acid test everything has to improve recommendability.’
But there is more to understanding the influence of this form of marketing than just recommendation, be that word-of-mouth advocacy or viral marketing (where customers are encouraged to pass on a company’s ads to colleagues, friends and family). You need to take into account those dissatisfied customer voices. ‘One way to measure “recommendability” is through the Net Promoter Score (NPS),’ says Marsden. It’s the ‘one number you need to grow’, according to the Harvard Business Review. Marsden explains, ‘At the LSE we wanted to find out what factor most influenced business growth with a view to developing a metric to measure it. We tested everything from innovation to loyalty and CRM but none of them correlated to performance. When NPS and the idea of recommendability first came to our attention we initially set out to falsify the “magic number”, but we ended up validating it.’
To calculate your NPS take the percentage of ‘promoters’ (customers who are highly likely to recommend your company or its products), and subtract the percentage of detractors (those who are less likely to recommend). The resulting figure, which is linked to growth, can be used to gauge performance, establish accountability and prioritise investment.
The influence of social networks
So how do you find out what your customers are saying? The solution lies in the social networks available through the internet which are made even easier to access with the speeds increasingly available with broadband. Internet-based social networking, conducted through formal websites, began in 1995 with Classmates.com. Now, 11 years on, we’ve seen News Corporation pay over £300 million for Myspace.com, and ITV buy Friends Reunited for £120 million. There are also 60 million blogs on the internet, each with the capacity for interactive commentary, plus various internet based forums devised to provide commentary on specific market sectors, such as the restaurant review forum Toptable.co.uk.
Harnessing the power of the internet
Marketers have also tapped into the viral marketing phenomenon, sometimes to great effect.
Companies such as Starbucks, Agent Provocateur and Burger King have all used viral marketing to good effect while the marketers behind the American Express interactive billboard campaign came unstuck when, posing as consumers, they tried to generate interest via a series of blogs.
An astute blogger investigated the email address of one of the marketers and uncovered his association with the agency behind the campaign. For months, entering the agency’s name and ‘American Express’ into Google would reveal damning criticism. Marsden says: ‘Another related danger of customer-led marketing is allowing customers to make your ads.’ He cites the example of Carlsberg which, during the 2006 World Cup, generated an image of 11 women in wet football shirts, lining up for kick-off. The image could be edited and passed around, but the campaign seriously backfired when someone added very uncomplimentary remarks on the taste of the beer.
Despite the dangers, clever use of the internet still drives customer-led marketing. Dan Wilson, community manager, BT Tradespace, says: ‘The central concept is the fact that business is about conversations. As the internet has given consumers a greater voice, marketing has become a two-way street. The conversation around a transaction is what makes it special, and by engaging your customers, you stand a greater chance of ensuring their return.
‘It’s the engaged customers who do the marketing for you. They’ll send people to your website, sing your praises and take the conversation that you started far beyond people you thought you could ever reach. For that to happen, you have to start the conversation.’
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2. What are the key parts of the marketing mix? Explain how each works with the others.

What is Marketing Mix?

Description
The Marketing Mix model (also known as the 4 P's) can be used by marketers as a tool to assist in implementing the marketing strategy. Marketing managers use this method to attempt to generate the optimal response in the target market by blending 4 (or 5, or 7) variables in an optimal way. It is important to understand that the Marketing Mix principles are controllable variables. The Marketing Mix can be adjusted on a frequent basis to meet the changing needs of the target group and the other dynamics of the marketing environment.
P 1  ---  Product
Product
Marketing is about identifying,
anticipating and satisfying customer
needs. You need to be sure that your
products and services continue to meet
your customers. needs.
1. Carry out simple research by
asking your customers .
_ What they think of each
product/service
_ How satisfied are they
with the quality
_ How satisfied are they
with any support services
you may provide
_ How effective it is in
meeting their needs
_ How they see their needs
changing in the short and
long term future
2. Carry out step 1 for each product
or service you offer
3. Have a system for collecting and
analysing feedback from your
customers so that ideas are fed into
a new product development process
that is ongoing.
4. Ask yourself what stage of the
product life cycle your products or
services have reached. The .product
life cycle. is one way of looking at
how the marketing mix links
together. Products are said to go
through stages . an introductory
stage, a growth stage, a mature
stage and a decline stage. At each
stage a slightly different mix is
appropriate . see the .What you
need to know. section of this
material for more information.
5. Analyse the profitability of each
product/service you offer. For more
information on calculating this, take
a look at the 10-minute 80/20 Rule.
Which products/services make the
biggest contribution or provide the
highest profitability? What support
services do you offer with each
product? Could it be improved,
adding value with little cost?

