Product life-cycle management (marketing)

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This article is about the commercial term to describe the life of a product in the market. For the engineering term, see Product lifecycle management. Product life-cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) changes over time and must be managed as it moves through its succession of stages. Product life-cycle (PLC) Like human beings, products also have an arc. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things:

Products have a limited life, Product sales pass through distinct stages, each posing different challenges, opportunities, and

problems to the seller,

Products require different marketing, financing, manufacturing, purchasing, and human resource

strategies in each life cycle stage. The four main stages of a product's life cycle and the accompanying characteristics are:

Stage

Characteristics 1. costs are very high 2. slow sales volumes to start 3. little or no competition 4. demand has to be created 5. customers have to be prompted to try the product 6. makes no money at this stage costs reduced due to economies of scale sales volume increases significantly

1. Market introduction stage

2. Growth stage

1. 2.

3. profitability begins to rise 4. public awareness increases 5. competition begins to increase with a few new players in establishing market 6. increased competition leads to price decreases

3. Maturity stage

1. costs are lowered as a result of production volumes increasing and experience curve effects 2. sales volume peaks and market saturation is reached 3. increase in competitors entering the market 4. prices tend to drop due to the proliferation of competing products 5. brand differentiation and feature diversification is emphasized to maintain or increase market share 6. 1. 2. 3. Industrial profits go down costs become counter-optimal sales volume decline prices, profitability diminish

4. Saturation and decline stage

4. profit becomes more a challenge of production/distribution efficiency than increased sales

INTRODUCTION Third generation mobile phones E-conferencing All-in-one racing skin-suits iris-based personal identity cards

GROWTH Portable DVD Players Email Breathable synthetic fabrics Smart cards

MATURITY Personal Computers Faxes Cotton t-shirts Credit cards

DECLINE Typewriters Handwritten letters Shell Suits Cheque books

The product life cycle

Each product has its own life cycle. It will be 'born', it will 'develop', it will 'grow old' and, eventually, it will 'die'. Some products, like Kellogg's Corn Flakes, have retained their market position for a long time. Others may have their success undermined by falling market share or by competitors.

Th e product life cycle shows how sales of a product change over time. The five typical stages of the life cycle are shown on the graph. Not all products follow these stages precisely and time periods for each stage will vary widely. Growth, for example, may take place over a few months or, as in the case of NutriGrain, over several years. However, perhaps the most important stage of a product life cycle happens before this graph starts, namely the research and development (R&D) stage. Here the company designs a product to meet a need in the market. The costs of market research - to identify a gap in the market and of product development to ensure that the product meets the needs of that gap - are called 'sunk' or start-up costs.

Nutri-Grain was originally designed to meet the needs of busy people who had missed breakfast. It aimed to provide a healthy cereal breakfast in a portable and convenient format. 1. Launch - Many products do well when they are first brought out and Nutri-Grain was no exception. From launch (the first stage on the diagram) in 1997 it was immediately successful, gaining almost 50% share of the growing cereal bar market in just two years.

2. Growth - Nutri-Grain's sales steadily increased as the product was promoted and became well known. It maintained growth in sales until 2002 through expanding the original product with new developments of flavour and format. This is good for the business, as it does not have to spend money on new machines or equipment for production. The market

position of Nutri-Grain also subtly changed from a missed breakfast product to an 'all-day' healthy snack. 3. Maturity - Successful products attract other competitor businesses to start selling similar products. This indicates the third stage of the life cycle - maturity. This is the time of maximum profitability, when profits can be used to continue to build the brand. However, competitor brands from both Kellogg's itself (e.g. All Bran bars) and other manufacturers (e.g. Alpen bars) offered the same benefits and this slowed down sales and chipped away at Nutri-Grain's market position. Kellogg's continued to support the development of the brand but some products (such as Minis and Twists), struggled in a crowded market. Although Elevenses continued to succeed, this was not enough to offset the overall sales decline.

4. Saturation- This is the fourth stage of the life cycle and the point when the market is 'full'. Most people have the product and there are other, better or cheaper competitor products. This is called market saturation and is when sales start to fall. By mid-2004 Nutri-Grain found its sales declining whilst the market continued to grow at a rate of 15%. 5. Decline - Clearly, at this point, Kellogg's had to make a key business decision. Sales were falling, the product was in

decline and losing its position. Should Kellogg's let the product 'die', i.e. withdraw it from the market, or should it try to extend its life?

Strategic use of the product life cycle

When a company recognises that a product has gone into decline or is not performing as well as it should, it has to decide what to do. The decision needs to be made within the context of the overall aims of the business. Strategically, Kellogg's had a strong position in the market for both healthy foods and convenience foods. Nutri-Grain fitted well with its main aims and objectives and therefore was a product and a brand worth rescuing. Kellogg's aims included the development of great brands, great brand value and the promotion of healthy living. Kellogg's decided to try to extend the life of the product rather than withdraw it from the market. This meant developing an extension strategy for the product. Ansoff's matrix is a tool that helps analyse which strategy is appropriate. It shows both market-orientated and productorientated possibilities.

