Marketing Planning Guru

Transcription

1 This Chapter is a sample of Marketing Planning Guru e-book; which is copyrighted by Mohammed Magdy; the Author of the book, and the Founder & CEO of howtobeamarketer.com Special note: some of the hyper-links won t work with you; because they are linked to other components of Marketing Planning Guru e-book. To enjoy all of the browsing experience, you need to invest in Marketing Planning Guru e-book.

2 Product Mix 1. What is a product strategy? 2. What is a product in marketing terms? 3. What is a product portfolio in marketing? 4. What is a product portfolio analysis? 5. What are elements of product marketing? 6. What are product characteristics in marketing mix? 7. How to make a Product portfolio management? 8. Product Life Cycle: 1.1. What are Product Life Cycle Stages? 1.2. Why product life cycle is important? 1.3. What is a product life cycle management? 1.4. Examples of short and long product life Cycles How to extend the product life cycle in 5 steps? 9. B.C.G. Matrix (Boston Consultancy Group Matrix): 9.1. What is a BCG Matrix Model? 9.2. How to Make a BCG Matrix Model? 9.3. BCG Matrix Examples (Case Study no.1) BCG Matrix Examples (Case Study no.2) BCG Matrix template. 10. G.E. Matrix (General Electric Matrix): What is a GE Matrix Analysis Diagram? Factors affecting Market Attractiveness in G.E. Matrix Factors affecting Company Business Strengths or Position in G.E. Matrix How to calculate the market attractiveness in G.E. Matrix How to calculate Company Business Strengths for your company and competitors companies in G.E. Matrix? What is the recommended strategy to manage products in the G.E. Matrix? GE Matrix example (Case Study) GE Matrix template.

3 11. New Product Development: Stages of new product development process in 7 steps What are new product development process types? What is a new product development process steps used for? 12. Product Adoption Process: What is a New Product Adoption Process? Consumer Behavior in a New Product Adoption Process How to make a new product adoption with your customers? Product Adoption Process as Price Determinant. Back to Marketing Mix

4 What is a product strategy? A Product Strategy means Product Marketing Plan. So to design a good product strategy, you need to develop a marketing plan for your product; starting from situational analysis (external and internal environmental analysis), passing with marketing objectives, developing your marketing strategies, and managing the marketing tactics or marketing mix.

5 What is a product in marketing terms? When you want to open a new business and thinking about which product you could innovate, develop or imitate to get business in term of money. The questions comes to our mind is What is a product in marketing terms? Or what does product mean? or If I sold a hand watch, can I call it a product? What about selling a maintenance services for hand watches? Is it a Product? What about selling a new idea to my manager?? Is it a Product? Am I a Product?!! Is Nicholas Cage, Tom Cruise, Angelina Jolie, William Smith, Brad Pitt, and other celebrities could be Products?? Actually I knew how much this article could be basic for some learners, but I believe it s very important to understand what is product in marketing terms, because this is going to help you in finding a variety of business development ideas if you want to develop a new product for getting ahead in business world. What is a product in marketing terms? A Product is a (Physical good, service, idea, person or place) that is capable of offering a (tangible and intangible) attributes that (individuals or organization) regards as so (necessary, worthwhile or satisfying) that they are prepared to exchange (money, patronage, or any other unit of value) or in order to acquire it.

6 The Product could be: 1. Physical Good (What is a product in marketing terms?): Physical good product example: watches, clothes, cars, creams, food, shoes, pharmaceutical drugs etc anything that could be considered as physical good. 2. Service (What is a product in marketing terms?): There are two types of services: Consumer services: as educational institutes, health care centers, charities, Government, financial services, professional services, leisure, entertainment, tourism etc services that are provided to target consumers; it s called (business to customer or B2C).

7 Business Services: as repairs and maintenance services, consultancy services, leasing or contract hire, transportation, recruitment companies, advertising/marketing research agencies etc they are service provided to business companies or organizations rather than individuals; it s called Business to Business Services or B2B. 3. Idea (What is a product in marketing terms?): Example: to innovate a new idea to your company, to your manager, to any authority that you can get business in return. 4. Person (What is a product in marketing terms?): You and I are considered as Product (if there are individuals or organizations can perceive our value and give us money in return), celebrities are the perfect examples of considering the person as a product. 5. Place (What is a product in marketing terms?): Restaurants are considered as place which you can provide other products in (as food and drinks), the Zoo is a place where individuals are paying money to enter, hotels, beaches, or any other place that the consumers can consider as something of value and can pay you a money in return. So the Product is any Physical Good, Service, Idea, Person or Place who can provide Tangible or Intangible attributes wait a Minuit, what is difference between tangible and intangible products?? Let s explain what attributes means: it s the Physical good, services, idea, person, or place that is having something special (Benefits) for the consumer, those benefits called attributes. What the Tangible and Intangible attributes? Tangible attributes: are the benefits that you and I can feel it by our five senses; hands (as most of products; watches, clothes, drugs, calculators, football, etc),

8 eye (something solid you can see by your eyes, something in package and you can observe easily), Ear (as added sense to hands and eye as video games, nose (have special sense when you smell it as food, flowers), mouth (as ice cream, any type of food). Example of tangible attributes; any physical good, place, person. Intangible attributes: as services (mentioned above) and ideas. So if you are providing a product which either tangible or intangible to individuals (business to customer) or organizations (business to business), it won t be of value if your product aren t considered as worthwhile, satisfying and of added value to the customer (individuals or organizations) so they express their satisfaction in term of paying you money or any other term of value to you.

9 What is a product portfolio in marketing? The Product Portfolio is all the product lines and items that company offers for sale. What is the importance of having a good product portfolio? (What is a Product Portfolio used for?) Actually companies are always aiming for having a portfolio of products that get them good business in return. This is especially in the downturn and periods of uncertainty, where many companies withdraw their businesses for those who are depending on 1 or 2 products in their portfolio. So the first step you should consider is to make, create, innovate or develop more than one product lines, each line has its own products, so if one products line fall in sales, the others helping you and vice versa. I started this article by defining the product portfolio and telling you about how much it s important, because now I am going to tell you how to design a good products portfolio for your company:

10 How to create a product portfolio in marketing? From the above diagram you can understand that there are three main components to build a good products portfolio; having Products Portfolio Width, Depth and Consistency. The Products Portfolio Width is the number of products line. Products portfolio Depth: is the average number of items per product line. Products Portfolio Consistency: it means the closeness of relationships in product range; e.g. end users, product distribution. Consistency means you need to ask yourself Am I having problems in the distribution of my products to the end users, are all my end users or customers capable of finding my products available everywhere, and is there problems in delivery of my product in the deadlines? If my marketing strategy is providing Differentiation Marketing Strategy then Am I delivering my products in the same quality of the production?

11 Let s take the following example for illustrating what we are talking about: Product Portfolio Examples: I will illustrate the supermarket or hypermarket as an example of business to consumer (B2C): Product Width: lines for food, lines for different types of cheese, lines for drinks, lines for fashion, lines for games, lines for babies, lines for electronics etc imagine Wall Mart and you will get how much they are providing different products lines. Products Portfolio Depth: in the cheese products, how many types are there? In fashion, do we provide clothes for children, men and for women or is it specialized for special category of them? In electronics; how many companies are there in the mobile phones? And which one of them we are providing in our shop? Although the previous example is illustrating Products Portfolio Width and Depth for other companies who are promoting their products than yours, but sure if you are making your own products you will get more revenue, stable trust from the customers and capable of innovation and development for your existing products that would eventually match the dynamic changes of customers needs.

12 What is a product portfolio analysis? Product portfolio analysis has been created to help marketers to make a product portfolio management. So you start with analysis to recommend management strategy for your product portfolio. In this article I am explaining how to analyze your products and compare them to competitors products. How to make a product portfolio analysis? there are three products portfolio analysis tools; P.L.C.; Product Life Cycle, B.C.G. Matrix; Boston Consultancy Group Matrix, and G.E. Matrix; General Electric Matrix.

13 What is P.L.C.; Product Life Cycle? It s a valuable tool to help you in defining the different stages in product development; also it helps to forecast future demand about your products. Product Life Cycle (PLC) is reminding us that all products are having a limited life time, so it s helping to predict the profit levels and for tailoring marketing programs according to the demand, your product development stage, current profits and level of investments and your changing customers needs. In the product life cycle (PLC); there are four development stages for any product; Introduction, Growth, Maturity and Decline. What is B.C.G. Matrix; Boston Consultancy Group Matrix? B.C.G. Matrix is considered as both planning and analysis tools for your products portfolio (as main objective) and also it help you to understand how much your product performing from your competitors and market leader. This tool is classified the products on the basis of: 1. Their market share relative to that of their competitors. 2. According to the rate of growth in the market as a whole.

14 Products are positioned in the matrix as circles with diameter proportional to their sales revenue. The usual sequence of a new product is the problem child to begin with, then with effective marketing it become a star. As markets mature, a cash cow, finally a dog. See the full article of B.C.G. Matrix.

15 What is G.E. Matrix; General Electric Matrix? It s similar to BCG matrix, but includes a broader range of company & market factors. The matrix classifies products/businesses according to: - Industry attractiveness: market share, market growth, competitive climate, stability of demand, ease of market entry, industry capacity, levels of investment, profitability. - Company strength: relative market share, company image, production capacity, production cost, financial strengths, product quality, distribution system, control over prices/margins. See the full article of G.E. Matrix.

16 What are elements of product marketing? Sometimes we are thinking as marketers to develop a new idea, service, solution to your original product and we don t know if the new added element is essential or not. And because some marketers fall in love with their products and fall in trap of Marketing Myopia, so they love to develop and too many innovate ideas to be added to their products and they believe that those ideas could make a real difference with the consumer. What are elements of product marketing used for? So the objective of this article is to tell you if your innovative idea, added service is of real value or not. This is happening through depth understanding of the four categories of the perfect product. The perfect Product is containing four elements; Core, Tangible, Augmented, and Potential.