Historically, the thinking was: a good product will sell itself. However there are no bad products anymore in today's highly competitive markets. Plus there are many laws giving customers the right to send back products that he perceives as bad. Therefore the question on product has become: does the organization create what its intended customers want? Define the characteristics of your product or service that meets the needs of your customers.
Functionality; Quality; Appearance; Packaging; Brand; Service; Support; Warranty.
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P 2  ---  Price

Price
Price generates profit so is an
important element of the mix. You
need to consider -
1. What your target group of
customers will be prepared to pay
for your product or service. It is
important not to set the price too
low as customers may think there is
something wrong with the product.
Equally, if you set the price too
high, customers may think that it
is too expensive for the benefits
offered. Think about how you have
.positioned. your product in terms
of quality. This will help you to
assess how to price it.
1. What it costs you to produce it.
This will show you what you need
to charge and not what you could
or should charge. However, if you
do not calculate what it costs you
to produce your product correctly,
the more you sell, the more you
will lose. Don.t forget to make an
allocation for costs such as selling
which are usually treated as fixed.
(See item 1 for more information.)
3. What your competitors charge.
Look at your competitors. web sites,
or simply phone them and ask for
a price list or quotation.

How much are the intended customers willing to pay? Here we decide on a pricing strategy - do not let it just happen! Even if you decide not to ask (enough) money for a product or service, you must realize that this is a conscious decision and forms part of the pricing strategy. Although competing on price is as old as mankind, the consumer is often still sensitive for price discounts and special offers. Price has also an irrational side: something that is expensive must be good. Permanently competing on price is for many companies not a very sensible approach.
List Price; Discounts; Financing; Leasing Options; Allowances.
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P 3  ---  Place
Place
.Place. is the means of distribution
you select depending on the type of
product or service you are marketing.
Your choice will impact on your pricing
and your promotion decisions.
1. Are the customers for your
products and services consumers or
businesses? If they are consumers
you will have three main options .
_ Selling to wholesalers who will
sell to retail outlets who will sell
on to the consumer
_ Selling direct to retail outlets
_ Selling direct to the customer
If your customers are businesses you
will probably sell to them direct
through your own sales force.
2. If you sell through wholesalers and
retailers, remember when you price
your products that they will each
want their own mark-up to cover
their overheads. You will also need
to promote your products and
services to all members of the
channel. Wholesalers and retailers
will have to be persuaded to stock
your product and end customers
to buy them.
3. If you are selling to businesses you
will have to cover the cost of a sales
force. This can be an expensive
overhead and will again impact
on your pricing.

Available at the right place, at the right time, in the right quantities? Some of the recent major changes in business have come about by changing Place. Think of the Internet and mobile telephones.
Locations; Logistics; Channel members; Channel Motivation; Market Coverage; Service Levels; Internet; Mobile.
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P 4  ---  Promotion

