Product Life Cycle
John’s company is at the declining stage of the product life cycle. The firm has encountered an approximately 20% decline in the business operations, with a sequential decline in the market share. The product shrinks during the declining stage, as customers opt for substitutes. The shrinkage may be caused by market saturation, which reduces a company’s market share. Companies can overcome the declining stage by opting for cheaper production methods, and changing the market segments.
Reasons for Downturn
One of the possible reasons for John’s Company to fail is the failure to incorporate modern marketing techniques. It is essential to note that customers’ preferences change on a daily basis; the firm has not improved its marketing strategies, which in turn has contributed to its downturn. Effective marketing should incorporate research programs to identify the customers’ demands. The frequent research projects enable a firm to collect useful information useful for product development. interviewing new customers can help the company o identify new trends in he market segments.
The presence of substitutes in the market may have caused the decline in the company’s market share. Competitors tend to use cheaper production methods, which help to reduce their overall costs. John on the other hand, may incur additional costs in producing similar products, which reduces its profitability margins. Extensive usage of traditional marketing plans may have played a significant role in reducing the company’s market share. The emergence of new trends in the business market has led to the diversification of marketing tactics (Tueth, 2010). Competitors seek to improve their strategies to attract new customers. The availability of several firms competing for a small market segment may hinder a company from attaining maximum benefits.
The management team may have failed in incorporating the stakeholders into the decision-making process. Excluding the suppliers, employees, shareholders, and customers into the decision-making process hinders the development of healthy business relationships, which contributes to a firm’s downfall (Campbell, & Craig, 2005). Teamwork is an integral element in enhancing a company’s success. The involvement of stakeholders in the decision-making process can help the management to learn new tactics used in marketing. The customers can acquire a sense of belonging to the company’s activities, which is useful in increasing customers’ loyalty.
Recommendation
The firm should seek to collect adequate information from the target market; this measure helps the company to develop its product to suit the prevailing demands. The informative research can enable John to identify the challenges in the company’s marketing techniques. The collected information can help to identify the customers’ demands; the company can use it to tailor its products.
The firm’s target market is based on the young people in the society. the target market may be changing, as there is development in the food industry. The young people have a wide variety of junk food to select from, which hinders the company from increasing its sales on potato chips. John should seek to improve the firm’s marketing strategies, for instance, by segmenting the market in accordance with the clients’ preferences. Improving the promotion strategies can help to attract new customers.
Johns should opt for another market segment. The geographical segmentation aspect can help the company achieve its objectives; the young people in the society provide a suitable target market for the potato chips. Geographical segmentation can help to improve the marketing tactics; setting the outlets in major cities, where there are many young people can help the company to expand its market share. The company can improve its performance by using innovative techniques in the promotion strategies.
Market Penetration Strategy
The geographical segmentation requires comprehensive penetration strategies. The company should first learn the competitors’ tactics before implanting its strategies. Adequate market knowledge will enable John’s to attract the young population in major cities, which will improve its overall sales, and enable the company to expand its market share. The product development strategy can involve improving the quality of potato chips, for instance by adding flavors or offering an after-sale service. The company can embark on offering a free drink to the customers who buy two or more potato chips packets.
Establishing the company’s outlet on a strategic zone can help the company to increase the number of potential buyers. According to Tueth (2010), it is essential to consider the pricing strategy when developing a declining product. Reducing the price can enable the company to attract new customers into the premise. The management team can offer interview sessions to the customers; this measure will help them to acquire useful information, required for product development.
SWOT ANALYSIS on the Overall Strategy
The product development strategy will enable the company to regain its initial market share. It, however, involves several steps, which may be costly to the firm. The SWOT analysis presents the factors that the management team should consider when making critical decisions for the firm.
Johns Company is at a declining stage in the product life cycle. Efforts to regain the market popularity will entail segmenting the market geographical to attract the targeted segments. The firm has existed in the market for 25 years, which has enabled it to build a reputable image. Improving its marketing tactics will help it to regain its initial position in the market. The segmentation and product development strategies will be time consuming and costly to the firm, but the long-term results will be beneficial. Failure to follow appropriate steps in the segmentation process may lead to ineffective implementation of the formulated strategies. The company faces increased competition from substitutes; it, therefore, is essential to restructure the pricing system. The management team should be willing to make necessary changes; this measure will enable the company recover and retain its relevance in the competitive market.
References
Tueth, M. 2010. Fundamentals of sustainable business: A guide for the next 100 years. Hackensack, NJ: World Scientific.
Campbell, D. J., & Craig, T. 2005. Organizations and the business environment. Amsterdam: Elsevier Butterworth-Heinemann.