17 What is the Core Product? The Core Product is the basic product that the customer is considering for the most important and essential elements. It s the basic use of any product. As; the four tires in any car, as calling and receiving functions in any mobile phone, as monitor, keyboard in any laptop. What is the Tangible Product? It s the actual product; the brand identity of the product (read related articles to Branding), the package, the quality of the product. What is the augmented product? It s the extended product benefits; installation, warranty, after service. Most of the Brands ends in this step and don t go further more to the 4 th element. What is the Potential Product? The Potential product is the product that is providing potential future improvements, as car that is helping their customers to save the money of the fuel as results of new modifications added in the motor. Other example is to develop a product that protecting the consumers from car accidents in the future. So it s the new modifications you add to your product to provide potential future improvements to your customers. Some of the individuals and organizations are providing a Product that is having Core and Tangible functions only, many of them are providing Augmented Product Services to differentiate themselves from the existing competitors, but very rare % of them are providing a newly added service, idea or modification to improve their quality of their customers life in the future.

18 What are product characteristics in marketing mix? To understand what product characteristics are in marketing mix, you need to understand what a product is in marketing terms. I mentioned that your product should have tangible and intangible attributes, so the individuals or organizations can perceive it as worthwhile, satisfying and of added value to them. In this article I am explaining the attributes that your product should have to add a new value for the customer (Perceived Value). What are product characteristics in marketing mix? Any Product in the world should have Three Main Characteristics to make it special and of added value to the customer:

19 What are the Physical Characteristics of Any Product? There are three physical characteristics of any products; shape of the Product, Size of the Product, and Color of the Product. So if you didn t consider all of the three factors together, then you are missing important aspects that your customer will consider very well. I will take very well known example that will help you very much in understanding the importance of considering the shape, size and color of your product; let s take the celebrities as an example. We should consider how the product (which is person in case of celebrities) looks like, so let s say William Smith, how he looks like, someone who is body builder, awesome and bright in shape, his color is black (may be my opinion right or wrong, it s just an example). Angelina Jolie: she looks pretty woman, Tiger eyes, and having very recognizable and lovely face (shape, size and color). So when you design a Product, you need to consider how you want your product to look like in front of your customers, what is the size of your product (small, medium, large), and the color of your product (see CocaCola Colors, Addidas, Nike and other well known brands to understand what I mean). What are the functional Characteristics of any product? The functional characteristics of any product means how is your product going to perform with the customers or the usage experience of the product. Let s mention the Car Industry as an example. What is the speed of your car, the stability, the airbag functions, other accessories in the car? Other example is computers; how many rams do you have in your P.C., the processor of your PC, the DVD in your PC, the capability (20 Giga, 120, 240, 400 Giga etc).

20 So when you design a new product, you need to consider developing the benefits of your product to really make something having a functional value for your customers. What are the Psychological Characteristics of your product? The Psychological Characteristics mean how to design a product which is having a characteristics/benefits to reveal a positive psychological perception when your customers see, hear about if from the first time. In other words it could be expressed as the Psychological Perception of the customers to your products which reveals in changing their attitude. A Very well known example is NIKE Brand, we were see from long time ago the slogan of NIKE Just Do It, which is always telling us that we can do anything we want by just thinking about NIKE, so this is called Brand Association where your customers associate your brand value by something in their life (as persistence, insistence, challenges etc).

21 In the next part, the following diagram will help you in understanding what you should consider in designing a new product, and how the customer perceive each characteristic of the three essentials ones for any product.

22 The following diagram is summarizing how the customers perceive the three main characteristics of any product you are going to develop:

23 How to make a Product portfolio management? Before you understand how to make a product portfolio management, you need to learn what is a product portfolio in marketing? And what is a product portfolio analysis? In this article I am explaining very common mistakes happening between marketing and sales departments in most of companies and in most of industries worldwide. Examples of those most important mistakes: Why my market share isn t better than the competitor? (While your product just had been released this year, while the competitor s products launched from 3 years The competitor market growth is higher than me this year, so why? (And this mistake is happening although you know that your product has been launched from 10 years ago, while the competitor s product has been launched from 2 years only). The competitor is selling 200,000$ this month by using techniques like bla bla..bla bla so I will do the same and get better sales force and better techniques (marketing communication tools) and get more sales next month The previous mistake is the most stupid mistake which is happening all of the day and night among different companies and competition between different organizations and individuals. You can t even compete with companies who are depending on Cost Leadership marketing strategy while your competitive advantage strategy is Differentiation marketing strategy. You can t compare your business (market share, market growth) which has been launched from 2 years by other product which has been launched from 10 years. To understand the answer for all of the above common questions and mistakes and to protect your company employees against committing the same mistake, you need to understand these two issues:

24 1. What are the Marketing Strategies? (competitive advantage strategy, Ansoff s Matrix or Growth Strategies, Market Positioning Strategy, Segmentation, Targeting and Positioning) 2. What are the Products Portfolio Analysis Tools? There are three main Products Portfolio Analysis tools:

25 P.L.C. is Product Life Cycle (Products Portfolio Analysis tool). B.C.G. Matrix is Boston Consultancy Group Matrix (Products Portfolio Analysis tool). G.E. Matrix is General Electric Matrix (Products Portfolio Analysis tool). So to make a product portfolio management, you need to follow a process of setting your product portfolio marketing analysis and strategy, and this process should be done on a continuous basis to monitor the marketing dynamics of your product portfolio.

26 What are Product Life Cycle Stages? It s a valuable tool to help you in defining different stages in product development; also it helps to forecast the future demand about your products. Product Life Cycle (PLC) is reminding us that all products are having a limited life time. What are the Product Life Cycle (PLC) Stages used for? It helps to predict the profit levels and tailoring marketing programs according to the demand, your product development stage, current profits and level of investments and your changing customers needs. The Product Life Cycle (PLC) is one of the Products Portfolio Analysis and Planning Tools.

27 What are Product Life Cycle Stages? There are four different stages of any product from its development stage (prototype) till the product withdrawn from the market and no further demand on it. The P.L.C. means Product Life Cycle; which is helping you to understand that each product is passing with four developmental stages from the time of launch till the product die; those four stages are: 1. Introduction Stage: In this stage, your product is starting in the market. In this stage your sales grow slowly at a cost. 2. Growth Stage: This stage is the best stage that all of the companies, organizations and individuals are dreaming of their products to be in this stage. In this stage your sales are growing very well but your profits level is still small. 3. Maturity Stage: In this stage organizations and individuals starting to search for new opportunities to increase their sales, as this stage is a well established competition between your product and competitors products. In this stage you get stable market share. 4. Decline Stage: In this stage you start to lose your market share again, your customers are starting to shift to another competitor, and your loyal customers became not satisfied as before. In this stage, if you didn t manage your product well, then you can expect that your product will eventually die.

28 Why product life cycle is important? Instead of telling you why Product Life Cycle (PLC) is important, I will tell you what you are going to lose if you didn t use this tool, and to explain this, I am asking you to understand, listen and think about the following example: Imagine your dream is to be a football player, and actually you aren t skillful at all, then you got videos for most football players as Ronaldo, Ronalidino, Rony etc then you started to implement the same training techniques that they (professional players) were doing all of the time. Let s say you were implementing those techniques perfectly for six months, and you started to apply for famous and well known clubs as Manchester, Liverpool, Barcelona, intermilan etc. And you get refused from all of them!! Then you got a severe depression and become a de-motivated toward becoming a professional football player. Actually you had fallen in the Trap that most of marketers fall into. You can t compare your performance in six months (while you start your football for the first time as professional from six months) with someone performance in the last six months (who were playing football for twenty years!!). The same issues for marketers, many marketers are comparing their products performance with the best competitor in the market share, growth rate, and sales. This is totally a mistake, because the best competitor for you (Benchmark) may be in the Growth stage while you are in the Introductive stage of Product Life Cycle (PLC). So you can t compare your product performance with products which are belonging to different stages of the product life cycle (PLC). Check the following article to understand the previous issue (What is a product life cycle management?)

29 So what can you do? You can compare your product performance against the competitors who are in the same stage of the Product Life Cycle (PLC) e.g. comparing the products which are in the introduction stage together, comparing the products which are in the growth stage together, comparing the products which are in the maturity stage together and comparing the products which are belonging to the declining stage together. But take care; you need also to monitor the products which are belonging to the different stages of Product Life Cycle (PLC), because you need to understand the marketing dynamics very well and predicting what is going for your future products.

30 What is a product life cycle management? In this article I will explain what the changes that are happening in each stage of the Product Life Cycle (PLC) are, and how to manage each change to get the best profit for your business. The following diagram is representing the P.L.C.; Product Life Cycle: I will explain each stage in Product Life Cycle (PLC) separately illustrating the changes happening there and how to manage those changes effectively.

31 What is a product life cycle management? 1. The Introduction Stage (What is a product life cycle management?): Changes and marketing dynamics in Introduction Stage of Product Life Cycle (PLC): In the introduction Stage of PLC; your sales are growing slowly, with your profit didn t cover the expenses or level of investment that you are making in your product. This is important because many marketers who aren t experienced and also for sales managers who aren t studying marketing, both of them believe that you should get the profit or ROI for every investment you make. Actually this is a great mistake in the introduction stage of your product, so you should expect that you won t get the profit that covers your team expenses and level of investments in the introduction stage. This profit could be increased in the Growth stage. The Objective of Integrated Marketing Communication Mix in this stage is to INFORM your customers about your products benefits, value, use, and achieving high level of awareness about your product.

32 2. Growth Stage of Product Life Cycle (PLC) (What is a product life cycle management?): Changes and marketing dynamics in Growth Stage of Product Life Cycle (PLC): In this stage your sales are growing, and your market growth is increasing in very acceptable manner. The levels of profits are slow in this stage, because you are still investing in your product to keep your product in the growth phase and getting higher market share. Actually most of the organizations are investing thousands of thousands of money to keep their products in the growth stage and to maintain their position within the competitor, so in this stage you are investing money in advertising and sales promotion to increase your growth rate and getting higher market share. Recommending tactics and strategies to keep your product in the growth phase: 1. High advertising and sales promotion to differentiate your products from competitors. 2. Tactical and strategic retaliation, customer relationship management (CRM) with distributors and suppliers. 3. Line extension (if your product growth started to decline after good level of investment, so you look for new opportunities).