Kellogg's | Extending the product life cycle

Extending the Nutri-Grain cycle - identifying the problem

Kellogg's had to decide whether the problem with Nutri-Grain was the market, the product or both. The market had grown by over 15% and competitors' market share had increased whilst Nutri-Grain sales in 2003 had declined. The market in terms of customer tastes had also changed more people missed breakfast and therefore there was an increased need for such a snack product.

Extension strategies

The choice of extension strategy indicated by the matrix was either product development or diversification. Diversification carries much higher costs and risks. Kellogg's decided that it needed to focus on changing the product to meet the changing market needs. Research showed that there were several issues to address: 1. The brand message was not strong enough in the face of competition. Consumers were not impressed enough by the product to choose it over competitors. 2. Some of the other Kellogg's products (e.g. Minis) had taken the focus away from the core business.

3.

The core products of Nutri-Grain Soft Bake and Elevenses between them represented over 80% of sales but received a small proportion of advertising and promotion budgets. Those sales that were taking place were being driven by promotional pricing (i.e discounted pricing) rather than the underlying strength of the brand.

Implementing the extension strategy for Nutri-Grain

Having recognised the problems, Kellogg's then developed solutions to re-brand and re-launch the product in 2005. Fundamental to the re-launch was the renewal of the brand image. Kellogg's looked at the core features that made the

brand different and modelled the new brand image on these. Nutri-Grain is unique as it is the only product of this kind that is baked. This provided two benefits: the healthy grains were soft rather than gritty the eating experience is closer to the more indulgent foods that people could be eating (cakes and biscuits, for example) The unique selling point, hence the focus of the brand, needed to be the 'soft bake'.

Researchers also found that a key part of the market was a group termed 'realistic snackers'. These are people who want to snack on healthy foods, but still crave a great tasting snack. The re-launched Nutri-Grain product needed to help this key group fulfil both of these desires. Kellogg's decided to re-focus investment on the core products of Soft Bake Bars and Elevenses as these had maintained their growth (accounting for 61% of Soft Bake Bar sales). Three existing Soft Bake Bar products were improved, three new ranges introduced and poorly performing ranges (such as Minis) were withdrawn. New packaging was introduced to unify the brand image. An improved pricing structure for stores and supermarkets was developed.

The marketing mix

Using this information, the re-launch focused on the four parts of the marketing mix: Product improvements to the recipe and a wider range of flavours, repositioning the brand as 'healthy and tasty', not a substitute for a missed breakfast Promotion a new and clearer brand image to cover all the products in the range along with advertising and point-ofsale materials Place better offers and materials to stores that sold the product Price new price levels were agreed that did not rely on promotional pricing. This improved revenue for both Kellogg's and the stores As a result Soft Bake Bar year-on-year sales went from a decline to substantial growth, with Elevenses sales increasing by almost 50%. The Nutri-Grain brand achieved a retail sales growth rate of almost three times that of the market and most importantly, growth was maintained after the initial re-launch.

Conclusion

Successful businesses use all the tools at their disposal to stay at the top of their chosen market. Kellogg's was able to use a number of business tools in order to successfully re-launch the Nutri-Grain brand. These tools included the product life cycle, Ansoffs matrix and the marketing mix. Such tools are useful when used properly. Kellogg's was able to see that although Nutri-Grain fitted its strategic profile a healthy, convenient cereal product it was underperforming in the market. This information was used, along with the aims and objectives of the business, to develop a strategy for continuing success. Finally, when Kellogg's checked the growth of the re-launched product against its own objectives, it had met all its aims to:

re-position the brand through the use of the marketing mix

return the brand to growth improve the frequency of purchase introduce new customers to the brand. Nutri-Grain remains a growing brand and product within the Kellogg's product family.

KITcat

Kit Kat: Revitalising a Brand Leader

A Nestle case study

Page 1: Introduction
All products have a life-cycle. It starts with preparations for the product's launch, followed by the launch itself. Some products are an immediate success; they capture public imagination. Often this results from well targeted, exciting promotional and advertising activity and from careful market research that has identified a genuine gap in the market. Other products take longer to come to consumers' attention, and longer still to become popular. Some new products flop, and soon disappear from sale. The growth stage comes next. Growth can take weeks or months (e.g. the latest fashion clothes) or years (e.g. the typical packet or canned food and drinks found in supermarkets). Eventually the maturity stage is reached,

where sales of the product and consumers' level of product awareness are both high. At this stage, products risk going into decline, largely because they have become too familiar and are seen as less exciting than recently launched alternatives.

The life-cycle of a product

Marketing departments are expected to ensure that products do not go into decline. Mature products need new life injected into them, to keep the buying public interested and aware of the product's benefits. This case study provides a classic example of how to put new life into a favourite, leading brand: Kit Kat.

