THE CAMBRIDGE ASSOCIATION OF MANAGERS GRADUATE DIPLOMA IN MARKETING MANAGEMENT MARKETING PLANNING AND CONTROL

UNPRODUCTIVE PRODUCT LIFE CYCLE AS A MARKETING STRATEGY. Analysis of the Impact of Product Life Cycle as a marketing strategy in a company of a period of 2 years A CASE STUDY OF EDCOMM SYSTEMS LIMITED

Done by: Candidate Number: Purpose: For Partial fulfillment of Cambridge Association of Managers Graduate Diploma in Tourism Management (Marketing Planning module) 2009 Cambridge Association of Managers, International Examinations, Cambridge UK

Dated: Presented to:

DECLARATION
I declare that this project is my original work and has not been exhibited or published in any way and has never been presented for any awards in any institution. Name: Signature. Date...

This project has been submitted for examination with my approval as the supervisor.

NameSignature .... .Date. This project has fulfilled the Quality Assurance Policy requirements

NameSignature... Date. Head of Quality Assurance This project has been submitted for examinations with my approval as the moderator.

Name.Signature. Date. Project Assessments coordinator This project has been submitted for examinations with my approval. Name. Signature..Date... Dr. Humphrey Oborah Head of Missions and Curriculum Manager, Digital Advisory and learning Centre.

ACKNOWLEGMENT
My sincere gratitude to the management of Edcomm Systems Limited for granting me the opportunity to use the company for this project and allowing me to carry out the research, and also for those staff willingly and candidly offered the backbone of this research. I also want to thank my classmates for giving me courage and support in carrying out my research and for my family and friends for supporting me financially and morally. Finally, I appreciate the generous support of the Digital Advisory and Learning Centre [DALC] for giving me the opportunity to complete my Graduate Diploma course in a conducive learning environment, my lecturer, for the critics and guidance that he provided during the entire process.

EXECUTIVE SUMMARY
The study is about Product Life Cycle as a marketing strategy practiced by Edcomm Limited. It attempts to describe the stages in which a product undergoes throughout its lifetime in the market. The main objective of the study is to determine the effectiveness of the product life cycle used by Edcomm as a marketing strategy which involves establishing the stages a products lifetime in the market. The researcher also seeks to find out the best stage of a product life cycle when the sales are up. The research design used in the study is that of case study research method, an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident. The target population was hundred{100} the researcher randomly selected the sample size from senior level management, upper level, middle level management, and operations department and narrowed it down to twenty respondents, the departments, in stratified random sampling, so as to achieve desired representation from the various subgroups in the population are more or less reproduced in the sample. The researcher used few freedom of response. The questionnaires were then send to the staff and were collected after three days, because some of the staff was busy and some were not available. The data obtained was edited for mistake, coded, key-punched in Excel software then used to validate and verify the information. The researcher found that Edcomm System was implementing Product Life Cycle as a marketing strategy.

No of words: 3,638

TABLE OF CONTENTS Contents Declaration Acknowledgements Executive summary Table of contents List of figures and tables CHAPTER ONE: INTRODUCTION PAGES i ii iii iv v

1.1. Background of the study 1.2. Background of the company 1.3. Organizational structure of the company 1.4. Department of study 2

4 4

CHAPTER TWO: LITERATURE REVIEW

2.1. Theoretical Review 2.2. Empirical Review 2.3 Critical Review 2.4 Missing Gap CHAPTER THREE: STATEMENT OF PROMBLEM 3.1. Problem Specification 3.2. Problem solution 3.3. Broad Objectives 3.4. Specific Aims

5 8 8 9

10 10 10 11

CHAPTER FOUR: RESEARCH DESIGN AND METHODOLOGY

4.1. Research Design and Methodology 4.2. Sample Population 4.3. Sampling Technique 4.4. Data Collection Method 4.5. Data analysis Method CHAPTER FIVE: FINDING OBSERVATION AND ANALYSIS 5.1. Results and Findings 5.2. Interpretation of the results 5.3. Conclusion 5.4. Limitation of the study

12 12 12 13 15

16 17 19 19

References Appendix

LIST OF FIGURES AND TABLES Figure 1: Tables 1: 2 3. Graph 1: Organization structure of Edcomm Systems Limited Details of the respondents at top management Details of the respondents at middle level management Details of the respondents at operational level Bar chart response from the questionnaire

PAGE 4 16 17 18 16

2. 3.