33 4. Product offers and sales promotion: so you are encouraging the customers to purchase your products through discounts, bonuses and other sales promotion techniques. 5. Increase your push strategy: to push your products in the wholesales and key areas with quantities to make your product available everywhere for your customers and preventing competitors products from getting shelf space. Actually the push strategy is playing a great rule in changing consumer behavior especially in F.M.C.G; Fast Moving Consumer Goods. E.g. Cocacola and Pepsi, many supermarkets are containing only cocacola or only pepsi, while the switching cost (what cost the consumer to shift from one brand to another) is small in the F.M.C.G. products. The objective of Integrated Marketing Communication Mix of this stage is to DIFFERENTIATE your product from competitors. 3. Maturity Stage of Product Life Cycle (PLC) (What is a product life cycle management?): Changes and marketing dynamics in Maturity Stage of Product Life Cycle (PLC): In this stage your sales levels are stable, but your profit is declining. This stage is common in the markets that are having a well established competition (existing products were competing from long time ago).

34 The Maturity stage would be acceptable if your product is achieving the highest market share among your competitors, and your product is well established product, then you suggest new market development opportunities, line extension, repositioning of your products to make your product back again to the growth stage. The maturity stage became very risky if your product is not having a high market share, or your product have been launched from small period of time (1-2 years ago). Then you need an urgent action, a risk assessment to decide are you going to invest in this product or let your product die. Recommending tactics and strategies to keep your product in the Maturity Stage of Product Life Cycle (PLC): The objective of those tactics is to extend the life cycle again and help your product to back again to the growth phase. Here some ideas about extending your product life cycle: New Product Development for your existing product (s) : Quality, style, functional modifications in the existing products. Revising your Segmentation, Targeting Strategies to make a new market development, or new product development (See Ansoff s Matrix). Repositioning of your products benefits and value to persuade your customers to buy more or gaining new customers to try your products. Re-Branding of your product to make your customers receive a unique, relevant and sustained added value from your product that match their new needs. Price-Cutting: to decrease your product price, actually this isn t favorable strategy especially if your competitive advantage strategy is Differentiation Marketing Strategy, but if you are competing through Cost Leadership Marketing Strategy then Price Cutting become a good option for extending your Product life cycle (PLC).

35 The Objective of Marketing Communication Mix in This Stage is to PERSUADE your existing customers to buy your product more (increasing the frequency of purchase), or acquiring new customers to try your product. 4. Declining Stage Of the Product Life Cycle (PLC) (What is a product life cycle management?): Changes and marketing dynamics in Declining Stage of Product Life Cycle (PLC): In this stage, you are losing your customers (your target segment), or your customers are decreasing their purchasing frequency than usual. Your market share is decreasing in this stage, and your product market growth become in minus. In this stage both your sales and profit are declining and may end to stop promotion about your product. The Declining Stage is happening in the old established products that have been launched from many years ago (may be more than 10 years), or your product service or technology become obsolete (Due to the development of the technology and changing customers needs among the time). Also the declining stage comes to the products which didn t succeed in their growth stage of PLC, or those which their Product life cycle (PLC) was very small, so the product passed with growth, maturity and declining

36 stages in very small period of time. Actually this is happening when you create a product that isn t essential of your customers, didn t create customers needs, or your product is of low quality and service delivery so your customers gave up and decided not to purchase your products again. Recommending tactics and strategies to keep your product in the Declining stage: Actually there are two recommended marketing strategies for managing your product in the declining stage of Product Life Cycle (PLC): 1. Obsolescence: To decide that you won t promote your product anymore, so you will cut the expenses, you won t invest any money in promoting your product, and just wait to gain some cash before your product die. 2. Repositioning strategy of your product: Think to reposition your product value and benefits to your existing customers segment at the start (as market penetration) and for new customer segment (as market development), allocate your resources (to control your budget) and start to rebrand your product again. If you decided to reposition your product then you need to make a high market promotion, rebranding, and consider making a new product development of your existing product to back again to the growth stage and gaining a good market share. 3. New Product Development: Actually this is happening with lot of products, as Camera films in the last 10 years, people became more comfortable to the new technology of digital cameras and transferring the photos and videos to the computer. So those companies which their business build on camera films decided to make new product development and releasing new digital cameras for the same old established brands, so the old customers will love to buy their new product rather than the competitors, and this is happening if you were having a good customers loyalty when your product was in the growth stage.

37 The Objective of Integrated Marketing Communication Mix in this stage is to REINFORCE your product again to your old customers; to remind them about how much your product was their first choice and to reassure those customers about your competitive advantages and product value.

38 Examples of short and long product life Cycles What is the Difference between Short P.L.C. (Product Life Cycle) and Long P.L.C.? In this article I am explaining why there is a product which is having a short Product Life Cycle (PLC) and other product having a long product life cycle (PLC), also to help you to understand that the industry business is affecting the PLC of the products. What are the Products with a Long Product Life Cycle (PLC)? The products with Long Product life cycle (PLC) are the successful products, the products with the right marketing strategies (competitive marketing strategies, Segmentation, Targeting and Positioning), right budget allocation, right investment, and always developing their product (product development) and penetrating new markets (Market Development) and they are the companies which are providing the appropriate marketing mix for their customers (right product mix, communication mix, place, price, people, physical evidence and process).

39 Also the products with long product life cycle (PLC) are the products which is released in a high market attractiveness in which the market industry is growing, this is helping you to understand if you are going to invest more money in extending your product life cycle (PLC) or you should obsolete your product and look for something else in another industry. What are the Products which having Short Product Life Cycle (PLC)? The product which is having a short Product Life Cycle (PLC) is the product which doesn t have the appropriate competitive marketing strategy for the target customers (as wrong positioning, wrong segmentation and targeting, or wrong competitive advantage strategy as companies which are adapting both cost leadership and differentiation marketing strategies for the same product), wrong integrated marketing communication mix, not allocating their resources effectively, for companies who aren t making a market development for their target segment or not developing their existing product, so finally their product become obsolete and their existing users became not interested to purchase their products as they were in the past.

40 Also the Short Product life cycle (PLC) found in the industries which all of their products are having the same problem as Fashion, and Movies industry. Both of the previous examples are perfect description for the products which are short in their PLC, and this is happening for most of the products in those industries. You know, when you watch a new movie in the cinema, the movie producer may be find a new market development through offering his movie in more than one country, then in the local and international TV channels, then releasing those movies in DVD and CDs. And if the cycle was perfect as planned, then may be the product starts and ends maximum by one to two years in the Cinema industry. Nowadays the torrents for downloading the recent movies through the internet became the major challenging problem for all cinema movies producers, and even if you protect your movie for couple of months, finally you found your movie uploaded in these torrents among different internet sites.

41 How to extend the product life cycle in 5 steps? The objective of this article is helping you to understand what are marketing strategies needed for each stage in the Product Life Cycle (PLC). This is very important because sometimes marketers get confused about making new product development or new market development while their product life cycles are in the Growth Stage of the PLC. Revenue & Profit Market Development Line Extension Market Penetration Diversification New Product Development McDonald, 1999 As any product should pass with Introduction stage, then Growth, Maturity and ends in declining stage of Product Life Cycle (PLC), Also the marketing strategies (Anoff s Matrix) should start by Market Penetration and ends with Diversification (as last option). So those stages are as follow (from 1 to 5): How to extend the product life in 5 steps? 1. Market Penetration: You need to make a Market Penetration first for your product to convince the existing users to use more (increasing the frequency of purchase) or encouraging the non users to try your product. Market Penetration should be your 1 st option when you release a

42 new product, don t get lost by thinking about new product development or new market development while you are in the introduction stage, so focus your time and energy in penetrating your target segment with the right positioning and appropriate marketing mix. 2. Line Extension: The 2 nd recommended marketing strategy to extend your product life cycle (when your product start shifting from growth to maturity stage) is to make a line extension of your existing product. Line extension means to release another version of the same brand, as CocaCola Zero, Pepsi Max. Both of them are clear examples of Line Extension. 3. New Market Development: The 3 rd recommended marketing strategy if your product started to shift to maturity stage for the 2 nd time is to make a new market development, so you look for new target segment to promote your products to, or New Geographical Market to penetrate your product to. Please note that the line extension came before market development in extending the product life cycle (PLC) for your product, because you will gain more revenue and profits by releasing a new version of the same brand to the existing target segment (existing customers) that you were targeted all of the time, so their behavior will be change easier than looking for new customers and start convincing them about your products value and benefits. 4. New Product Development: The 4 th recommended marketing strategy when your product starts to decline. You need to make a new product development of your existing product; as adding new technology, new modifications about your product to back again to growth phase and start gaining the market share again.

43 Please note that the cost of new product development is high and not to be considered as an easy option, as per my best knowledge P & G; Procter and Gamble are investing billions of dollars every year on their R & D; Research and Development Department. So this stage needs a money and helps in protecting your company from downturns, but again remember if you don t have enough budget to invest in R & D, then make the new product development stage your last option when your product starting to decline. 5. Diversification: The final tactic for extending your company business is to make a Diversification. Actually the diversification process isn t considered as a tool for extending your product life cycle (PLC) rather than helping your company to find a new business opportunity to make money. Diversification is to make a new product in a new market or new industry. This strategy is a risky strategy and you should understand the market that you are going to develop a new product in before start spending money in developing that new product. As overall you need to make a situational analysis (External and internal environmental analysis) again before you decide which market and which product you are going to release.