Why Kit Kat needed revitalising

Kit Kat is the UK's best-selling chocolate bar. However, in the competitive modern world consumers' tastes continually change. As a result, even the most popular icons have to reinvent themselves from time to time in order to keep their appeal and stay 'on top'. For example, pop stars adjust their image, film animators amend their favourite cartoon characters, and car designers re-design old favourites such as the VW Beetle and the Mini. One secret of success is to retain enough of the old image to keep the loyalty of present enthusiasts for the product, whilst making sufficient innovations to attract a whole new group of consumers.

In the world of popular chocolates and sweets, there has been in recent years an ongoing revolution in modifying products. In previous times, sweets and chocolate bars remained in more or less the same form for many years. Today, however, modern sophisticated consumers constantly seek novelty and change, and consumers have become the driving force behind product modification. Take Smarties, for example, which have undergone a series of changes in recent years. Until the late 1980s, Smarties came in well-established standard flavourings, colours and packaging. Then: 1989 Nestl introduced blue Smarties 1991 Printing on sweets was introduced 1992 Green chocolate arrived 1995 The standard range of Smarties was relaunched with colourful new packets 1997 Giant Smarties were launched 1999 Smarties ice cream was launched 2000 Mini Smarties came on the scene 2001 Tetrahedon pack for Mini Smarties Every alert, market-focused producer recognises the need for regular change. This is required because: consumers want and demand change rival firms are constantly re-inventing themselves and their products innovation and inventiveness keep an organisation flexible and able to respond to further change. Although Kit Kat continued to be the Number 1 confectionery brand, by the late 1990s its volume sales were falling. Faced with several increasingly attractive competitive offerings, consumers began to see Kit Kat in its traditional form as lacking in excitement and interest, with purchases being driven more by habit than positive choice. Although the fourfinger Kit Kat continued to be highly popular with its core

target market of 25-40 year olds, it was losing popular appeal with younger consumers. The image problem was most evident among core countline consumers ie 12-20 year olds. In this important age group, while Kit Kat had been part of 'growing up' and may also have made regular appearances in lunch boxes, it was hardly relevant to their lifestyle. The traditional four-finger Kit Kat did not seem relevant to them. In 1999 therefore, Nestl felt it was time for some re-invention. The company decided to develop a new format of Kit Kat whilst still retaining the fourfinger variety with which consumers are so familiar.

Project Tyson

Project Tyson resulted in the launch of Kit Kat ChunKy, a super size Kit Kat finger with a real mouthful of chunky milk chocolate. This 'heavyweight' idea assumes that younger consumers are looking for novelty, interest and even excitement when they buy a chocolate bar. While most of us are loyal to the chocolate products we buy regularly, we also seek novelty. Project Tyson, as with all Nestl projects, followed Nestl's internal advertising code of conduct, which reflects the industry position on advertising to children. The project team ensured, for example, that the promotional campaign would not encourage children to pester their parents for products nor would it encourage children to eat confectionery frequently throughout the day, in preference to properly balanced meals. To find out exactly what consumers were looking for, Nestl carried out detailed market research, including detailed qualitative research. Many pairs of young people were invited

to give their views on different formats for the new product eg whether they preferred one or two fingers, what flavours they preferred (caramel, peanut butter, orange jelly, chocolate layers etc). Researchers also considered the most appropriate form of packaging to add further interest and attraction to the product. Other forms of market research included group discussions with young people who, typically, were regular consumers of chocolate bars. A survey group might consist of, for example, males and females who were: 17, 18, 19 or 20 years old of different ethnic origin from different parts of the UK a mix of students and non-students. Using focus groups in this way, researchers were able to compile data on the views and feelings of representative samples of the targeted groups of consumers. The research provided clear evidence that: the targeted population of 12-20 year olds were attracted to the idea of the single Chunky finger Project Tyson could be a winner. The research also identified the type of packaging with the greatest appeal - a mainly red and silver flow wrap. It also became clear that Kit Kat Chunky would inject new interest in Kit Kat across a broad range of consumers, including young children and older adults. The research examined different types of wrappings and formats. In particular, it compared two-finger and single-finger variants of Kit Kat Chunky. The single-finger proved to be most popular with the 12-20 year old group, and was also the most distinctive form that the new product could take. The research also indicated that a two-finger variety would, in some ways, compete with the four-finger variety. This would lead to Kit Kat competing

against itself; not a very good idea! By contrast, the singlefinger Kit Kat Chunky provided a promising line extension.

Objectives for the launch

A wise company will look to justify every new venture in strict business terms: it will set tough performancetargets. These in turn can be converted into production targets, cost estimates and revenue projections.

Quantitative objectives

Nestl set demanding quantitative objectives for the launch. Nestl aimed to: achieve 90distribution in all sectors of the confectionery market within the first four weeks after the launch sell 50 million units (ie 2,750 tonnes of product) in 1999, the year of the launch increase sales in subsequent years.

Qualitative objectives

Nestl also set several qualitative objectives. These were to: broaden the number of occasions on which people consume Kit Kat, with the vision that Kit Kat would be the natural choice for all breaks increase Kit Kat's market penetration by enticing new consumers to the brand, and by persuading lapsed users

to return to the product, with particular emphasis on the 12-20 year old segment create real innovation in the countline market.