Promotion
The promotional mix is made up
of 5 elements:
_ advertising
_ sales promotion
_ public relations
_ direct marketing
_ personal selling
The combination of tools you use
depends on the budget you make
available, the message you wish
to communicate and the group of
customers you are targeting
(How) are the chosen target groups informed or educated about the organization and its products? This includes all the weapons in the marketing armory - advertising, selling, sales promotions, Direct Marketing, Public Relations, etc. While the other three P's have lost much of their meanings in today's markets, Promotion has become the most important P to focus on.
Advertising; Public Relations; Message; Direct Sales; Sales; Media; Budget.
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P 5  ---  People
People
The people employed in your
organisation will determine the quality
of service your customers receive. This
is truer for services, but also impacts on
businesses making tangible products.
Happy, skilled and motivated staff make
happy customers. They are more likely
to think about the customer and deliver
good customer service if they are well
trained and are recruited for their
positive attitude to customers.
You can achieve a competitive
advantage over your competitors
through offering a high level of
pre-sales and after-sales support and
advice. Again, this can impact on the
price you set, as customers are likely to
be prepared to pay more for the service
they receive but there may be a higher
cost for you to take into account.
Identify those staff who come into
contact with customers, either face-toface
or by phone.
1. Carry out a task analysis of what
they do in terms of customer
contact.
2. Involve your staff in setting
standards for customer service.
For more information on customer
service, look at the 10-minute
Customer Service Programme.
3. Prioritise training needs
for these staff and provide
appropriate training

An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. Consumers make judgements and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for. Many British organisations aim to apply for the Investors In People accreditation, which tells consumers that staff are taken care off by the company and they are trained to certain standards.
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P 6  ---  Process
Process
The processes involved in delivering
your products and services to the
customer have an impact on the way in
which your customers perceive you.
1. Look at all the processes involved in
getting your products to the
customer. Start with the
identification of prospects and work
through to after-sales support. Does
any stage cause a delay? How can
you improve this?
2. Are your customers kept informed
about what is happening?
3. Do your staff keep their promises to
customers?
4. How effectively are you handling
customer complaints?

Refers to the systems used to assist the organisation in delivering the service. Imagine you walk into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company.
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P7  ---  Physical Evidence
Physical Evidence
Physical evidence is a term used to
describe the type of image that your
business portrays through its physical
presence, namely its premises, the
appearance of its staff, its vehicles, etc.
When customers do not have anything
that they can touch, see or try before
they buy, they are more likely to assess
you by the image you put across. It is
therefore particularly important if you
offer services rather than tangible
products.
1. How tangible is the product you
market? If it is heavily dependent on
the service element (for example, a
restaurant, or hotel, or window
cleaning service, or hairdressing)
then you should pay particular
attention to this element of the mix.
Even if you are a manufacturer, this
element is important if customers
visit your premises.
2. Ensure that the image portrayed by
your organisation is consistent with
the type of product or service you
offer.
3. Look at your reception area, your
car park (are there spaces for
visitors near to the entrance), the
appearance of your delivery staff or
customer service staff, that
condition of your vehicles, etc.
Where can you make
improvements?

Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgements on the organisation. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down!
Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service.
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3. Explain why the balance of the marketing mix is as important as any single element.
marketing objective and marketing mix vary across the PRODUCT  TYPE  and  Product Life Cycle

PRODUCT LIFE CYCLE

Products pass through a series of stages. Successful products progress through four basic stages: (1) Introduction; (2) Growth; (3) Maturity; and (4) Decline.

The product life cycle concept provides important insights about developments at the various stages of the product's life. Knowledge that profits assume a predictable pattern through the stages and that promotional emphasis should shift from product information in the early stages to product promotion in the later stages should allow the marketing manager to improve planning.

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PRODUCT LIFE CYCLE   BENEFITS


Here is a brief description of what is expected to take place in the stages of the life cycle:

1.   Initiation starts with the initial conception or discovery of the product idea and runs until it has been evaluated, has become specific, and has been approved for development.

2.   Development covers the various activities that transform an abstract product idea into a concrete prototype model of the product (if it is a tangible good) that can be manufactured.

3.   Market plans and tests is our term for the final gestation phase, in which the product would pass its last tests and everything be ready for commercialising it.

4.   Introduction starts when the offering is made available to buyers, probably on a limited scale, and continues as it is tried by innovators and experiences show slow sales growth.