44 What is a BCG Matrix Model? In this article you will learn about: What is a BCG Matrix Model (Boston Consultancy Group Matrix) Model? What is a BCG Matrix Model (Boston Consultancy Group Matrix) Model used for? BCG Matrix (Boston Consultancy Group Matrix) Model Diagram:

45 You need to understand that in Star and Dog boxes; the profit level is very small and almost reach zero, as the cash generation is almost same as cash usage (level of investment and total cost). While in the Cash Cow; it s the highest phase that you got profit in, as the level of investment is small relatively to the cash generated. 1. QUESTION MARKET OR PROBLEM CHILD : This is happening with product which is having low relative market share and high growth rate. It s typically for the new product. In this box the brand support is limited (if question mark product) or the brand is new (problem child). Sometimes QUESTION MARK Phase called Wild Cat.

46 The recommended strategy is depending on your budget, level of competitive investments from the competitors and market opportunities (to know if you are going to invest in your brand or not). 2. STAR: It s the product that is having a high market share in a high growth industry. It has potential for generating significant earnings currently & in future. For the products which are belonging to STAR, actually the level of expenditure are equal to the profit level, so the profit here is very small and may be zero, and this is happening because you need to invest more in your product to maintain this position. 3. CASHCOW: A High market share but in a mature slow growth market. Typically a well established product with consumer loyalty. It makes good contribution to overall profitability. Strategy: will vary, if market growth is strong, then holding strategy is good. If growth is weakling, then harvesting will be more sensible (cut marketing expenses & maximize short term cash flow). Actually we use the cash generated from CASHCOW products to invest in PROBLEM CHILD and START PRODUCTS. 4. DOG: Low market share, low growth. A Typical established product but losing consumer support. Strategy: consider diversification, unless cash flow is strong, in which case the product would be harvested in the short term prior to deletion from the product range.

47 What is a BCG Matrix Model (Boston Consultancy Group Matrix) used for? Imagine a company with 20% of its products are in the high growth markets (PROBLEM CHILD OR STAR), while 80% of its products are in the low growth markets (CASH COW or DOGS), then you can expect those 80% of the company products are going to be DOGS after couple of years, which results in high risk results if the company isn t going to look for new opportunities and new products. Please note that B.C.G Matrix (Boston Consultancy Group Matrix) is applicable for planning and analyzing companies, divisions, business units, product groups, and products, so it s very effective tool and is having a wide range of applications.

48 How to Make a BCG Matrix Model? In this article you will learn about: What BCG Matrix (Boston Consultancy Group Matrix) Model used for? Why Relative Market Share in BCG Matrix (Boston Consultancy Group Matrix)? Why relative to the biggest competitor in the market? What is the market growth rate in BCG Matrix Model? What is the BCG Matrix (Boston Consultancy Group Matrix) Analysis Diagram? How to Make a BCG Matrix Model (Boston Consultancy Group Matrix) Model? What is the normal sequence of any product in the B.C.G. Matrix? BCG Matrix; Boston Consultancy Group Matrix Model is a matrix that classifies products according to their cash usage and cash generation, using market growth and relative market share to categorize them in the form of a box matrix. The Relative Market share is the indicator of Cash Generation, which indicates the ability of your product to generate cash, while the market growth is indicator of Cash Usage; which is indicator of how much cash required investing in your product (product s cash requirements). What BCG Matrix (Boston Consultancy Group Matrix) Model used for? The BCG Matrix Model can be used to forecast the market position of your products in the next five years from now, so it s very helpful and effective tool.

49 Why Relative Market Share in BCG Matrix (Boston Consultancy Group Matrix)? Because it reflect your product position in the market, so relative market share means your market share relatively to the biggest competitor in the market. Why relative to the biggest competitor in the market? Because it reflect your product s market share from the best and biggest competitor market share, so we use the biggest competitor market share to be as standard for measuring your product performance or as KPI; Key Performance Indicator.

50 What is the market growth rate in BCG Matrix Model? It s the annual growth rate of the market (that you are promoting your product in) relative to the G.N.P. growth (Growth National Product). What is the BCG Matrix (Boston Consultancy Group Matrix) Analysis Diagram?

51 The previous 2 diagrams are representing the BCG Matrix for analyzing and planning your product performance against the competitors. Before I start to explain what the four boxes are shown above in the BCG Matrix, I am going to explain how to calculate the relative market share in BCG Matrix Model Diagram.

52 How to Make a BCG Matrix Model (Boston Consultancy Group Matrix) Model? It s the % of the market share of your product relative to the % of the market share of the biggest competitor in your market. Example: if your product market share is 10% and the biggest competitor s market share is 20%, then your relative market share is 10:20 which equal to 1:2, then we balance the equation again to make the competitor market share as 10%, so your relative market share will be 5:10 or 0.5:1. Please note that the VERTICAL Axis in the B.C.G. matrix is representing the biggest competitor s market share that you are comparing your product to. So it s common to make the vertical axis as 1 which equal to 10% of competitor market share, then you are comparing your product relatively to this %, to be more than 1 or less than 1. I will explain this more in the examples. What is the normal sequence of any product in the B.C.G. Matrix? Any new product is a problem child or question mark (as market penetration strategy), then with effective marketing strategies and tactics it become star. As the Market become mature (stable market) then your product become a Cash Cow, and finally your product becomes a Dog (declining phase of the PLC; Product Life Cycle).

53 BCG Matrix Examples (Case Study no.1) The BCG Matrix (Boston Consultancy Group Matrix) helps to analyze and plan the position of your products in the next five years. So it could be applied to Companies, Business Units, Group of Products and for individual products. The following case study is from my imagination to help you in understanding how to apply the B.C.G. Matrix very well. In this case study, I will create example to analyze your product position from competitors products. In another case study, I will apply the B.C.G. matrix on analyzing the company position for all its products. BCG Matrix Examples (Boston Consultancy Group Matrix Examples): Case Study: Let s say you have a company called SuperCola which is responsible for production of Cola Products to the end consumers. Your company product is also called SuperCola which have achieved 40% market share in MAT 2009 (for 12 months assessment), and 50% growth rate in the last 12 months. You have 5 competitors in your industry: CocaCola; which have achieved 30% market share for the last 12 months. Pepsi; which have achieved 10% market share for the last 12 months. BeCola; which have achieved 5% market share for the last 12 months. ColaHero; which have achieved 10% market share for the last 12 months. KokaKola; which have achieved 5% market share for the last 12 months. The Market Growth Rate is 20% of all Cola Products Market.

54 The growth rates of your five competitors are: CocaCola; 15% growth rate. Pepsi; 20% growth rate. BeCola; 40% growth rate. ColaHero; with 10% growth rate. KokaKola; with 10% growth rate. The answer of the above Case Study of BCG Matrix: 1. Who is the biggest competitor for you in market share? The highest competitor s market share is CocaCola Brand. Then we are going to compare all products market share to this CocaCola market share. We are going to put CocaCola Market Share on the vertical axis of the BCG Matrix. CocaCola Market Share is 30%, so as I explained in other articles about BCG Matrix, I am going to balance any product ration to be (any product Market share: 1 (which is the CocaCola Market Share)). Please note that the biggest competitor s market share for you doesn t mean that competitor should have higher market share than you, because the theory says The Biggest Competitor for you in Market Share and not said The Biggest Product Market Share among all products Don t worry I will explain more now: 2. Calculating the Relative Market share for each product: Relative Market share of SuperCola: Relative market share of SuperCola to CocaCola = 40% to 30% = 40:30 = 4:3. But as I said, we should make the biggest competitor market share = 1, so the Supercola Relative Market Share is 1.33 (for SuperCola): 1 (for CocaCola).

55 Let s do the same example for the other products: Relative market share for pepsi: Pepsi market share = 30%, then the relative market share of pepsi = 10:30 (to CocaCola Market share) = 1:3, and by doing the same exercise we did above, the relative market share of pepsi = 0.33: 1 (CocaCola Market share). Relative market share for Becola = 5:30, and after balance = 0.16: 1. Relative market share for ColaHero = 10: 30, and after balance = 0.33:1. Relative Market Share of KokaKola = 5:30, and after balance = 0.16: How to understand the growth rate for all of the products in BCG Matrix Model Diagram? Because this case study is applied to analyze your product position from competitors products (and not analyzing company products as products portfolio), so we will put the Market Growth on the horizontal axis and products growth rate will be drawn along the horizontal axis without making balance (the Relative Growth Rate isn t calculated in BCG Matrix). Example: The horizontal axis will be the market growth rate of all Coca Products, which is 20%. Then any product growth rate above the 20% (as SuperCola, and BeCola Brands) will be above the line (horizontal line) and any product growth rate below 20% (as CocaCola, CocaHero and KokaCola Brands) will be below the horizontal line. In this case; Pepsi Brand will be drawn on the horizontal line (because it s the same growth rate of the market = 20%). Let s put the previous data summarized: SuperCola= 1.33 Relative market share & 50% growth rate. CocaCola=1 market share (as biggest competitor market share) & 15% growth rate.

56 Pepsi=0.33 relative market share & 20% growth rate. BeCola=0.16 relative market share & 40% growth rate. ColaHero=0.33 relative market share & 10% growth rate. KokaKola=0.16 relative market share & 10% growth rate. Now here is the final draw of the B.C.G. Matrix for this Case Study: (BCG Matrix (Boston Consultancy Group Matrix) Example)

57 BCG Matrix Examples (Case Study no.2) How to use BCG Matrix for Planning and Analyzing Company Products (Products Portfolio) (More Advanced Case Study) In another Case Study (case study no.1) I was applying the BCG Matrix (Boston Consultancy Group Matrix) for Analyzing and predicting your product position from competitors product. In this case study we are going to take a case study for all of the company products, to analyze and predict the company position, strengths, and risks in the market(s) that promote the products in. Please note that the following case study is totally from my imaginations to help you to understand different context application techniques for BCG Matrix (Boston Consultancy Group Matrix): The Case Study: You are the Marketing Manager of Company called PharmaSolutions, which is a leading pharmaceutical company based in your country. Your Company is providing many products in different markets (Differentiation marketing Strategy). The following are the company products and each product representing a market segment: 1. HALOTHENIA: representing Anesthesia Market. 2. THIOPENTALIA: representing Anesthesia Market too. 3. CANCER DEFEATER: representing Oncology Market. 4. EPILEPTICO: representing epilepsy market. 5. CHOLESTROL CLEAR: representing hyperlipidaemic market.