Supporting the launch: media, PR and point of sale

For a new product to grab public attention quickly, it is vital to support its launch with well-targeted advertising and promotional activities. Chunky was supported by two dedicated television adverts complemented by a phone site campaign. The advertising was a big departure from previous campaigns in that it focused on the targeted age group. It concentrated on 17-18 year olds in order to capitalise on aspirational identification from the younger groups, without alienating older consumers. In addition, Nestl invested in a range of public relations activities through radio and the national press. A detailed point-of-sale campaign supported the launch with attractive dumpbins in stores, and posters for shop windows. Field sales staff were involved in a detailed communication exercise to raise awareness in all forms of distribution channels.

The success of the launch

The launch of Kit Kat Chunky proved to be one of the best marketing success stories in recent times. Over 50 million bars were despatched within the first few weeks of the launch. Kit Kat Chunky almost immediately became the best selling countline, and this success story has continued. Nestl provided excellent support for retailers by providing them with in-store promotions and a smooth supply of the product in

order to meet the massive customer demand. Within 6 months, more than 20 percent of the UK population of the UK had tried the product, and repeat rates have been very high. Both the quantitative and the qualitative objectives for the launch were quickly met. The most successful aspect of the launch and subsequent marketing activity has been that of revitalising interest in the Kit Kat line, particularly among the 12-20 year old age group. There has been a clear knock-on effect into other age groups and only a limited negative effect on the sale of the traditional four-finger Kit Kat. In addition, the Kit Kat Chunky is a versatile product with an ability to inject new ideas into the market focused at 12-20 year olds eg by producing varieties such as orange flavoured Chunky.

Conclusion

The launch of Kit Kat Chunky has shown that intelligent innovation and adaptation, supported by meticulous market research and product promotion, really can extend a successful product's life-cycle significantly.

Amway

Introduction

Founded in Ada, Michigan in 1959, Amway has become one of the largest 'Direct Selling' companies in the world with nearly three million Independent Distributors. Direct selling involves dealing with customers 'Face-to-face' so that personal attention can be given to each of their requirements. Direct selling differs from traditional retailing as it often involves selling to consumers on a one-to-one basis, usually in the comfort of their own homes. The industry has grown rapidly over recent years and is currently estimated to be worth 40 billion a year world wide. This case study examines this growth which has helped Amway to become one of the industry's market-leaders influenced by changing lifestyles, demographics and economic recession.

Direct selling for Amway is undertaken by its own independent distributors. Their own income is based on the goods they sell, bonuses paid by Amway and the volume of sales generated through their own distributor network. These distributors sell to people they know or meet. Amway distributors operate as their own independent businesses. Amway is a long-standing member of the Direct Selling Association (DSA) in the UK and Republic of Ireland. The DSA regulates the industry by providing a Code of Conduct endorsed by the Office of Fair Trading (OFT). Amway has developed into a global corporation manufacturing over 450 products and employing more than

12,000 people in over 80 countries and territories around the world. To supply a global base of customers, Amway manufactures products ranging from household cleaners to cosmetics, food supplements to housewares. It also markets products on behalf of other leading manufacturers, such as Kenwood, Aiwa and Philips.

The ARTISTRY* Range Of Cosmetics

Over the last 31 years Amway has invested heavily in the development of the Artistry range of Skin Care and Cosmetics. The range comprises approximately 3,257 individual lines which are sold in over 30 countries throughout the world. Based upon a recent Euromonitor study of global sales data: Artistry is among the world's ten largest brands of facial skin and colour cosmetics Artistry is the largest direct sales brand of facial skin care and colour cosmetics in the world.

Product Development

Research and development play a vital commercial role creating better products through improving operational processes and helping the whole business focus upon its customers.

Artistry products are the result of years of research, development and testing, supported by modern manufacturing principles. Amway's research is proactive, taking the lead in a market by researching the newest ingredients in the industry for continuing development of new formulae using state-ofthe-art manufacturing techniques. This case study focuses upon how Amway has recently injected life into the product life-cycle for its Artistry range to maintain this proactive position and keep ahead of its competitors.
Global Marketing

Amway is a global organisation which markets products in international market places. Planning for global markets is a much more complex process than for domestic markets. It presents many more risks than operating in a domestic market where goods are sold in only one local area. Global marketing involves recognising that people from all over the world have different needs, i.e. values; customs; languages; rules and currencies.

Though it is said that consumer needs around the world are converging, there are commonly accepted needs and wants that go beyond national barriers. The marketing mix consists of a complex set of variables which an organisation combines together in order to ensure that both global and local corporate objectives are achieved.

