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Different Phases of Product Life Cycle

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MBA 408 Assignment 2

Question 3

  1. Distinguish between channels of distribution for consumer product & industrial Product

Distribution channel are the core of a marketing strategies that enables entities to expand indefinitely and generate increased revenue over the time. The distribution is built up by coordinating the product, promotion, price and placement. Business to Business (B2B) and Business to Consumer (B2C) firms can sell their products through a sole distribution channel of over multiple channels that may consists of the distributor, internet, catalogue, and the sales team, value added reseller, consultant, dealer, retailer and finally the producer’s representative. The distribution channel for industrial products is shorter than that of a consumer product because there are few industrial customers concentrated at a very few locations.

Consumer Channels vs. Industrial Channels

Consumer channels

Producers may either reach the consumers directly or indirectly. Direct approach refers to the deliverance of products without using the distributional channel and the indirect approach refers to using one or more distributional channel participants

Industrial Channels

These channels are normally shorter compared to the consumer channels. Direct vending is prevailing for closer relationships amongst the producer and the end user based on the nature of goods sold.

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Producer to consumer

This approach is based on the concept of direct marketing for instance, selling of the good personally, internet or selling goods through communicating via phone or mails. EBay and Amazon enable producers to sell their products directly to the potential customers. The products in this approach are delivered directly to the end users for consumption.

Producer to Industrial buyer

A strong and close relationship must exist between the producer and the buyer to enhance the operations of the consumer. This is the most common channel for heavy duty and expensive products such as equipment and machine ware. The seller participates in activities including installation, maintenance and quality control with the end user. The nature of the good needs a continuing relationship amongst the seller and buyer. The expanded size of the order of the client for economic distribution is beneficial to both the parties.

Producer to Retailer to Consumer

Retailers over the years have expanded in size and quantity. Growth of the retailer size indicates that the producer’s power and quantity of supply has significantly increased. Supermarket chains the capital wholesalers have strong purchasing capabilities. Firms like Walmart use its enormous power to build pressure on the prime producer to supply the goods at frequent intervals.

Producer to Agent to Industrial Customer

Firms that sell industrial products adapt the services of agents that may vend a variety of products on commission basis. These arrangements spread the cost of selling and benefit the entities that do not have the resources to set up and increase their sales. However, entities do not have much control over their agents.

Producer to Wholesaler to Retailer to Consumer

Small retailers prefer buying their inventories from wholesalers rather than the producer to avoid extra costs. It is economically sensible for wholesalers to purchase from producer and deliver to small retailers like local shop owners. However large retailers have the market power to purchase directly from the producer to avoid incurring additional costs. This enables large retailers to deliver the goods to consumers at a cheaper rate as their cost of purchasing the goods is relevantly low.

Producer to distributor to Industrial Customer

For inexpensive and frequently used goods, distributors are used. Firms have both internal and on field staff that communicates with customers for better sales and development. They look for new customers by distributing catalogues and gathering necessary market information.

Producer to Agent to Wholesaler to Retailer to Consumer

This channel of distribution is used by entities to enter international markets. It mainly lacks the sales to warrant the process of entire sales and distribution, delegating the task of vending its goods to agents who refuse taking title of the products.  Firms wanting to sell its produce to a large number of buyers use multiple channels for distribution.

Manufacturer to agent to Distributor to Industrial Customers

The manufacturer employs an agent rather than a dedicated sales force to serve distributors mainly because it is less expensive to do so.

The agent may sell the goods of several suppliers to an industrial distributor, who further sells it to the business user. This type of channel may be required when business customers require goods rapidly, and when an industrial distributor can provide storage facilities.

b) Discuss on different phases of Product Life Cycle

Once a product is introduced to a market, it carries its own value and goes through a life cycle. The product life cycle is a process which contains four stages which are Introduction, Growth, Maturity and Decline. Figure 1.0 below portrays the different stages of product life cycle. Setting aside product development, the latter four stages are very important to product life.

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Product Development

The first stage of a product life cycle is the development phase of a new product. This includes research, surveys and design processes. Brainstorming is done by a department in order to come up with innovative ways and ideas into implementing the product in such a way that is passed by the management as well as the customers. A model is developed which goes through extensive analysis before being endorsed and launched to the public. The organisation takes the full brunt of risks and costs associated with failure of product in the development stage as well. This stage gives a full analysis what the expectation of the product is in the market and what the organisation needs to fully deliver. The product should be able to cater for customers with terms or uses and benefits as well as a full description of the product shall be available. The final product should be feasible and to maintain a stronghold in the market for a longer period of time.

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