MARKETING MANAGEMENT-Assignment

1. Explain the stages in the Product Life Cycle with examples.

As consumers, we buy millions of products every year. And just like us, these products have a life cycle. Older, long-established products eventually become less popular, while in contrast, the demand for new, more modern goods usually increases quite rapidly after they are launched.

Because most companies understand the different product life cycle stages, and that the products they sell all have a limited lifespan, the majority of them will invest heavily in new product development in order to make sure that their businesses continue to grow.

Product Life Cycle Stages

The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.

 

Introduction Stage – This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.

Growth Stage – The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

Maturity Stage – During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

Product Life Cycle Examples

It’s possible to provide examples of various products to illustrate the different stages of the product life cycle more clearly. Here is the example of watching recorded television and the various stages of each method:

1.    Introduction – 3D TVs

2.    Growth  – Blue ray discs/DVR

3.    Maturity  – DVD

4.    Decline  – Video cassette

The idea of the product life cycle has been around for some time, and it is an important principle manufacturers need to understand in order to make a profit and stay in business.

However, the key to successful manufacturing does not just understand this life cycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and sales and marketing strategies, depending on what stage products are at in the cycle.

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2. Write Short Notes on

(i) Online marketing. (ii) Green marketing.

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       i.            Online Marketing

It is the art and science of selling products and/or services over digital networks, such as the Internet and cellular phone networks.

The art of online marketing involves finding the right online marketing mix of strategies that appeals to your target market and will actually translate into sales.

The science of online marketing is the research and analysis that goes into both choosing the online marketing strategies to use and measuring the success of those online marketing strategies.

The broad online marketing spectrum varies according to business requirements. Effective online marketing programs leverage consumer data and customer relationship management (CRM) systems.

Online marketing connects organizations with qualified potential customers and takes business development to a much higher level than traditional marketing/advertising.

Online marketing synergistically combines the Internet's creative and technical tools, including design, development, sales and advertising, while focusing on the following primary business models: 

• E-commerce
• Lead-based websites
• Affiliate marketing
• Local search

Online marketing has several advantages, including:

·         Low costs: Large audiences are reachable at a fraction of traditional advertising budgets, allowing businesses to create appealing consumer ads.

·         Flexibility and convenience: Consumers may research and purchase products and services at their leisure.

·         Analytics: Efficient statistical results are facilitated without extra costs.

·         Multiple options: Advertising tools include pay-per-click advertising, email marketing and local search integration (like Google Maps).

·         Demographic targeting: Consumers can be demographically targeted much more effectively in an online rather than an offline process.

The main limitation of online marketing is where goods are being sold, the lack of tangibility means that consumers are unable to try out, or try on items they might wish to purchase. Generous return policies are the main way to circumvent such buyer apprehension.

Online marketing has outsold traditional advertising in recent years and continues to be a high-growth industry.

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     ii.            Green Marketing

Green marketing is the marketing of products that are presumed to be environmentally preferable to others. Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, sustainable packaging, as well as modifying advertising.

Marketing products and services are based on environmental factors or awareness. Companies involved in green marketing make decisions relating to the entire process of the company's products, such as methods of processing, packaging and distribution.

The obvious assumption of green marketing is that potential consumers will view a product or service's "greenness" as a benefit and base their buying decision accordingly.

The not-so-obvious assumption of green marketing is that consumers will be willing to pay more for green products than they would for a less-green comparable alternative product - an assumption that, in my opinion, has not been proven conclusively.

While green marketing is growing greatly as increasing numbers of consumers are willing to back their environmental consciousnesses with their dollars, it can be dangerous.

The public tends to be skeptical of green claims to begin with and companies can seriously damage their brands and their sales if a green claim is discovered to be false or contradicted by a company's other products or practices. Presenting a product or service as green when it's not is called green washing.

Green marketing can be a very powerful marketing strategy though when it's done right.

Managerial Economics (DRM 12)

Managerial Economics(Free Download)

I. Explain Cobb- Douglas Production Function?

           

            The task of a production function is to organize a production process- a process of combining the different factors in some proportion so that those inputs can be efficiently transformed into products or outputs.

Various terms are used for inputs and outputs.

Inputs                                         Outputs

--------                                         -----------

factors                                       Quantity(Q)

factors of production               Total product(P)

resources                                    Product

A production function defines the relationship between inputs and maximum amount that can be produced within a given period of time with a given level of technology. Decision on input and output are taken after considering various technological specifications. The technological information is summarized as

Q = Q(L, N, K, .........)

Production function states that Q is the the maximum amount of output which the firm can produce if it combines the inputs( Land L, Labour N and Capital K). The ratio of the the factor-combination depends on the form of the estimated production function. Mathemaqtically, the production function can be shown as

Q= f(X1, X2,.......Xk)

where Q = Output

X1..........Xk =input used

For the purpose of analysis, the equation can be reduced to two inputs X and Y as,

Q = f(X,Y)

where

Q = output

X = Labour

Y = Capital

Two special features of production function are,

a.     Labour and capital are are both inevitable inputs to produce any quantity of goods.

b. Labour and capital are substitutes to each other in production.