Standardising elements of the marketing mix is key to operating successfully in the global marketplace. As a result, common needs and wants are identified across countries. At the same time, parts of the marketing mix requiring adaptation are identified so that it can be developed to cater for local differences. This requires a thorough understanding of every market in which Amway operates. Many advantages arise from competing in a global marketplace, including: economies of scale - over a larger output, costs per unit are decreased to provide the supplier with a competitive advantage. Amway is able to spread its research, development, technology and distribution costs so that it can maximise its production efficiency the development of new business opportunities - in numerous countries, markets are growing faster than in Europe and America. Overseas markets offer the opportunity to compete in different marketplaces and extend the life-cycle of products to meet the tastes of consumers from different nations over recent years there has been a convergence of tastes resulting in a more global marketplace.
The Product LIfe - Cycle

Markets are in a constant state of change. Over a period of time, tastes and fashions alter and the technology used to produce goods and services moves on. As a result, there will always be a demand for new products as old ones become redundant. According to the product life-cycle concept, all products move through four life-cycle phases.

During the introductory phase growth is slow and volume is low because of limited awareness of the product's existence. Sales rise during the growth phase and profit per unit sold reaches a maximum. As products reach maturity, growth in sales starts to level off. Organisations have to invest heavily to extend the life-cycle while competition becomes stronger. When sales start to fall a product is said to be in decline. In a global environment, managing and maintaining the market share for fashion products is particularly demanding. Cosmetic manufacturers are constantly challenged by different changes in the fashion industry. If these changes are not properly managed, products could quickly move into decline

Injecting New Life Into The Artistry Life - Cycle

To prolong the life-cycle of a brand or product range, an organisation must inject new life into the growth period through readjusting the ingredients of the marketing mix.

In 1996, to ensure the Artistry range would stay in line with evolving market trends and tastes, Amway set about upgrading its brand with the additional objective of increasing its global competitiveness. Amway engaged in world wide market research to gain a comprehensive understanding of the needs and wants of

target markets. Market research is the systematic gathering, recording and analysing of data about positives and negatives relating to the marketing of goods and services. Through acquiring a substantial know-ledge of each marketplace, the marketers could identify elements of the marketing mix which could be standardised, in addition to elements requiring change.

The Needs Of The Targeted Markets

Market segmentation is the process of breaking a market into sections which match consumer needs. Where segments are identified as having requirements that can be met by an organisation, they can then be targeted. Research of international markets commissioned by Amway aimed to gain a broader understanding of the Artistry user. It indicated that the overall profile of the Artistry user was consistent across all geographic regions. The Artistry woman: leads a busy lifestyle appreciates quality cosmetics rates skin care as highly important 'transforms' herself when wearing cosmetics values a natural appearance desires a variety of shades so she can create any look she wishes. However, the Artistry woman is attracted to images which are regional or country specific. For example: in Thailand the Artistry woman is attracted to a classic or traditional image in Taiwan the image desired is classy and elegant

in Germany the Artistry user is attracted to glamorous and luxurious images as well as scientific and clinical images in the USA Artistry users prefer scientific and clinical images in Australia a moderate image of pampering was found to be appealing. Finding the right marketing mix would require finding the common ground between the geographic differences and preferences highlighted by the research. The solution came about through: 1. developing a product range suitable for all markets 2. developing universal packaging 3. undertaking a global promotional campaign that met with regional image requirements.

Universal Packaging

Packaging is particularly important as part of the 'product surround' in the cosmetics industry. The functions it serves include: protecting the product which it contains acting as a communication tool - conveying messages about the image and ingredients of the product and the manufacturer creating brand identity between the numerous components. Packaging for Artistry products is one element of the marketing mix that is globally standardised.

More than $2.5 million was invested by Amway in high quality pack-aging communicating one theme, designed to position the cosmetics in the high quality premium sector. Different languages and product information ensure that the message is communicated to all targeted markets.

Global Promational Campaign With Regional Image Requirements

One of the biggest challenges for global businesses is designing promotional and advertising materials that go beyond national and cultural boundaries. The revision of Artistry was backed up with a promotional campaign designed to: build brand awareness increase sales of the Artistry range maintain a consistent global image to meet specific market needs. The challenge was how to advertise the brand with images that would be appealing and meaningful across a range of nationalities. A model was chosen as the face of Artistry world-wide. A portfolio of promotional material was produced using this 'signature model' in six different styles communicating different moods and images. From this portfolio, Product Merchandisers of each region could choose the advert containing the best images for each marketplace.

Conclusion

The revision injected life into the Artistry brand to extend its life-cycle across its global markets. The manipulation of the marketing mix for Artistry products enabled the business to benefit from economies of scale in production, packaging and promotion of the Artistry range while at the same time fulfilling the specific needs of regional markets around the world.