5.   Growth begins when numerous tryers like the product, word of its virtues spread, and the product sales "take off". Since the product is not established until this takes place, we include it in this chapter of "evolving products6.   Maturity comes eventually, for the halcyon days of sharply rising demand vanish when most potential buyers have become actual customers. This may be a very long period during which demand decelerates and then reaches a plateau.

7.   Decline sets in persistently when the product eventually becomes obsolete. When it actually starts to toboggan, it is time to give the product a merciful death and burial.

The marketing strategist should never assume that the PLC operates inexorably, but should rather examine a brand's or product's actual position carefully. Further a serious effort should be made to find a winning strategy can revive a slumping demand, rather than summarily abandoning the possibility. In that context, the PLC does pose a hypothesis of product or brand behaviour that is useful for sales forecasting. It also enables us to clarify strategies in terms of their timeliness.

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WHY YOU  SHOULD USE THE  PRODUCT  LIFE   CYCLE  CURVE    
FOR ANALYSIS

The product life cycle curve can be extremely important in generating strategist, and it should be monitored and controlled by the marketing manager. This is necessary due primarily to five reasons:

1 . Rapid Maturity of Products
2. Life Cycle Product Mix
3. Strategic Implications
4. Product Planning
5. Changing the Life Cycle Curve

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THE PRODUCT LIFE CYCLE

Successful products progress through four basic stages: Introduction. Growth. Maturity and Decline. This progression is known as the Product Life Cycle.

1.INTRODUCTION

The company's objective in the early stages of the product life cycle is to stimulate demand for the new market entry. Since the product is not known to the public, promotional campaigns stress information about its features and benefits. They also may be directed toward marketing intermediaries in the channel to induce them to carry the product.

In this phase, the public becomes acquainted with the merits of the product and begins to accept it.

Losses are common during the introductory stage due to heavy promotion and extensive research and development expenditures.

However, the ground is being laid for future profits. Companies expect.to recover the costs and to begin earning profits when the new product moves into the second phase of its life cycle   the growth stage.


2.GROWTH

Sales volumes rise rapidly during the growth stage as new customers make initial purchases and early buyers re purchase the product. 'Word of mouthl and advertising induce hesitant buyers to make trial purchases.

As the company begins to realise substantial profits from its investment during the growth stage, the product attracts competitors.

Success breads imitation and other companies rush into the market with competitive products. The majority of firms in a particular market enter during the growth stage.


3.MATURITY

Industry sales continue to grow during the early part of the maturity stage, but eventually they reach a plateau as the backlog of potential customers is exhausted. By this time, a large number of competitors have entered the market, and profits decline as competition intensifies.

In the maturity stage, differences among competing products diminish as competitors discover the product and promotional characteristics most desired by the market. Heavy promotional outlays emphasise subtle differences among competing products, and brand competition intensifies.

In this stage, often available products exceed industry demand. Companies attempting to increase their sales and market share must do so at the expense of competitors.

As competition intensifies, the competitors tend to cut prices in an attempt to attract new buyers. Even though a price reduction may be the easiest method of inducing additional purchases, it is also one of the simplest moves for, competitors to duplicate.

Reduced prices result in decreased revenues for all firms in the industry unless the price cuts produce enough increased purchases to offset the loss in revenue on each item sold.

     
4.DECLINE

In the final stage of the product's life, innovations or customer preferences bring about an absolute decline in industry sales.

Sales and profits decline and companies begin to leave the industry in search of more profitable products.
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FOR    EFFECTIVE   MARKETING EFFORTS  YOU     WORK  WITH
PRODUCT LIFE CYCLE


1.INTRODUCTION

**ORGANISATION CONDITIONS   

-High Costs

-Inefficient Production Levels

-Cash Demands  HIGH
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**ENVIRONMENTAL CONDITIONS   

-Few or No Competitions

-Limited Product Awareness and Knowledge

-Limited Demand
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**MARKETING EFFORTS   

-Stimulate Demand

-Establish High Price

-Offer Limited Product Variety

-Increase Distribution
------------------------------
===============================
2.GROWTH