Bar chart response from the questionnaire Bar chart response from the questionnaire

17 18.

CHAPTER ONE: INTRODUCTION 1.1Background of the study

Marketing is an organizational function and a set of process for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Marketing is a societal process by which individual and groups obtain what they need and want through creating and offering and freely exchanging products and services of value with others.

Marketing is also based on the premise that the customer is the most important person to the organization. Most people think of the term customer in the context of a profit making facility. Whilst it is true that the marketing concept has been more widely adopted and practiced in the profit making sector of the economy, the fundamental principles of marketing are equally applicable in not for profit sector, a factor that is often overlooked. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally marketing should resort in a customer who is ready to buy. All that should be needed is to make the product or service available.

After launching the new product, management wants the product to enjoy a long and happy life. Product Life Cycle is course of products sales and profits over its lifetime. It involves five distinct stages; Product development, Introduction, Growth, Maturity, and Decline stages.

1. 1.2 Background of the company Edcomm Systems Limited was established by a group of ambitious businessmen in 1985 in Kapiyo area of Bondo District in Kenya. The company has employed approximately 407 employees. It has its sister companies spread over six neighboring countries. It is one of the leading textile mills in East Africa producing International quality standards of textile in knits, woven, spun, yarn, as well as of knitted garments. It manufactures 100% cotton combined yarn, complete rage of woven and knitted fabrics, knitted garments of different

styles, sewing threads, terry towels, mosquito nets and bed sheets for both domestic and foreign market. Spinning Division: The spinning division has over 5,000 spindles and 400 rotors. It caters mainly to the raw material need of the weaving and knitting division. It also supplies to the domestic consumers. It manufacturers yarn of 100% cotton, 100% polyester and yarn of various blends like polyester cotton viscose etc, yarn being manufactured are of carded yarn as well as combed yarn of various counts ranging from 6s of grey and dyed. Weaving Division: The weaving division has over 130 sulzer and the state, of art processing machines from thies, Bruckner and benninger. The division is the largest sulzer installation in East Africa. It manufactures very delicate fabrics like lining materials to the toughest canvas materials. Though it makes a variety of fabrics, it is very specialized in the lining and suiting materials. It has processing capacity of 18 million meters per annum. The processing and finishing house of the unit has modern facilities like singeing, raising, calendaring, printing etc.

2.

Garment Division: It is one of the largest procedures garment in Kenya. It has a capacity to produce 4 million garments in an annum. It manufacturers t-shirts, sports shirts, polo-shirts, sweatshirts, leggings, shorts, jogging suits, industrial suits, mosquito nets, bibs and ladies wears for both domestic and export materials.

Mission: To provide world class services and be certified by I. S. O certificate by the year 2015 Vision: To be the best company in Kenya by the year 2010 Organization Objective: To deliver sufficient and efficient good s and services to our esteemed customers at a lower cost

3. 1.3 Organizational structure of the company Managing Director

General Manager

Secretary

Production Manager

IT & Communication Manager

Sales & Marketing Manager

Financial Manager

HRM Manager

Asst. Production Manager

Asst. IT & Communication Manager

Asst. Sales & Marketing Manager

Accountant

Asst. HRM Manager

Production Supervisor

Support Staff

Accounts Clerk

Laborers

Source: Researcher, 2008 1.4 Department of study-sales & marketing department T he Sales & Marketing Manager assisted by his deputy ensures that the organization remains competitive by providing information about what products and services the markets wants and what sort of prices will pay by having market intelligence on current sales activities; sales representatives provide weekly sales reports and also designs and develops advertising materials and campaigns aimed at increasing sales. The corporate has a functional organization structure. Each department is therefore interdependent of each other. 4.

CHAPTER TWO: LITERATURE REVIEW 2.1 Theoretical Review

Product Life Cycle {PLC} is the course of a products sales and profits over its lifetime. Product life cycle has five distinct stages; Product development, introduction, growth, maturity, and decline. Not all products follow this product life cycle. The Product Life Cycle concept can be applied by marketers as a useful of framework for describing how products and markets work. This is according to Philip. K. and K. L. Keller, 2006, 12e.