An enterprising approach to a marketing re-launch

A United Biscuits case study

Introduction

Enterprising businesses must be able to re-invent themselves and their products. This is because consumer expectations change over time and other elements of the general business environment also alter. A successful, enterprising business knows when and how best to change in order to please its customers. This case study focuses on one of the UK's leading savoury snacks, Phileas Fogg. The study analyses how United Biscuits (UB) reinvented Phileas Fogg.
Part of a larger group - United Biscuits (UB)

The history of Phileas Fogg is steeped with innovation based on a small enterprising business with exciting packaging and advertising ideas. Today, like many other organisations in the

food industry, Phileas Fogg is part of a much larger group: UB, a multi-national company. It was originally founded in 1948 following the merger of two Scottish family businesses: McVitie & Price and McFarlane Lang, and now has the number 1 biscuit brand in the UK, Netherlands & Spain as well as the number 1 nut brand (KP). UB also has strong brands in France, Belgium, Ireland and Portugal, and is the second largest crisp manufacturer in the UK. It makes good commercial sense for small businesses like Phileas Fogg to join larger organisations like UB. As part of UB, Phileas Fogg benefits from various commercial economies of scale that can come from marketing, selling and distributing products on a larger scale. UB has grown through both organic growth and acquisition, a process that has involved taking over and merging with other companies to become the leading manufacturer and marketer of biscuits and snack foods that it is today. The two main UK divisions of UB are: McVitie's 'The first choice for biscuits' including well known favourites such as Jaffa Cakes, Penguin, Hobnobs, Digestives and Rich Tea. KP One of the UK's largest manufacturers of savoury snacks including Hula Hoops, Skips, KP Nuts and Phileas Fogg.

Phileas Fogg has benefited from being part of a multi-national company. Higher levels of funding are available for developing the brand and distribution costs are lower. There are improved opportunities for shared projects involving research, advertising and promotion. The Phileas Fogg business has also been able to benefit from expertise available elsewhere within the group. The challenge facing Phileas Fogg, however, was how to retain its innovative culture and individuality within a much larger organisation.

Being enterprising

The Phileas Fogg brand was born in 1983 in the steelworks town of Consett in the North East of England. The steelworks was closing down, creating high levels of unemployment in the area. Four men installed a snack-making machine on the site. With this they created their exciting product lines. One of their acquaintances ('Jeff' used a former ice-cream van to sell the products to local shops and to passing customers. That could have been the whole story, but it was only the start. Fired with enthusiasm from the success of the venture, these entrepreneurs saw the opportunity to exploit a gap in the market. In particular, they realised that they could capitalise on a potential niche market by catering for adult tastes that were not adequately met in the crisps market of

the time. Their objective was to create a premium brand with the distinguishing qualities of authenticity, quality and excitement. Very quickly the new business was able to gain a competitive advantage over rivals through: its innovative name: Phileas Fogg - a fictitious explorer from Victorian times attractive packaging, promotion and advertising the novelty and range of its snacks. Phileas Fogg was the first to develop tortilla snacks. Incredibly, it took seven years for a competitor to match this innovative product. Phileas Fogg gained a reputation for developing snacks based on foodstuffs and tastes from far flung corners of the globe. With its innovative approach to marketing, the company ensured that Consett, and in particular Medomsley Road, became as famous as the exotic locations that inspired its snacks. The business has become increasingly adventurous in its quest to develop tasty, unconventional snacks. This approach has helped maintain its growth. Today it employs over 200 staff, including a team of discoverers, who research remoter parts of the world for the next taste bud tingling delight. Over the years, humorous award-winning advertising campaigns have developed the brand's reputation as the leading innovator within the adult premium snacks market.

Product life-cycle

All products experience a life-cycle. This takes the form of a staged product launch, followed by a period of sustained growth up to maturity, and then finally a decline in sales as

product strength diminishes. The length of the life-cycle is not the same for all products, but it is usually many years. With careful nurturing, a product's life-cycle can sometimes be extended.

Following its success in the 1980s, the Phileas Fogg brand showed signs of slower growth in the 1990s. This was mainly because: new competitors had entered the field, supported by heavy investment and clever marketing e.g. Doritos, Kettle Chips and Pringles the original Phileas Fogg proposition based on the idea of a Victorian gentleman travelling around the world with his manservant Passepartout had become outdated and lacked relevance the strong levels of creativity and innovation that characterised the Phileas Fogg brand in the 1980s and early 1990s had diminished in recent years. It was clear that if Phileas Fogg was to re-discover its early vigour and success then a new approach to marketing and innovation was required.

Preparing to change

In the world of food manufacture, products are continually being improved and altered to keep abreast with changing times. The process of improvement involves first finding out what consumers want, and then seeking to introduce changes to existing products to meet their needs. Having done this, companies can re-launch a brand or individual product lines using appropriate advertising and promotional techniques to convey the change. In preparing for the re-launch of Phileas Fogg in June 2002, UB carried out vital preparatory work. The group: 1worked with a number of leading entrepreneurs to discuss possible ways of rejuvenating the brand 2carried out detailed market research to discover consumers' views 3identified the core elements of the Phileas Fogg brand that needed to be retained. These were: commitment to innovation absolute integrity ongoing research worldwide to identify new snacking experiences.

Making the change

To create a momentum for the change process, work patterns at Phileas Fogg were altered; people responsible for new product development were put into cross-functional teams. New products were developed and fast tracked to re-launch in record time. Importantly, the organisation was prepared to take risks. Every single product was re-launched and the range was drastically cut to remove under-performing lines that were draining resources. The aim was to radically change and modernise the Phileas Fogg brand, a process which involved the decision to remove the brand icon, the Victorian Phileas Fogg character. A significant amount of finance - 1.5m - was put behind the brand in the re-launch year. Great emphasis was placed on putting innovation back at the heart of the brand.