**ORGANISATIONAL CONDITIONS   

-Smoothing Production

-Lowering Costs

-Operation Efficiencies

-Product Improvement Work
----------------------------------
**ENVIRONMENTAL CONDITIONS   

-Expanding Markets

-Expanded Distribution

-Competition Strengthens

-Prices Soften a Bit
---------------------------------
**MARKETING EFFORTS   

-Cultivate Selective Demand

-Product Improvement

-Strengthen Distribution

-Price Flexibility
------------------------------------
=====================================
3. MATURITY


**ORGANISATIONAL  CONDITIONS

A. EARLY  MATURITY      
  
-efficient scale of operation         
-production modification work
-LOW  profit      

B. LATE MATURITY

-product standardization
-Decreasing Profits
------------------------------
**ENVIRONMENTAL  CONDITIONS      
     
A. EARLY MATURITY      
     
-slowing growth      
-strong competition      
-expanded market      
-heightened competition   

B. LATE  MATURITY

-Faltering demand
-fierce  competition
-shrinking  number of  competitors
-established  distribution  pattern
-----------------------------------
**MARKETING EFFORTS

A.EARLY  MATURITY
  
-Emphasise Market Segmentation   
-Improve Service  and Warranty   
-Reduce Prices
  
B. LATE  MATURITY      

-ultimate  in  market segmentation
-competitive pricing
-retain distribution
--------------------------------
===================================
4.DECLINE

**ORGANISATION CONDITIONS

-Permanently Declining Demand
-------------------------------
**ENVIRONMENTAL CONDITIONS   

-Reduction of Competitors

-Limited Product Offerings

-Price Stabilisations
----------------------------
**MARKETING EFFORTS
  
-Increase Primary Demand

-Profit Opportunity Pricing

-Prune and Strengthen Distribution
--------------------------------
=======================================
EXAMPLE  OF  MARKETING   PROGRAM   FOR
STAGES IN PRODUCT LIFE CYCLE


A.INTRODUCTION.

1.MARKETING  OBJECTIVE
-successful  entry in the market.

2.SALES
-increase sales.

3.CUSTOMERS
-identify  customer  segments

4.ENVIRONMENT
-Comply With  External Regulations   
& Accepted  Values

5.PRODUCT
-Assure High  Quality

6.PRICE
-use cost plus  strategy

7.PROMOTIONS
-build product awareness

8.DISTRIBUTION
-build  and  channels

==================================
B. GROWTH.

1.MARKETING  OBJECTIVE
-gain market share
-increase  profitability

2.SALES
-increase / maximize  sales volume.

3.CUSTOMERS
-determine  customer  acceptance.

4.ENVIRONMENT
-determine  channel  responses.

5.PRODUCT
-offer  extensions or value added  like service.

6.PRICE
-penetrate  deeper into  the  market

7.PROMOTIONS
-induce trial.

8.DISTRIBUTION
-use selective  distribution
--------------------------------------------------------
====================================
C.MATURITY.

1.MARKETING  OBJECTIVE
-consolidate  market share
-maximize  profit.

2.SALES
-maximize  sales.

3.CUSTOMERS
-determine  re-purchase  rates.

4.ENVIRONMENT
-monitor  competitive  activities

5.PRODUCT
-diversify  the  brands  or  models

6.PRICE
-price war with  competitors

7.PROMOTIONS
-stress  favourable  evaluations

8.DISTRIBUTION
-more intensive  distribution
-----------------------------------------------------------
=====================================
D.DECLINE.

1.MARKETING  OBJECTIVE
-arrest  the  market share decline.
-minimize effort/time in  marketing  expenses.

2.SALES
-retain  sales volume.

3.CUSTOMERS
-evaluate  customer complaints.

