Traditional business cycle analysis model

First, the lead-in period: sales growth tends to slow down. Because of the small sales volume and high distribution and promotion expenses, the company will lose money or make low profits. At this stage, the market is not ready for product improvement and update, so only a few competitors are producing basic models of products. The company sells to the most urgent buyers, usually the high-income class.

(A) the introduction of marketing strategy:

1. Quick skimming strategy: launch new products at high price and promotion level. The company takes high prices in order to make as much profit as possible in each unit of sales, and at the same time, it uses high-level promotional activities to accelerate market penetration. The main conditions for adopting this strategy are:

(1) Most people in the potential market have low awareness of the products;

(2) people who know have a strong desire to buy and have the ability;

(3) Faced with potential competition, the company tries to establish brand preference.

2. Slow skimming strategy: that is, launch new products with high prices and low promotions. Doing so can get more gross profit, reduce marketing expenses, and hopefully get the maximum profit from the market. The assumption of adopting this strategy is:

(1) The market scale is limited;

(2) Most markets already know this product;

(3) The buyer is willing to pay a high price;

(4) Potential competition is not imminent.

3. Rapid penetration strategy: introducing new products with low price and high promotion level. Doing so can bring the fastest market penetration and the highest market share to the company. The assumptions of adopting this strategy are: (1) the market is large; (2) The market does not understand the products; (3) Most buyers are price-sensitive; (4) The potential competition is very strong; (5) With the expansion of production scale and the accumulation of manufacturing experience, the company's unit manufacturing cost will be reduced.

4. Slow penetration strategy: launch new products at low price and low promotion level. Low prices allow the market to quickly accept products; At the same time, low cost can achieve more net profit. The assumption of adopting this strategy is that (1) the market is large; (2) The products are well-known in the market; (3) The market is quite sensitive to price; (4) There are some potential competitions.

Growth period: the growth period is marked by rapid sales growth. Due to the attraction of large-scale production and profit opportunities, new competitors enter the market, while the number of distribution outlets increases, and the price of products remains unchanged or slightly decreases. With the rapid growth of sales, the proportion of promotion expenses to sales is decreasing. Because the promotion cost is shared by a large number of sales, the profit increases, while the unit manufacturing cost decreases faster than the price.

Second, the growth stage of marketing strategy:

The company improves the quality of its products and increases the functions and styles of its new products.

The company entered a new market segment.

The company entered a new sales channel.

The goal of company advertising has shifted from building product awareness to persuading consumers to accept and buy products.

The company reduces the price at an appropriate time to attract another level of price-sensitive buyers, who demand low-priced supply.

The implementation of these market expansion strategies will greatly strengthen the company's competitive position, but it will also increase costs. In the growth stage, the company is faced with the choice of high market share or current high profit. Giving up the latter can gain a dominant position in the market, and the profit is expected to be compensated in the next stage.

Third, the mature stage: the sales growth rate of a product will slow down after reaching a certain point and enter a relatively mature stage. The duration of this stage is generally longer than the first two stages, and most products are in the mature stage of life cycle.

The mature stage can be divided into three periods.

The first period is maturity. At this time, due to the saturation of distribution, sales growth began to decline. Although some backward buyers will still enter the market, there are no new distribution channels to open up.

The second period is stable maturity, because the market is saturated, the sales growth and population growth are at the same level, most potential consumers have used the product, and future sales are inhibited by population growth and replacement demand. The third period is the mature period in recession, when the absolute level of sales begins to decline and customers begin to turn to other products and substitutes.

The slowdown in sales growth has caused overcapacity in the entire industry, which in turn has led to increased competition.

Marketing strategy in mature stage: divided into market improvement, product improvement and marketing mix improvement.

Market promotion: expand the market for its brand with two factors that constitute sales volume, leading to opportunities: sales volume = number of brand users × usage rate of each user.

There are three ways to expand the number of brand users, namely, changing non-users, entering new market segments and winning customers from competitors; We can increase the number of products by increasing the utilization rate of existing brand users, that is, increase the number of times of use, increase the amount of use in each occasion, and develop new and more kinds of uses of existing products.

Product improvement: Managers should also strive to improve the characteristics of products so that they can attract new customers or increase the usage of existing customers to increase sales. The re-listing of products can take several forms. 1. Quality improvement 2. Functional improvement 3. Style improvement

Marketing mix improvement: the product manager stimulates sales by improving one or several elements in the marketing mix. It mainly includes price, distribution, advertising, promotion, personnel promotion, service and so on.

Fourth, the recession stage: most product forms and brand sales will eventually decline. This may be a slow process.

Marketing strategy in recession: a company faces many tasks and decisions when dealing with its aging products.

1. Identify weak products. Establish a system to identify defective products. The company appointed a product review committee composed of marketing, manufacturing and financial representatives to develop a system to identify weak products. According to the information provided by various products, use computer programs to analyze and identify suspicious products.

2. Develop marketing strategy. Companies must decide when and how to stick to it in the market. Harrigan distinguished five recession strategies faced by the company: increasing company investment; Maintain the existing investment level under the condition that the uncertain factors in the industry have not been solved; Selectively reduce investment; Increase profits and recover cash quickly; Dispose of assets and give up business.

3. Give up the decision. When the company decides to give up a product, it faces further decisions. First, it can sell or transfer products to others, or abandon them completely. Secondly, it must decide whether to give up the product quickly or slowly. Third, it must decide how much spare parts inventory and maintenance services to keep for its former customers.