The stages through which individual products develop over time are called commonly known as the Product Life Cycle. The classic product life cycle has four stages; introduction; growth; maturity and decline. This is according to the website, tutor2u.net/business/marketing/products-life cycle. Asp.

The product life cycle concept suggests that a product passes through four stages of evolution. Introduction, growth, maturity and decline. As a product evolves and passes through theses four stages profit is affected and different strategies have to be employed to ensure that the product is a success within its market. This is according to the website, Learn Marketing.net/productlifecycle.htm The product life cycle has four distinct stages: 2.1.1 Introduction Stage: The Introduction stage starts when the new product is first launched. Introduction takes time and sales growth is apt to be slow. In this stage, profits are negative or low because of the low sales and high distribution and promotion expenses. Much money is needed to attract distributors and build their inventories. Promotion spending is relatively high to inform consumers of the new product and get them to try it.

5. 2.1.2 Growth Stage:

If the new product satisfies the market, it will enter a Growth stage, in which sales will start climbing quickly. The early adopters will continue to buy, and later buyers will start following their lead, especially if they hear favorable word of mouth. Attracted by the opportunities for profit, new competitors will enter the market. Profits increase during the growth stage, as promotion costs are spread over a large volume and as unit manufacturing costs fall. It improves product quality and adds new product features and models. It enters new market segments and new distribution channels. It shifts some advertising from building product awareness to building product conviction and purchase, and it lowers prices at the right time to attract more buyers. In growth stage, the firm faces a trade-off between high market share and high current profit. By spending a lot of money on product improvement, promotion, and distribution, the company can capture a dominant position. 2.1.3 Maturity Stage: At some point, a products sales growth will slow down, and the product will enter the Maturity Stage. This maturity stage normally lasts longer than the previous stage, and it poses strong challenges to marketing management. The slowdown in sales growth results in many producers with many products to sell. Competitors begin marking down prices, increasing their advertising and sales promotion, and upping their R & D budgets to find better versions of the product. These steps lead to a drop in profit. Some of the weaker competitors start droping out, and the industry eventually contains only well-established competitors. The company might also try modifying the product-changing characteristics such as quality, features, or style to attract new users and to inspire more usage. It might improve the products quality and performance-its durability, reliability, speed and taste. It can improve its product styling and attractiveness. Or the company might add new features that expand the products usefulness, safety or convenience.

6. Finally, the company tries modifying the marketing mix-improving sales by changing one or more marketing mix elements. It can cut prices to attract new users and competitors customers.

It can launch a better advertising campaign or use aggressive sales promotions-trade deals, cents-off, premiums, and contests. The company can also move into larger market channels, using mass merchandisers. Finally, the company can offer new or improved services to buyers. 2.1.4 Decline Stage: The sales of most product forms and brands eventually dip. The decline may be slow. Sales may plunge to zero, or they mat drop to a low level where they continue for many years. This is the Decline Stage. Sales decline for many reasons, including technological advances, shifts in consumer tastes, and increased competition. As sales and profits decline, some firms withdraw from the market. Those remaining may prune their product offerings. They may drop smaller market segments and marginal trade channels, or they may cut the promotion budget and reduce prices further. Keeping weak products delays the search for replacements, creates a lopsided product mix, hurts current profits, and weakens the companys foothold on the current profits. For these reasons, companies need to pay more attention to their aging products. The firms first task is to identify these products in the decline stage by regularly reviewing sales, market shares, costs, and profit trends. Then, management must decide whether to maintain, harvest, or drop each of these declining products. Management may decide to maintain its brand without change in hope that competitors will leave the industry. Or management may decide to reposition or reformulate the brand in hopes of moving it back into growth stage of the product life cycle. Management may decide to harvest the product, which means reducing various costs and hoping that sales hold up. If successful, harvesting will increase the companys profit in the short run. Or management may decide to drop the product from the line. It can sell it to another firm or simply liquidate it at salvage value. If the company plans to find a buyer, it will not want to run down the product through harvesting. 7.