58 The following are the market share, market growth of product: 1. For HALOTHENIA: market share = 10% (from Anesthesia Market), Anesthesia Market growth for = 50%. 2. For THIPENTALIA: market share = 40 %( from Anesthesia Market), Anesthesia Market growth = 50%. 3. For CANCER DEFEATER: market share = 60% (from Oncology Market), Oncology Market growth = 10%. 4. For EPIELPTICO: market share = 20% (from Antiepileptic Market), Antiepileptic Market growth = 5%. 5. For CHOLESTROL CLEAR: market share = 80% (from Hypercholestrolimia Market), Hypercholestrolimia Market growth = 3%. 6. The Total Pharmaceutical Market Growth Rate = 10%. Special notes: 1. Please take care that both HALOTHENIA and THIPENTALIA Products are belonging to one market; Anesthesia market. 2. Each product of the five products has its Product Growth Rate, but when you are analyzing all of the products for specific company, you should look for the market that you promoting your product in, rather than your product growth rate. I will clarify this through example: imagine you released a new Cola Product, and the growth rate of this product for the last 12 months was 40%, while the growth rate of the Cola Market (that include all Cola Products) was 2%, this isn t a good sign at all to invest in this product in the future, because the market is mature market and if your product grown yesterday, it won t grow tomorrow in this market. That s why we are looking for Growth rate for the market rather than the product (when we analyze all company products to evaluate, analyze and predict its current and future position).

59 The Answer of this Case Study (How to use B.C.G. Matrix for Planning and Analyzing Company Products) A. Calculating the biggest competitor market share to relative all company products to it: Actually this is the Trap that all marketers fall into, when you are analyzing all company products, then there is no ONE Single Biggest Competitor for all company products. So you need to identify what is the biggest competitor product in each market you are competing in, then identifying the market share of that biggest competitor for each market (for Anesthesia market, for Oncology market, for Antiepileptic market and for HyperCholestrolimic Market). 1. In Anesthesia Market: the biggest competitor is HYPOTHANE Product, and its Market Share is 30% (take care that the biggest competitor market share is the highest market share between competitors products not between competitors and you, which means you may be having higher or lower market share than the biggest competitor market share). 2. In Oncology Market: the biggest competitor is called OncoHero and its market share is 40%. 3. In Antiepileptic Market: the biggest competitor is called Lamicta and its market share is 40%. 4. In Hypercholestrolimia Market: the biggest competitor is called Simvastatin and its market share is 60%. B. Calculating the Relative Market Share for Each Product: As I mentioned in another article, the Market Share of each product should be balance to 10% which is representing 1 on the BCG vertical axis. We are going to calculate the relative market share for each product. Because we have different products in different markets, and each market has its biggest competitor, so we are going to calculate the relative market share for PHARMA SOLUTIONS Company s Products for each biggest competitor s market share in each segment the company promote in. I will illustrate and explain more as following:

60 1. Relative Market Share for HALOTHENIA: HALOTHENIA Market Share is 10%, its biggest competitor market share in anesthesia market is 30%, so the relative market share =10:30=1:3=0.33:1. 2. Relative Market Share for THIPENTALIA: THIPENTALIA Market Share is 40%, its biggest competitor market share in anesthesia market is 30%, so the relative market share for THIPENTALIA= 40:30=4:3:1.33:1. 3. Relative Market Share for CANCER DEFEATER: CANCER DEFEATER Market Share is 60%, its biggest competitor market share in Oncology Market is 40%, so the relative Market Share of CANCER DEFEATER=60:40=6:4= 1.5:1. 4. Relative Market Share for EPILEPTICO: EPILEPTICO Market Share is 20%, and its biggest competitor market share in antiepileptic market is 40%, so the relative market share of EPILEPTICO =20:40=2:4=0.5:1. 5. Relative Market Share for CHOLESTROL CLEAR: CHOLESTROL CLEAR Market Share is 80%, and its biggest competitor market share in Hypercholestorlimic market is 60%, so the relative market share of CHOLESTROL CLEAR=80:60=8:6=1.33:1.

61 C. Summarizing the final data will be used in the BCG Matrix (Boston Consultancy Group Matrix): For HALOTHENIA: Relative Market Share is 0.33, Market Growth is 50% (mentioned at the start of the case). For THIPENTALIA: relative market share is 1.33, market growth is 50%. For CANCER DEFEATER: relative market share is 1.5, market growth is 10%. For EPILEPTICO: relative market share is 0.5, market growth is 5%. For CHOLESTROL CLEAR: relative market share is 1.33, market growth is 3%. Total Pharmaceutical Market Growth is 10% (which will compare the market growth of all products to this one, so any product s market growth above 10% will be above the horizontal line, and any product s market growth below 10% will be below the horizontal line). The B.C.G. Matrix of this case study are easily to be finalized as follow:

62 This business case is representing all of the BCG Matrix (Boston Consultancy Group Matrix) Stages; we have here 1 product in PROBLEM CHILD Box; which is HALOTHENA, which needs a high investment to get higher market share, and the required cash for investment can be generated from the products belonging to STAR and CASH COW Boxes; as THIPENTALIA, CANCER DEFEATER and CHOLESTROL CLEAR. One Product is belong to CASH COW Phase; CHOLESTROL CLEAR, and this product starts to lose their customers loyalty and shift to DOG, so cutting the expenses (Budget), and use reinforcing messages to remind the old customers about their product benefits and reassure them about the company quality of Service. CHOLESTRO CLEAR is the product that generates the cash for the company, it s the product that helps in the new investment in other products, and it s the product that generates money for salaries, budget for other product and expenses of employees. One Product is between STAR and CASH COW Phases; CANCER DEFEATER, I see the investment in this product is depending on product growth rate and market growth rate of this product (which is Oncology Market in this case), so proper investment will help this product to be both growth driver and cash generator for the company. One Product in STAR Phase; THIPENTALIA, which is the growth driver and cash generator of the company at the same time, but the amout of profit generated from this product is small because there is high investment spent on this product to get that position (STAR position). THIPENTALIA is considered as the STRATEGIC Product for the Company. One Product is in DOG Phase; EPILEPTICO, so harvest the money before this product dies. Actually the overall of this company position is good in the market, the company is having one big Cash Generators, and 2 STAR Products; one of them is the Strategic Product for the company, one CHILD Product, and one Dog product which won t affect the company as much as cash generated from the other 4 products.

63 BCG Matrix template

64 What is a GE Matrix Analysis Diagram? (Diagram, Definitions, how many factors should be involved?) In this article you will learn about: How G.E. Matrix Diagram looks like? What is a GE Matrix (General Electric Matrix) Analysis Diagram? What is the definition of Market Attractiveness in GE Matrix (General Electric Matrix) Diagram? What is the Business Strengths/Position in GE Matrix (General Electric Matrix) Diagram? How many factors should be involved in assessing/analyzing the Market Attractiveness or Business Strengths? Who is the Analysis Team involved in GE Matrix Diagram? What is the importance of GE Matrix (General Electric Matrix) Model Analysis? Why the analysis of market attractiveness is important? Why the analysis of the Business Strengths/Company Position is important? GE Matrix (General Electric matrix) is the further development matrix for BCG Matrix (Boston Consultancy Group Matrix) where the GE Matrix is classifying the Product/Businesses to Market Attractiveness and Business Strengths, instead of Relative Market Share and Market Growth in BCG Matrix. How G.E. Matrix Diagram looks like? There are two forms of GE Matrix; one of them is segmenting the matrix to four boxes (as BCG Matrix), and the other one is segmenting the Matrix to Nine Boxes (more common approach).

65 What is a GE Matrix (General Electric Matrix) Analysis Diagram? The following diagrams are representing different forms of GE Matrix.

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67 What is the definition of Market Attractiveness in GE Matrix (General Electric Matrix) Diagram? It s the measure of the potential of the market place to yield growth in sales and profits. The market attractiveness should be independent of the organization s position in its markets. If the organization is having more than one product, each product promoted in a different market, and then we are talking about different Market Segment(s) that your organization promotes its product(s) in.

68 What is the Business Strengths/Position in GE Matrix (General Electric Matrix) Diagram? Business Strengths or Position is a measure of an organization s actual strengths in the market place (i.e. degree to which it can take advantage of a market opportunity). How many factors should be involved in assessing/analyzing the Market Attractiveness or Business Strengths? The total no. of factors in assessing market attractiveness or business strengths should be more than 5 or 6 factors in each one of them, otherwise the analysis process become more complicated and lose focus. Who is the Analysis Team involved in GE Matrix Diagram? The analysis team should be includes different people from different functions of the company; sales, marketing, finance, HR etc Please consider that the total number of team members shouldn t be more than Six Persons. What is the importance of GE Matrix (General Electric Matrix) Model Analysis? The GE Matrix is classifying the products business to two factors; Market Attractiveness and Business Strengths. Why the analysis of market attractiveness is important? Because you may be have very good and promising product. But the market segment that you are going to release this product in is fully mature and saturated market, or the market size is small; which reflect small investment opportunities for your product, or the market growth is declining which is an indicator that your product isn t growing to get you a revenue and profit in the future.

69 Why the analysis of the Business Strengths/Company Position is important? This part is very important too, because it reflects how the customer position and perceive your company, it tell you if you product, price, service or promotion is really satisfying customers needs and requirements or not.

70 Factors affecting Market Attractiveness in G.E. Matrix In this article I will tell you about all of the factors that can be used in assessment/analysis of market attractiveness in G.E. Matrix (General Electric Matrix), and what are the recommended and most common factors used there. A. What are the factors that can be used in assessing and analyzing the market attractiveness? 1. Market Factors: Size (money, units, or both). Size of key segments. Growth rate per year (total growth rate, and/or growth rate per segment). Diversity of the market. Sensitivity to price, service. Features and external factors. Cyclicality. Seasonality. Bargaining power of upstream suppliers. Bargaining power of downstream suppliers. 2. PESTEL Factors; Political, Economic, Social, Environmental, Technological, and Legal factors (Macro-environmental analysis) 3. Porter s Five Forces for analyzing the Micro-environment; Bargaining Power of Buyer, Bargaining Power of Supplier, Threat of entrants, threat of substitute and inter-rivalry among the competitors.