Short -run and Long-run Production function

Some quantity of of both inputs is required to produce a given quantity of output. A two variable input -lon-run production function for quantities of labour and capital up to 10 units can be expressed in the form as in the table:

Labour(L)                                               Capital(K)

            0          1          2          3          4          5          6          7          8          9          10

0                      0          0          0          0          0          0          0          0          0          0          0

1                      0          5          15        35        47        55        62        61        59        56        52

2                      0          12        31        49        58        66        72        77        72        74        71

3                      0          35        48        59        68        75        82        87        91        89        87

4                      0          48        59        68        72        84        91        96        99        102     101

5                      0          56        68        76        85        92        99        104     108     111     113

6                      0          55        72        83        91        99        107     112     117     120     122

7                      0          53        73        89        97        104     111     117     122     125     127

8                      0          50        72        91        100     107     114     120     124     127     129

9                      0          46        70        90        102     109     116     121     125     128     130

10                    0          40        67        89        103     110     117     122     126     129     131

If capital was the fixed input in the short-run, then each column of the table represents a short-run production function with respect to a specific quantity of the fixed (Capital)input. for example for K=4 the short-run production function would be

Labour (L)     0          1          2          3          4          5          6          7          8          9          10

Output (Q)   0          47       58       68       72       85       91       97       100     102     103

Cobb-Douglas Production Function

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The most popular form of production function is Cobb-Douglas function.

Suppose Q = Q(L, K)

this means, the physical output level, Q depends upon qunatities of Labour (L) and Capital (K).

The Cobb-Douglas form is

              Q = ALpoweralpha Kpower (1- alpha)

                         where 0 < a < 1  A and a are constants.

2. Analyse the determinants of investment?

            Inducement to Invest' or the investment function is the second component of Aggregate demand. Investment, according to Keynes, is the addition to real capital assets. According to classical economists investment demand was simply a decreasing function of rate of interest. Inducement to invest depends upon two factors (i) Marginal efficiency of capital and (ii) Rate of interest. Thus I = f (r, i).

            The marginal efficiency of capital (MEC) is the higher rate of return over cost expected from the employment of a marginal or additional unit of capital asset. MEC means the expected rate of profitability of a new brand machine. It may be defined as the highest rate of return over cost expected from the marginal or additional unit of a capital asset. The MEC depends on two factors.

(i)                Prospective yield "from the capital assets

(ii)              The supply price of the capital asset.

The MEC is the ratio of their two factors.

            The prospective yield means the total net returns which an entrepreneur expects of obtain from selling the output of the capital asset over its life time. Running expenses are deducted from their returns. If the total expected life of a capital asset is divided into a series of years, the annual returns represented by R_p R₂, R₃ R, are added. The investor also takes into account the supply price of the asset it is the cost price of a new capital good. Supply price is also known as replacement cost.

            The investment decisions are governed by the prospective yield aid the supply price of an asset. By comparing their two concepts we can arrive at the MEC of a particular asset. The MEC of a particular type of asset means what an investor expects to earn from an additional unit of it compared with what it costs him.

            In other words the MEC is the rate at which the prospective yield is to be discounted if it is to equal the supply price of the asset. Given the supply price, the marginal efficiency of capital is influenced by future expectations.

            The low rate of interest induces investment and high rate of interest discourages it. Rate of interest, in term, is determined by the quantity of money and the liquidity preference. Given the quantity of - money the rate of interest mainly depends, on the strength of liquidity preference of two determinants MEC is the most important one to determine investment.

Investment demand curve:-

            The MEC progressing declines as more and more units of that asset are produced. As more and more units of an asset are produced, they will compete against each other to meet consumers' demand and by this the prospective yield will decline.

            With the decline in the prospective yield, the supply price of such as asset is likely to go up it more and more units of such asset are produced because of the rising cost. The decline in the prospective yield and the increase in supply price of an asset will result in lower MEC with an increased investment.

            In the above diagram MEC and rate of interest are measured in the OY-axis. Along OX-axis is measured investment. The equilibrium will be established at the point where MEC becomes equal to the given current rate of interest. Thus if the rate of interest is Op then OM investment will be under taken because at OM, level of stock of capital MEC of Capital is equal to the rate of interest OP.

            If the rate of interest falls to OP, investment will rise to ON since at ON level of investment the new rate of interest is equal to the marginal efficiency of capital. Thus it is seen that the curve of MEC shows the demand for investment or inducement to invest at various rates of interest. Hence MEC curve represents the investment demand curve. The Investment Demand Curve shows the amount of investment expenditure at various rates of interest.

            If the investment curve (MEC curve) is less elastic, then investment demand will not increase very fetch with the fall in the rate of interest. If the investment demand curve is elastic, the changes in the rate of interest will lead to larger change in investment demand.

            When expectations regarding profit change, the whole curve of the marginal efficiency of investment will shift. It profit expectation falls or rises, the MEC curve (Investment Curve) will shift downward or upward.

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