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Figure 11.3: Sales and Profit Life Cycles

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Presentation on theme: "Figure 11.3: Sales and Profit Life Cycles"— Presentation transcript:

1 Figure 11.3: Sales and Profit Life Cycles

2 Product Life-Cycle Marketing Strategies

3 Issues in Collecting and Using Information #6
Invasion of customer privacy e.g., use of medical databases to sell healthcare products Information and ethics e.g., guidelines for sharing of confidential information TM 5-13 McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

4 Bargaining Power of Buyers
Concentrated or large volume sales Purchased products are a significant fraction of buyer’s costs Products are standard or undifferentiated There are few switching costs Low profits - pressure on suppliers Buyers pose threat of backward integration Buyer has full information

5 Bargaining Power of Suppliers
Concentrated suppliers, fragmented buyers Little substitution threat Customer is not an important buyer Supplier’s product is important input High buyer switching costs Suppliers pose threat of forward integration Government - defense, timber, regulation

6 Rivalry: Price competition, advertising, product introductions, customer service..
Numerous Competitors: More mavericks Slow Industry Growth High Fixed or Storage Costs (Excess capacity often leads to price wars) Lack of Differentiation = commodity Foreign Competitors High Strategic Stakes High Exit Costs

7 Likelihood of retaliation to entry
History of retaliation Established firms with substantial resources such as cash, borrowing capacity, excess productive capacity, distribution leverage Established firms with illiquid industry assets Slow industry growth - can’t absorb new competition.

8 Figure 9-2: Barriers and Profitability

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