Because of its history, Phileas Fogg has always maintained a strong relationship with its employees. This relationship was further strengthened during the re-launch process. All Phileas Fogg employees were and continue to be kept informed of new developments and opportunities to ensure that new ideas are shared across the company. The Phileas Fogg Company invited and paid for a range of employees from different functions from both management

and the factory floor to travel the world and bring back fresh ideas. Pictures of the staff who travelled in search of new ideas are featured on the back of the new packs for all the world to see. The venture generated a host of new product ideas. Some of these have already been launched whilst others will be brought to market in years to come. Whilst individual brand re-launches will often have specific evaluation criteria that need to be delivered, there are generic measures that most re-launches, including Phileas Fogg, have to achieve. These include: increases in distribution, particularly among major retail chains improvements in both the brand's market share and consumer penetration increased levels of excitement and enthusiasm behind the brand amongst both the sales team and retailers increased levels of media coverage and public interest in the re-launched brand.

Conclusion

The Phileas Fogg Company has a culture that encourages risk taking and has always been well known for its ground breaking, distinctively eccentric, award winning advertising. It

has a reputation for frequent new product development and exciting packaging (e.g. a triangular tortilla pack). Because the company was born out of the hardship of industrial decline, employees have always been fiercely loyal to it. The challenge that faced UB following the acquisition of Phileas Fogg in 1992 was how to build on these core strengths with the added benefit of increased funding and resource without stifling the entrepreneurial spirit that built the brand. The re-launch initiative has been a huge undertaking. Its impact can be seen across the complete Phileas Fogg product range and can be felt amongst all its employees some of whom research and travel the world looking for new, exciting taste and snacking experiences. UB is committed to this exciting and enterprising approach. Re-inventing the Phileas Fogg brand demonstrates that all organisations need to create positive consumer led change.

Market leadership in the 3G market

A Hutchison 3G case study

Page 1: Introduction
3G stands for third-generation mobile communication and can be viewed as wireless broadband for mobile phones. It is a radio communications technology offering:

3G is a contemporary development, with phones first being developed on a major scale in Japan in 2001. Today, more than half of Japanese mobile phone users use 3G. It spread to Europe in 2003 and its use is growing rapidly here and worldwide. The market leader in 3G in this country is 3. 3 has the highest customer base in its market sector. As a mobile network provider, 3 recognised that 3G was the way forward for market development. It seeks to provide the best network available for mobile phone users.

The Product Life Cycle

Products go through a life cycle: When a new product is introduced to the market, consumers may have little awareness. Therefore, it is important to use promotional activity to give advice about the product's benefits. The next stage is growth. During this period more people find out about the product and purchase it. Finally is a stage of maturity when there is little expansion and a product may go into decline. The typical life cycle of a product can be illustrated as above. The sales performance rises steadily from zero (when the product is introduced to the market). The mobile phone market fits this pattern.

Relationship between the life cycle and sales

Initially the product will grow and flourish. However, as new competitors come into the market and as excitement about the product reduces, a new stage in the life cycle stage is reached, called maturity. If the product is not handled carefully at this stage we may see the saturation of the market and interest in the product or services begins to decline. At each stage there is a close relationship between sales and profits so that as organisations or brands go into decline, their profitability decreases. To prolong the life cycle of a brand or product, an organisation needs to use skilful marketing techniques to inject new life into the product.
Maintaining a product's life

A product's life cycle may last for a few months or for more than a century. It all depends on how good the product is originally, how easy it is for competitors to emerge, and how good a firm is at keeping its own product relevant and attractive to consumers. Hutchison Whampoa, the company that owns 3, has led the growth of the global 3G market. It has invested heavily in new technology and provides the most comprehensive network for 3G communications.

What is marketing strategy?

Marketing strategy describes how a business meets the requirements of its market. The marketing strategy must enable a business to deliver its objectives. Markets are made up of customers with wants and needs. Market planners must provide products and services that are better than those which competitors offer. The organisation with the most effective marketing strategy should become the market leader.
Creating a marketing strategy

To create a marketing strategy you must first find out about your environment through market research. Investigation into the 3G market in Japan first indicated that the 'killer application' would be video messaging. This has not proved to be the case. For example, Japanese consumers have been far more interested in music downloads. Market research by 3 showed that consumers are interested in the extensive range of 3G phone applications.

Marketing strategy covers all elements of the procedure that an organisation uses to satisfy the market, such as research, promotion and advertising. The marketing strategy must enable a business to deliver its objectives. Hutchison Whampoa's objective is to be the market leader in providing 3G wireless communications. All aspects of 3's market plan are tailored to achieving this. For example, the company's advertising helps customers appreciate the benefits of 3G services and content.