71 B. What are the recommended and most common factors used for assessing and analyzing the market attractiveness? 1. Growth Rate (for each targeted market segment). 2. Accessible market size: Market Size is the number of buyers and sellers in a particular market. This is especially important for companies that wish to launch a new product or service, since small markets are less likely to be able to support a high volume of goods. Large markets could bring in more competition. 3. Profit Potential: This is varying according to the industry that you promote your product in, there is subfactors for profit potentials assessment; Porter Five Forces; Bargaining Power of Buyer, Bargaining Power of Supplier, threat of substitute, threat of entrant and intensity of competition. For the pharmaceutical industry, the sub-factors are: Efficacy. Safety. Patient Convenience. Price potential. Competitive intensity. Cost of market entry.

72 Factors affecting Company Business Strengths or Position in G.E. Matrix The Company Business Strengths or Position, is the measure of an organization s actual strengths in the marketplace, and will differ according market/segment opportunities. The factors affecting company business strengths are usually a combination of an organization s relative strengths versus competitors in a connection with customerfacing needs, i.e. those things that are required by the customer. These factors can be summarized as: 1. Product requirements : Product requirements are describing how much your company investing in product quality, image, product differentiation, and how the customers perceive those issues as end user. 2. Price requirements: Your product s pricing strategy, and how the customers perceive your product price versus its quality. 3. Service requirements: What are the service delivery, quality of service delivery of our products to the customers (it s not a must end consumer, may be distributor, supplier, key account, or the end user), and how the customer perceive your service.

73 4. Promotion (Image) requirements: What is the company s reputation in front of the customer, this feedback is attained through marketing research to know how the customers perceive your company. In the pharmaceutical field, those factors became: Relative product strengths. Relative product safety. Relative product convenience. Relative cost effectiveness.

74 How to calculate the market attractiveness in G.E. Matrix To calculate the market attractiveness in the G.E. Matrix, you need to follow the following steps: 1. Identify the market segment(s) which your products belongs to. So if you have more than one segment, then you will need to do this exercise for each segment you have. 2. Identify the selection criteria for market attractiveness. In the previous article I explained what are the factors could be used, and what are the recommended & most common factors used. 3. The following table explains how to make these calculations: Factors (Selection criteria for Market attractiveness) Growth Rate Accessible Market Size Profit Potential Total Weight (the % depend on each segment/industry) Score Total Score = score x weight A. How to write the Weight? The Weight is the % of weight of the factor between the other factors; may be in F.M.C.G. Industry the Growth rate is representing 50% of market attractiveness, and may be in Car Industries the profit potential is representing 60% of the market attractiveness, those percentages are representing the % of weight in the market attractiveness.

75 B. How to calculate the Growth Rate Score: The Growth Rate here in G.E. Matrix is the Average Annual Growth Rate by that segment, this is called in some industries PPG, or Previous period Growth. e.g. (% of growth in 2009 over 2008, % of growth in 2008 over 2007). From IMS data, or the data published in journals, market researches, annual reports are representing the growth rate of this year than the last year. The Growth rate could be 5%, 10%, 20%, 50%, 80%, 100% (just examples). Actually the previous percentages put on a score from 0 to 10. You need to balance the % of the growth rate (in this year over last year) to put them in score from 0 to 10; 0 representing the lowest score, 10 representing the highest score. Q. Now, there is a common question; if the Growth Rate of the market (PPG %) was 10%, while the growth rate (PPG %) of the industry is 20%, then how can you score your market growth rate from 0 to 10?!! This is very important because you may be having 3 market segments: 1. Oncology market segment; its growth rate (PPG %) is 10%. 2. Anesthesia market segment, its growth rate (PPG %) is 3%. 3. CNS Market Segment, its PPG% is 30%. 4. The industry market segment PPG% is 20%. Let s enjoy the following calculations: follow the following steps: 1. We will make the industry PPG% as 100%, and then we make balance for calculating the growth rate for each segment relative to the industry.

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77 Now we have three market segments score: 5, 1.5, and 15. We will consider the market segment which scoring 1.5 as low score which scoring 5 as average score, and for which scoring 15 as high score. 2. Calculate the market size: Market Size is the number of buyers and sellers in a particular market. This is especially important for companies that wish to launch a new product or service, since small markets are less likely to be able to support a high volume of goods. Large markets could bring in more competition. So you and the other 5 persons included (as maximum no. ) will interpret each market size as small, average and large market sizes, which will be scored from 0 to 10. The CNS market size large (score more than 6 or 7 out of 10), but Anesthesia and oncology market sizes are small; scored less than 4.

78 3. Calculation of Profit Potential: To calculate the profit potential you will consider Porter s five forces for most of industries as follow: Sub-factors Weight (give by the analysis team) Score (from 0 as low, 5 as medium,and 10 as high) Weighted Score factor = weight x score Intensity of 50% (as example) = 5 (as example) 5 x 0.5 = 2.5 competition 0.5 Threat of substitute 10% (as example) = 8 (as example) 8 x 0.1 = Threat of new 10% (as 8 (as example) 0.8 entrants example)=0.1 Bargaining power of 20% (as 3 (as example) 0.6 suppliers example)=0.2 Bargaining Power of 10% (as 9 (as example) 0.9 Buyers example)=0.1 Profit Potential factor Score For the pharmaceutical industry: Sub-factors Weight Score (high is 10, medium is 5, and low is 0) efficacy 30% (as example) = 0.3 safety 25% (as example) =0.25 Unmet medical 10% (as example) needs =0.1 convenience 15% (as example) =0.15 Price potential 10% (as example) = 0.1 Competitive 5 %(as example) intensity =0.05 Cost of market 5% (as example) entry Profit Potential Factor Score =0.05 `100% = Weighted score factor (weight x score)

79 C. Finish the calculations of Market Attractiveness factors: I will write numbers as an examples to help you how the process in going on. For Oncology Market Segment: Factors (Selection criteria for Market attractiveness) Weight (the % depend on each segment/industry) Score (from 0 to 10) Growth Rate 40% (as example) = Accessible Market 20% (as example) = Size 0.2 Profit Potential 40% (as example) =0.4 Total market attractiveness weighted score 100% = Total Score = score x weight So in the oncology market (as an example) : from the previous calculations, we found that the total weighted market attractiveness factors score = 5.4, which means the market attractiveness for Oncology segment is AVERAGE. For Anesthesia Market, by doing the same examples (just examples), the market attractiveness = 3, which means the market is unattractive. For CNS Market, the market attractiveness total weighed score = 7 (for example), which means the market is attractive.

80 How to calculate Company Business Strengths for your company and competitors companies in G.E. Matrix? Before I start explaining how to calculate company business strengths, I recommend reading the article what are the factors affecting business strengths of any company. You can calculate the Business Strengths or position of your company and your main competitors too. There are four dimensions to calculate the Business Strengths of Any Company: 1. Critical Success Factors: what are the few things that any competition has to do right to succeed). 2. Weighting (how important is each of those critical success factors)? Score out of Score of each factor (from 0 as lowest, 5 as medium and 10 a high). 4. Total Weighted score = (Weight x Score) For your company and for your main competitors. Let s take the same example we took in How to calculate Market attractiveness factors article. In that article I was talking about three market segments as examples (anesthesia market, oncology market and CNS market) all of the three markets are in the pharmaceutical industries. Now the three main competitors companies for those three market segments are Company A, Company B and Company C. So the following example is to help you in understanding how you are going to calculate the factors of assessing and analyzing the Business Strengths of your company and competitors companies.

81 CSF Product. Weightin g 20 % = 0.2 Your Company Score Weighted Score (Score x Weight) Competitors Your Competitors Companies Compan Companies A B C y A B C 9 x 9 x 0.2 = 8 x x = 1.6 = 0.8 = Price. 10% = Service. 50% = Image. 20% = Total Weighted Score for all factors CSF= Critical Success Factors A, B, C= Company A, Company B, Company C. The Percentages mentioned is Weighting are just examples to illustrate the calculation process for you.

82 What is the recommended strategy to manage products in the G.E. Matrix? The objective of analyzing market attractiveness (for relevant market segment to your business) and business strengths of your company and future company; is to identify your current company position/strengths/weaknesses in each relevant market segment, and this is helping to reset the marketing objectives and strategies to change your company position in the matrix to more attractive segment (through market development growth strategy) and increasing your company business strength (product development, line extensions, investment capabilities and considering all of the factors affecting the business strengths of your company).

83 As you see from the following diagram, the analysis of your company strengths and competitors companies is helping you to understand your current position in the market (where are we now), and your future position in the market (where are we going) if you used the same strategies and objectives used to achieve your current position. And to change your company position to increase the business strengths, or looking for more attractive market segment (through market development), then you need to reset your marketing objectives, and marketing strategies for the company as a whole, and for each product as detailed analysis to make your organization position step forward. Actually the normal forecast for your marketing objective is used to be planned on three years from now, to predict where your organization is going and how to change this position in the market, the following diagram is helping you to understand more:

84 The above matrix is representing the SMART objectives and strategies that should organization plan to move from 1, to 2, to 3. Actually it s rare for the organization to move on the horizontal access, because the market attractiveness is irrelevant to organization position in the market, but sometimes it happens when the organization enter a new market segments (as market development growth strategies). When the organization release a new product (which will generate profit and money in the next 3 years) so the organization will move vertically, and that product will be launched in new market segment which is attractive, so we can expect that the organization will move towards more attractive market segment in the next three years.