4.ENVIRONMENT
-search  for  new  opportunities.
5.PRODUCT
-phase out  weak  items
6.PRICE
-cut price or offer other incentives
7.PROMOTIONS
-maintain loyalty
8.DISTRIBUTION
-depend on  middlman         
         
#####################################################



4. Analyse the marketing mix for NIVEA VISAGE Young. What are its strongest points? Explain why you think this is so

Product
The first stage in building an effective mix is to understand the market. NIVEA uses market research to target key market segments which identifies groups of people with the same characteristics such as age/gender/attitude/lifestyle. The knowledge and understanding from the research helps in the development of new products. NIVEA carries out its market research with consumers in a number of different ways. These include:

• using focus groups to listen to consumers directly

• gathering data from consumers through a variety of different research techniques • product testing with consumers in different markets.

Beiersdorf’s market research identified that younger consumers wanted more specialised face care aimed at their own age group that offered a ‘beautifying’ benefit, rather than a solution to skin problems. NIVEA VISAGE Young is a skin care range targeted at girls who do not want medicated products but want a regime for their normal skin.

Competitor products tend to be problem focused and offer medicated solutions. This gives NIVEA competitive advantage. NIVEA VISAGE Young provides a unique bridge between the teenage market and the adult market.
The company improved the product to make it more effective and more consumer-friendly. Beiersdorf tested the improved products on a sample group from its target audience before finalizing the range for re-launch. This testing resulted in a number of changes to existing products. Improvements included:

• Changing the formula of some products. For example, it removed alcohol from one product and used natural sea salts and minerals in others.

• Introducing two completely new products.

• A new modern pack design with a flower pattern and softer colors to appeal to
younger women.

• Changing product descriptions and introducing larger pack sizes.
Each of these changes helped to strengthen the product range, to better meet the needs of the market.
Some of these changes reflect NIVEA’s commitment to the environment. Its corporate responsibility approach aims to:
• reduce packaging and waste - by using larger pack sizes • use more natural products – by including minerals and sea salts in the formula

• increase opportunities for recycling - by using recyclable plastic in its containers.

Price
maximize profits or sales. A product’s price also needs to provide value for money in the market and attract consumers to buy. There are several pricing strategies that a business can use:

• Cost based pricing – this can either simply cover costs or include an element of profit. It focuses on the product and does not take account of consumers.

• Penetration price – an initial low price to ensure that there is a high volume of purchases and market share is quickly won. This strategy encourages consumers to develop a habit
of buying.

• Price skimming – an initial high price for a unique product encouraging those who want to be ‘first to buy’ to pay a premium price. This strategy helps a business to gain maximum revenue before a competitor’s product reaches the market.

On re-launch the price for NIVEA VISAGE Young was slightly higher than previously. This reflected its new formulations, packaging and extended product range. However, the company also had to take into account that the target market was both teenage girls and mums buying the product for their daughters. This meant that the price had to offer value for money or it would be out of reach of its target market.

As NIVEA VISAGE Young is one of the leading skin care ranges meeting the beautifying needs of this market segment, it is effectively the price leader. This means that it sets the price level that competitors will follow or undercut. NIVEA needs to regularly review prices should a competitor enter the market at the ‘market growth’ point of the product life cycle to ensure that its pricing remains competitive.

The pricing strategy for NIVEA is not the same as that of the retailers. It sells products to retailers at one price. However, retailers have the freedom to use other strategies for sales promotion. These take account of the competitive nature of the high street. They may use:

• loss leader: the retailer sells for less than it cost to attract large volume of sales, for
example by supermarkets
• discounting – alongside other special offers, such as ‘Buy one, get one free’ (BOGOF) or
‘two for one’.

Place
Place refers to:
• How the product arrives at the point of sale. This means a business must think about what
distribution strategies it will use.

• Where a product is sold. This includes retail outlets like supermarkets or high street shops.

It also includes other ways in which businesses make products directly available to their target market, for example, through direct mail or the Internet.

NIVEA VISAGE Young aims to use as many relevant distribution channels as possible to ensure the widest reach of its products to its target market. The main channels for the product are retail outlets where consumers expect to find skin care ranges. Around 65% of NIVEA VISAGE Young sales are through large high street shops such as Boots and Superdrug.