Product and market orientation

Product orientation

Production and marketing go hand in hand in successful businesses. You can only convince customers that you can meet their needs if you have the products to do so. 3G technology has significantly more bandwidth than 2G technology. More bandwidth means more space for transmitting large amounts of data e.g. videos rather than text. A 3G phone offers up to 384 kilobytes per second when a device is stationary or moving at pedestrian speed. During 2007, 3 will launch a high speed service which will have a target speed of 1.8 Mbytes per second. There are three main sections of 3's UK business:

First mover advantage

3 was the first company in Europe to appreciate the opportunities offered by 3G. It invested seriously in this market, hoping to acquire 'first mover advantage' by being the first one to develop a specific market. The first mover becomes associated by customers with that expansion. It is then able to be at the leading edge of new developments so its rivals are continually trying to catch up. 3 is always seeking to improve its products and services to maintain its market leading position. In 2006 these included: signing an exclusive deal to stream ITV1 ITV's flagship channel to its 3.75 million customers in the UK (customer numbers in August 2006) signing deals with leading handset producers such as Nokia, Motorola and Sony Ericsson to provide handsets to complement the network. A recent example of this is the link with Sony Ericsson's K610i and K800i Cyber-shot phones screening the 2006 World Cup directly on customer mobile phones. This created an all-time high in mobile television usage

launch of the X Series from 3, which is supported by a commercial link with key Internet service and software providers such as Microsoft, Yahoo, Google, eBay, Skype, Slingbox and Orb. These links will take wireless broadband to the next level, allowing consumers to experience the full Internet experience whilst on the move.

Market orientation

Hutchison Whampoa took a considerable gamble in investing in the 3G network market. At the time it was a relatively untried new technology, but there was considerable support for the development. Britain is a member state of the European Union (EU), which was able to see the advantage of this innovative technology. In 2002 the EU Council wanted telecom network providers to transfer 80% of telecommunications to 3G. 3 is always seeking to improve its products and services to maintain its market leading position. Existing network providers and new competitors had to bid for licences to operate using this system but the cost of these was extremely high. Because of this, the successful companies were left with only limited funds to invest in the new technologies. However, 3 was determined to lead the field and has invested considerably in this market. Today it is beginning to harvest the benefits.

Achieving market leadership

3 invested 4.4 billion to purchase one of the five licences available from the Government. Since then, 3 has invested heavily in developing its network which was launched on 3rd March 2003 and which today covers 90% of the UK population.

The market is getting stronger all the time. The network is continually being extended and there are new and innovative companies producing the high-quality phones required to access the products and services delivered across the network.When you phone someone using 3, 3G chops up your call into a miniature packet of data, which is coded. This is a highly efficient way of sending information. Using this system of chopping and coding, 3G can deliver large files such as pictures and videos at a much faster speed.
The results of 3's market research

3's market research shows that young people like 3G because it enables them to send pictures, view videos and listen to music downloads. It is also popular with business customers and people who work in the media for example, film editors and journalists. The market research was able to illustrate that 3G provides customers with many benefits including:

1. Real-time communication for example, phone calls, emails (including large attachments) and faxes. This means that people can be in constant touch. 2. High-speed Internet access you can browse the web and download data files and software using your handset wherever you are. 3. Access to information for example, watching the World Cup or accessing news bulletins. 4. Personal organisers including electronic diaries and lists. 5. Global roaming you can access services anywhere in the world (within 3's sister territories). 6. Video conferencing for business people or schools linking with partner schools in other parts of the world.

Asset-led marketing

An asset is something you have possession of. In this case, Hutchison Whampoa owns 3, which is the UK's market leader in 3G. This provides customers with a much greater range of communications benefits than non-3G offerings.

Asset-led marketing involves using your material goods in the most efficient way the market determines this. Wise marketers

know that assets work best when they meet customer needs. Market research is therefore seen as imperative for 3. For example, it showed that ITV1 is a highly popular television channel. Research also revealed that 3's customers wanted to watch ITV1 on their phones, so the company formed a link with ITV. The consequence is that 3's network works better to meet customer requirements this is asset-led marketing. Asset-led marketing involves using your material goods in the most efficient way. 3 is continually seeking to improve its network and services. This involves improving: the network the content available through the network links with mobile phone producers links with global leaders in internet technology.

Conclusion

3G wireless technology provides an exciting new development in the way people communicate with each other. It enables us to use a much more comprehensive range of communication than previous forms. Because of the greater bandwidth the new technology offers, there are tremendous benefits to be gained by business and private users. Features such as high-speed internet connections and the transmission

of pictures and sound give users access to high-quality information wherever they are.
Future development

A major strength of 3 is an emphasis on anticipating and meeting customers' needs. The company recognises that it can continue to be the market leader only if its product is superior to that of its rivals. This will only be the case if 3 understands what its customers want. In a fast-moving industry, it is important to find out what clients prefer today, but 3 must also research their future requirements. It must also frequently research new technologies in this way it will stay at the forefront of the field and retain market leadership. 3G is a developing technology and the greatest benefits are likely to come in the next couple of years. Because of its market leadership, 3 is ideally placed to continue to lead developments in 3G.