85 Now, I would like to summarize for you what are the recommended strategies and tactics that should be adapted to increase your company business strength or position in the relevant market segment(s), this recommendation is summarized in the following diagram, to manage each box in the G.E. Matrix independently:

86 GE Matrix example (Case Study) Case Study for Assessing Market Attractiveness and Business Strengths in G.E. Matrix I will explain the case study that have been used in two articles I mentioned before (How to calculate the factors for assessment/analysis of Market Attractiveness), and (how to Calculate the factors for assessment/analysis of Business Strengths) articles. So it s highly recommended to read those two articles before you start to apply the case study, because a big parts of this case study has been applied in the those two articles. Read the following two notes first: 1. The objective of this case study is to help you to understand how to make GE Matrix, how to interpret the data you calculated before, and how to utilize the GE matrix is analyzing and predicting company position and products performance in the future. 2. In this case study; it s not important to know if the weight is 20 or 50, or the score is 2 or 9, the objective of this case is to help you to understand how to calculate, interpret the data you got from these calculations into GE Matrix. 3. I will give you some highlights about the case study: There are three market segments that you products are competing in; Oncology market, Anesthesia market and CNS market. There are three main competitors companies for you; company A, company B, and Company C.

87 Highlights about Market Attractiveness factors in this case study: For Oncology Market Segment: Factors (Selection criteria for Market attractiveness) Weight (the % depend on each segment/industry) Score (from 0 to 10) Growth Rate 40% (as example) = Accessible Market 20% (as example) = Size 0.2 Profit Potential 40% (as example) =0.4 Total market attractiveness weighted score 100% = Total Score = score x weight So in the oncology market (as an example) : from the previous calculations, we found that the total weighted market attractiveness factors score = 5.4, which means the market attractiveness for Oncology segment is AVERAGE. For Anesthesia Market, by doing the same examples (just examples), the market attractiveness = 3, which means the market is unattractive. For CNS Market, the market attractiveness total weighed score = 7 (for example), which means the market is attractive.

88 Highlights about factors for assessment/analysis of Business Strengths: CSF Product Weightin g 20 % = 0.2 Your Compan y Score Weighted Score (Score x Weight) Competitors Your Competitors Companies Compan Companies A B C y A B C 9 x 9 x 0.2 = 8 x x = 1.6 = 0.8 = Price. 10% = Service. 50% = Image. 20% = Total Weighted Score for all factors Summary of the calculations for Market Attractiveness and Business Strengths: Market Attractiveness Market Segments Total Weighted factor score Oncology 5.4 Anesthesia 3 CNS 7 Business Strengths/Position Company Total Weighted factor score Your Company 7.4 Company A 3.6 Company B 5.2 Company C 2.4

89 Here is the GE Matrix as final interpretation:

90 GE Matrix template

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93 Stages of new product development process in seven steps In this article you will learn: what are the key steps to make a new product development (product development process); starting with idea generation and ending with launching your product in the marketplace. Also this article learn you about the importance of following the steps as its, otherwise serious business problems happens to your company. New Product Development Process or key steps:

94 1. Idea Generation (Stages of new product development process in seven steps): The idea generation step is simply to generate basic idea or ideas to make a new product development for your business. What should you consider when starting Idea Generation Step? You need to consider how to generate ideas to affect your consumer psychology in a new way, so you need to generate ideas about your Brand identity, Brand loyalty, Brand Equity, Brand Association, and Brand Strategies. So when you and your team start to brainstorm and generating ideas about each part that can affect the customer psychology in a positive way. What are the techniques recommended to make idea generation step? Actually this is very important, because you may think to invest millions of dollars in R&D Department (Research and Development Department) in your company, while you can easily understand the dynamics of your customers need through one of marketing research techniques. So the suggested techniques are: 1. Marketing Research Methodologies: It s preferred to adapt the Qualitative methodology to understand your customers needs. Qualitative marketing research as Focus Groups and In Depth Interviews, also you can consider to use Projective Techniques as very effective approach to reveal the unconscious content of your respondents. 2. Observation techniques: as Ethnography, Mystery shopping (for your products and competitors products). 3. SWOT Analysis: to identify where the opportunities and threats in your marketplace are. 4. Feedback: your employees, internal records feedback. 5. R&D Department.

95 2. Ideas Screening (Stages of new product development process in seven steps): Ideas screening simply means to know which idea you can implement, or develop to your products. To make Ideas Screening Step, you need to implement the following approaches: 1. The effect of your idea on the Micro-Environmental Changes in your business (Business, Customers, Suppliers, Competitors, Stakeholders, Porter s Five Forces, and on your SWOT Analysis). 2. Predicting the positive impact of this idea on your business: from Financial and non financial points of view. 3. Predicting the changes in the customers Psychology; customers perception, behavior and attitude, these results in purchasing your products on the longterm. In the Ideas Screening, You should know which ideas you will select to which Product Development Type, because you may be having 2 ideas but each one is supporting different product development type. Read Types Of New Product Development Article. 3. Concept Testing (Stages of new product development process in seven steps): In this step, you are testing the newly selected ideas added to your Brand identity, Brand loyalty, Brand Equity, Brand Association, and Brand Strategies on your existing (as 1 st priority) or newly target segment to test, monitor, and assess your customers psychology; perception mainly to your ideas. How to make concept testing? The ideal approach for testing a concept is Qualitative Marketing Researches (Focus Group and/or In-Depth Interview) using Projective Techniques to understand the

96 customer s psychology about your new ideas. Also you can use other Quantitative Marketing Research Techniques (as Questionnaires or, Surveys) but it s least preferable techniques when you are testing a concept with customers; unless you need a high pool of sample, then you go for quantitative marketing researches as Questionnaires. 4. Business and Financial Analysis (Stages of new product development process in seven steps): In this step you are estimating the business and financial aspects of your new developed products on your customers, and on your company. So you are estimating your profitability, market share, market growth, and the changes in the micro-environmental factors on your existing or new target segment. And you are estimating the effect of your price on your target segment, assessing your price from competitors price, and estimating your customers purchasing frequency for your product even if there is worldwide economic crises (which means you should consider all of the Macro and Micro Environmental factors of your newly developed concept) before you start Product Development step. 5. Product Development (Stages of new product development process in seven steps): In this step you are converting your Product Idea to Physical form (prototype). In this step your final end product is ONLY Prototype, which means your product won t go further Prototype form unless you move to step no. seven (Test Marketing). This step is including your product packaging, marketing strategies (competitive advantages strategy, Growth Strategy, Market Positioning Strategy, Segmentation, Targeting and Positioning), determining your marketing mix (Branding, Marketing Communication, Product Mix, Price, Place, People, Physical Evidence and Process). This step is the most expensive stage of New Product Development Process, that s why it comes after very important and well selected four steps.

97 6. Test Marketing (Stages of new product development process in seven steps): Test marketing means you are testing your product performance, and this is happening through placing your product (after being developed) in a small geographical area of your target segment, your product will be placed for sale, you will be capable to monitor your product performance and assessing the real customer perception, behavior or attitude towards your product. What is the Objective of Test Marketing? Evaluation of your product sales in very small geographical area of your target segment, which reflect where your product sales will go on in the future (it s not a must but may be as an indicator). Evaluation of real customers perception of your Brand identity, Brand value, Brand equity, and Brand strategy. This can be done through Mystery Shopping (personal or mechanical) and/or Qualitative Marketing Research (focus groups, In-Depth Interview) using projective techniques on customers after using your product; to receive their feedback and understanding their perception about your product positioning. 7. Commercialization Or Product Launch (Stages of new product development process in seven steps): This step is the final step in your Newly Product Development Process; by which you are implementing your full marketing plan, and launching your product in the marketplace to be available for your target segment. Once this step comes, you can t modify, change on your product (because your product passes to the production stage in this step and become commercialized product).

98 What are new product development process types? In this article you will learn: What are the five basic approaches, techniques or methodologies to develop your products; Product Development Types, and what are the suggested strategies to implement those approaches in developing your product. What are Product Development Process Types?

99 1. New World/Innovative: New world or innovative Product Development means you are creating a new market that hasn t been founded before. To achieve a new world or innovative Product Development you need to: - Focus on technical development of your product or the other products existing in the market, so you are creating a new technology that makes your product unique and different. - Your are making a new product revolution in existing or new market (creating new market); so you are going to create new customers need didn t exist before, and your target segment may be existing or totally new market. Examples of New world / Innovative Product Development: ipod, or Home Robots. 2. New Product Lines or Additions: There are two product development strategies to make a new product lines or additions: 1.1. New To Provider: you are creating a new product for the same brand, for another marketplace which is different to your existing market place. Example: CocaCola Brand for Shoes Sports, another product line (Shoes Sport) of the existing brand, but for another marketplace opposed to the existing ones (for sports industry) New Product lines for your existing product but for another target segment: Example: CocaCola ZERO, PEPSI Max. 3. Product Revisions/Replacements: This strategy is used to replace and/or to upgrade your existing products. The objective: is to develop your products to be adapted with the technology updates,

100 to develop your price to be adapted with the economic status of your customers (e.g. nowadays in the economic crisis), upgrading your product to protect the environment (to prevent the offensive actions of the environmental groups) etc. So it includes all of the strategies and approaches you can develop to adapt the macro-environmental changes in your country (PESTEL). 4. Product Repositioning: I will tell you a story of how product positioning can change the customers perception, behavior and finally their attitude. Apple Logo Design In 1976, Apple first logo was representing Small shaping sit under the tree with the Frame of Computer Co. as the frame of the Picture. But this product positioning was too Complex with the customers and it was hard To make the customers remember the logo Of the brand. So they developed the 2 nd logo In In 1976, Apple designed the 2 nd logo after Their first logo positioning had failed, so they Designed a new logo Bit Mark, and changed The color from monochrome to rainbow colored Logo. The logo was representing the old Religious story of Adam and Eve, which is

101 Reflecting a product positioning for making the customers believing (perusing) in their dreams. - At the 1 st time, the customers didn t understand all of those meanings of the brand identity, but after a period of time, the brand identity of Apple became the most simple, remarkable and retained symbol of all logos. How to make Product Development through Repositioning? To reposition your product, you need to change your marketing strategy, your brand identity, and the Marketing Communication Mix (tools, media and messages). These three approaches are the keys to change your product positioning, which results in changing your customers perception, and finally changing their purchasing behavior and attitude. Considering changing your marketing strategy: either you need to uncover new uses, benefits or applications of your brand (new product benefits) or to position your product for new market segment (reset your segmentation and targeting strategies). Considering your brand identity: as I mentioned in Apple Story, to change the brand identity; you need to work on your brand name, personality, design, color, typography, quality, overall identity, slogan etc Considering the marketing communication mix; you need to select which appropriate tool, with the right media and message to reposition your brand for the right target segment. Also you can use source credibility (opinion leaders and/or opinion formers) to support your brand. (To understand marketing communication mix, you need to read the related chapter to marketing communication mix). 5. Imitative Products: The imitative products are copycat products produced by others, but where there is a market for many alternatives and competing versions. Example: the pharmaceutical market; Generics Companies which make products contain the same active ingredients for a well known brand but with fewer prices. Yes, they will get a business and revenue, but you will never be a Market Leader if you are launching copycat products.