Superdrug is particularly important for the ‘young-end’ market. The other 35% of sales mainly comes from large grocery chains that stock beauty products, such as ASDA, Tesco and Sainsbury’s. Market research shows that around 20% of this younger target market buys products for themselves in the high street stores when shopping with friends.

Research also shows that the majority of purchasers are actually made by mums, buying for teenagers. Mums are more likely to buy the product from supermarkets whilst doing their grocery shopping.

NIVEA distributes through a range of outlets that are cost effective but that also reach the highest number of consumers. Its distribution strategies also consider the environmental impact of transport. It uses a central distribution point in the UK. Products arrive from European production plants using contract vehicles for efficiency for onward delivery to retail stores. Beiersdorf does not sell direct to smaller retailers as the volume of products sold would not be cost effective to deliver but it uses wholesalers for these smaller accounts. It does not sell directly through its website as the costs of producing small orders would be too high. However, the retailers, like Tesco, feature and sell the NIVEA products in their online stores.

Promotion
Promotion is how the business tells customers that products are available and persuades them to buy. Promotion is either above-the-line or below-the-line. Above-the-line promotion is directly paid for, for example TV or newspaper advertising.

Below-the-line is where the business uses other promotional methods to get the product message across:

• Events or trade fairs help to launch a product to a wide audience. Events may be business
to consumer (B2C) whereas trade fairs are business to business (B2B).

• Direct mail can reach a large number of people but is not easy to target specific consumers cost-effectively.

• Public relations (PR) includes the different ways a business can communicate with its stakeholders, through, for example, newspaper press releases. Other PR activities include sponsorship of high profile events like Formula 1 or the World Cup, as well as donations to or participation in charity events.

• Branding – a strong and consistent brand identity differentiates the product and helps consumers to understand and trust the product. This aims to keep consumers buying the product long-term.

• Sales promotions, for example competitions or sampling, encourage consumers to buy products in the short-term.

NIVEA chooses promotional strategies that reflect the lifestyle of its audience and the range of media available. It realizes that a ‘one way’ message, using TV or the press, is not as effective as talking directly to its target group of consumers. Therefore NIVEA does not plan to use any above-the-line promotion for NIVEA VISAGE Young.

The promotion of NIVEA VISAGE Young is consumer-led. Using various below-the-line routes, NIVEA identifies ways of talking to teenagers (and their mums) directly.

• A key part of the strategy is the use of product samples. These allow customers to touch,
feel, smell and try the products. Over a million samples of NIVEA VISAGE Young products will be given away during 2008. These samples will be available through the website, samples in stores or in ‘goody bags’ given out at VISAGE road shows up and down the country.

• NIVEA VISAGE Young launched an interactive online magazine called FYI (Fun, Young & Independent) to raise awareness of the brand. The concept behind the magazine is to give teenage girls the confidence to become young women and to enjoy their new-found independence. Communication channels are original and engaging to enable teenagers to identify with NIVEA VISAGE Young. The magazine focuses on ‘first time’ experiences relating to NIVEA VISAGE Young being their first skincare routine. It is promoted using the Hit40UK chart show and the TMF digital TV channel.

• In connection with FYI, NIVEA VISAGE Young has recognized the power of social network sites for this young audience and also has pages on MySpace, Facebook and Bebo. The company is using the power of new media as part of the mix to grow awareness amongst the target audience.

Conclusion
NIVEA VISAGE Young is a skincare range in the UK market designed to enhance the skin and beauty of the teenage consumer rather than being medicated to treat skin problems. As such, it has created a clear position in the market. This shows that NIVEA understands its consumers and has produced this differentiated product range in order to meet their needs.
To bring the range to market, the business has put together a marketing mix. This mix balances the four elements of product, price, place and promotion. The mix uses traditional methods of place, such as distribution through the high street, alongside more modern methods of promotion, such as through social networking sites. It makes sure that the message of NIVEA VISAGE Young reaches the right people in the right way.

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Leo Lingham

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18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc

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