102 What is a new product development process steps used for? In this article you will learn: Why Companies and Individuals need to make a New Product Development for their current products? The importance of New Product Development as Growth Strategy (Ansoff s Matrix) for your company/organization. The importance of New Product Development to Extend Your PLC.; Product Life Cycle. Why Companies and Individuals need to go through A New Product Development for their current products? Because the customers needs are always changing in a dynamic way; they get affected by political, economic, social, technological, environmental and legal factors (check PESTEL article), which make their needs changes according to macro and micro environmental factors, which finally results in dissatisfaction of your current products and switching to competitors brands. Why the New Product Development is important? I will explain my answer through 2 dimensions; when we need the New Product Development as Strategy? And when we can decide to make a New Product Development for my Product(s)?

103 When need the New Product Development as Strategy? Companies and Individuals are using the New Product Development Process as Growth Strategy (Ansoff s Matrix) for their current product, which means the objective of the new product development process is to increase the growth rate of your company, increasing your business and finally your revenue on the long term. The following diagram explains the Growth Strategies; Ansoff s Matrix: For more information about Ansoff s Matrix or Growth Strategies; check this article (Growth Strategies; Ansoff s Matrix).

104 When can I decide to make a New Product Development for my Product(s)? You need to make new product development process for your product when your product stage in the PLC (Product Life Cycle) is in the Maturity Stage. Before I start to explain when we use the new product development process to extend the maturity stage, I want you to understand what is the PLC and what are the Product Life Cycle stages. the following diagram is explaining what are the recommended strategies to extend your product life cycle (PLC) when your product became in the maturity stage:

105 So when your product became in the maturity stage, you should start the following strategies in sequence: 1. Line Extension (a type of Product Development). 2. Market Development (so you don t go for other product development types after line extension). 3. New Product Development (all of the types of Product Development Process except Line Extension). 4. Diversification (the least recommended strategy). The previous sequence is extremely important because you should start by Market Penetration, then Line Extension (in the 1 st maturity stage of your PLC), then go for Market Development (in the 2 nd time your product fall in the maturity stage again), then go for New Product Development Strategies (when your product start to decline), and finally go for Diversification (when your product market share die).

106 What is a New Product Adoption Process? You will learn in this article: Definition of Product Adoption Process. Stages of Product Adoption Process. What is the Product Adoption Process? It s a five mental process (stages) that all prospecting customers pass through; starting from being prospect, and ends by being loyal customer or non-customer at all (rejection process). Stages of Product Adoption Process: Each prospecting customer should start from awareness stage and ends by adopting or rejection your product (Adoption or Rejection Stage). 1. Awareness Stage: In this stage, the prospecting customer is come to know more about your product but lacking sufficient information.

107 2. Interest Stage: The customer is trying to get more information about your product. 3. Evaluation Stage: The customer is evaluating your product benefits against his/her needs, and against the other available products from your competitors. 4. Trail Stage: The customer makes his first purchase for your product, to see whether your product is useful or useless for him. Some companies are offering a sample of your product; as pharmaceutical products, pages from book authors, free articles, one month trial period of your services or products to let the customer guarantee that your product or service is the best choice for him or not. 5. Adoption/Rejection Stage: In this stage, your customer decides to adopt your product (as an advocate) or look for something else from your competitors. Adoption/Rejection stage is reflecting whether the customer is going to help you in disseminating a positive or negative word of mouth. Because the satisfying and loyal customers are willing to talk about their favorite products and may be recommending your products to everyone they know. In Adoption/Rejection Stage: the customer move from Cognitive Part of Your Brand (thinking about your product value and benefits) to Affective Part Of Your Brand (the customer feels that you brand is reflecting in a positive way of increasing his quality of life, or being associated emotionally to your brand), and finally move to Conation Part Of Your Brand (encouraging the customer to Purchase Your Product and being a Brand Advocate).

108 Consumer Behavior in a New Product Adoption Process In this article you will learn: What is the Product Adoption Process? What the different types of consumers/customers are at different stages of Product Adoption Process. What is the Product Adoption Process? It s a five mental process (stages) that all prospecting customers pass through; starting from being prospect, and ends by being loyal customer or non-customer at all (rejection process). Read the full article about Stages Of Product Adoption Process.

109 What are the different types of consumers/customers in Product Adoption Process? 1. Innovators: Innovators are the type of consumer that is always looking for what is new in the market. They are having a high purchasing power to buy high value product and of high prices too. Innovators shouldn t be the rich customers; they are the customers who are having the passion to know what is new in the field of their interest. Innovators are people who are initiative to ask about your product before its release in the market. 2. Early Adopters: They are the Key Opinion Leaders, and individuals who are purchasing products when it s become available in the market from short period of time. This target segment is coming after innovators customers. Early Adopters became a Word Of Mouth when they adapt your product early, that s why they called Early Adopters.

110 3. Early Majority: This segment is including most of your target segment. Those customers are purchasing your product when they feel that your product is matching their needs, and thought about your product values and benefits. 4. Late Majority: They are the customers who aren t updated about the technology or the new products available in the market. Simply they are purchasing your product late because they see that your product isn t essential to their needs when they see you product for the 1 st time. To target this group, you need to consider the Decision Buying Process Of those segment, they should ensure that they are making the right decision after referral from their friends, colleagues and most of the people around them in the community. 5. Laggards: They are the consumers that are having a problem in the decision buying process; they are late because they can t take a decision in a short period of time. Also they are the customers whom their purchasing power is not enough to purchase your product, so they won t purchase your product unless it became as a life essential factor for their living.

111 How to make a new product adoption with your customers? The objective of this article is to help you to understand what the customers needs are in order to make them adopting your product in their minds and hearts. To make a new product adoption with your customers, you need to apply the following five secrets:

112 1. Category Needs: Do you know how to choose your target segment? Category needs is the perception and understanding of your target segment's actual needs. So when you indentify your target segment, understand the actual customer needs of each target segment, then select the appropriate communication tool to the needs of each target segment you select. 2. Brand Awareness: The ability of the consumer to identify and associate with a particular brand and differentiate from another brand. So when your brand became indentified by your customer and differentiated from another brands, then you could say that you made brand awareness. 3. Brand Attitude: This relates to consumer s particular observations, views, and perceptions of the brand-cognitive beliefs. To measure your customer brand attitude, you need to observe your consumer behavior toward your product, the frequency of purchasing your product, the associate product he buys when he looks for your product. Does your product bring happiness and joy to his life? You can measure all of the previous factors through knowing your customer profile which one of the important objectives CRM (Customer relationship management). 4. Brand Purchase Intention: The brand purchase intention means if the customer bought your brand by intention or wasn't intended to buy your product.

113 Let explain the Brand Purchase Intention by example: If you go to supermarket to buy a FMCG product, and you was looking for fruit juice. If you are loyal to certain brand (e.g. Brand X), and you like the brand emotionally and convinced that this brand is the best fruit juice in the market, then this is will be shown in repurchasing the brand you like many times again and again, till if you go to the supermarket and didn't find the Brand X, you won't buy any other fruit juice product, and keep looking for Brand X in all supermarkets till you find it. If you (as a customer) didn't like Brand X very much, and the Brand X wasn't have a competitive advantage than any other competitor, definitely, if you didn't find brand X in the super market, you will buy any other fruit juice product, because you didn't like brand X by your heart and mind. So each time you go to the supermarket, you won't be intended to purchase Brand X, and if you buy it, it doesn't mean that you love the product (you as marketer can know this through a marketing research). Finally the brand purchase intention means if the customer intended to buy a certain brand, this is increasing his loyalty, frequency of purchase and finally he became adopting your product. 5. Purchase Facilitation: Purchase facilitation means how to facilitate (to help) the customer to purchase your product. This is happening through providing your products in the right price and right place. Also to make your product nearest to each customer activates. Purchase facilitation also includes the method of paying your product, are you accepting cash? What about credit card? What about online payment? You can consider all of the possible ways to facilitate your product to all customers. If you consider all the five factors in making product adoption, you will make your customer loyal and adopting your product to the extremes.

114 Product Adoption Process as Price Determinant In other articles I mentioned before; I was explaining: what is the Product Adoption Process? What is the consumers classification at Product Adoption Process? How to make a new product adoption with your customers? In this article I am explaining the Product Adoption Process as Price Determinant: According to Consumers Classification at Product Adoption Process; there are five types of consumers; Innovators, early adaptors, early majority, late majority, and laggards. Kindly observe the red curve which is representing how is consumers are responding to your pricing strategies on the behalf of Product Adoption Process.

115 You can understand from the above diagram that Innovators are the number one target segment of your customers or consumers who are ready to accept Skimming Strategy as pricing strategy for your products or services, and these acceptance decrease with early adopters; who are standing as a second priority, then early majority class, late majority class, and finally the laggards who are the most resistant consumers to the skimming pricing strategy, and those class of consumers are getting affected by Cost Leadership Marketing Strategy rather than other marketing strategies.