2.2 Empirical Review

Over the last 20years, Edcomm Systems Limited has established itself in many countries. Many people are aware of the products that they produce and the quality of the product. In

some way, the company has not changed much since 1985. But a closer look reveals that Edcom Systems has made adjustments to keep the brand out of decline. The company has added stream of new colors, shapes, sizes from the original ones and improved the quality of the products. Edcomm Systems Industry has extended the products to new market to other six countries. The new products include bed sheets, mosquito nets, sewing threads and terry towels. The company has added new machines to help producing 4 million garments per annum which meet the large demand of consumers around the continent. Thus Edcomm Systems continues its long and colorful life cycle. Through smart product life cycle management, Edcomm Limited has dominated the market almost 25 years.

2.3 Critical Review

The Product Life Cycle helps marketers interpret product and market dynamics. It can be used for planning and control, although it is useful as a forecasting tool. Suppose a brand is acceptable to consumers but has a few bad years because of other factors- for instance poor advertising, delisting of a major chain, or entry of a me-too competitive product backed by massive sampling. Instead of thinking in terms of corrective measures, management begins to feel that its brand has entered a declining stage.

8. It therefore withdraws funds from the promotion budget to finance R& D on new item. The next year the brand does even worse, panic increases.

Clearly, the Product Life Cycle is a dependent variable to which is determined by marketing actions; it is not independent variable to which companies should adapt their marketing programme. Some products in Product Life Cycle die quickly; others stay in the market until maturity stage for along long time.

2.4 Missing Gaps

The missing gap is that many companies including Edcomm Limited do not consider other concept in marketing actions which may as well affect the performance of the product. When determining the product life cycle as a marketing strategy, it should be noted that other factors like poor advertising, delisting by a major chain or entry of a me-too competitive product backed by massive sampling may affect how a product perfumes in the market. The other marketing actions should be analyzed effectively for a product to be successful in the market.

9.

CHAPTER THREE: STATEMENT OF THE PROBLEM 3.1 Statement of the Problem

Due to strong performance in Edcomm systems, it was recommended that their product life cycle be analyzed. It was found that the P.L.C. doesnt do well as a marketing strategy. Customers are not satisfied with the products in the market. The improvements of the products do not satisfy the customer hence a big turnover is experienced at the end of the year. The organization sales volume is reducing drastically

3.2 Proposed Solution

It should focus more on customer satisfaction to improve sales. It should focus more on when to improve the product and how it is going to satisfy the customer. They should consider educating the customer with programmes; communicating with the public and explaining to them about the products and how its will help them once modified or removed from the market through promotion, advertising etc. Also the company should use customer focus strategies to achieve organizational goals. This should be done by looking at which stage aggressive promotion mix should be implemented, when is the continuous marketing research programme be done so as to improve the sales of the products.

3.3 Project Broad Objective

The project broad objective of the study is to provide an opportunity to demonstrate Product Life Cycle as a marketing strategy. This objective can be achieved by the researcher revealing the various stages a product goes through its lifetime in the market. To investigate the Strategy used by the company, it requires an analysis of the Product Life Cycle which has been implemented by Edcomm Systems Limited.

10.

3.4 Specific Aims

To determine the effectiveness of the Product Life Cycle used by Edcomm Limited as a marketing strategy, this involves establishing the stages of a Products lifetime in the market.

To find out the best stage of a product life cycle when the sales are growing. To research on the best marketing strategy to implement on a product

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CHAPTER FOUR: RESEARCH DESIGN AND METHODOLOGY 4.1 Research Design and Methodology

The researcher used Case Study and research method. A Case study entails the detailed and intensive analysis of a single case. As Stake {1995} observes, case study research is concerned with the complexity and particular nature of the case in question. It is certainly true that exponents of the case study design often favour qualitative methods, such as participant observation and unstructured interviewing, because these methods are viewed as particularly helpful in the generation of an intensive, detailed examination of a case. With a case study, the case is an object of interest in its own right and the researcher aims to provide an in-depth elucidation of it. The researcher design and the collection of data are guided by specific research questions that drive from theoretical concerns.

4.2 Sample Population

The sample population was hundred {100} staff members, the researcher randomly selected the sample size from the senior management, middle management and operational staff. And narrowed it down to twenty {20} staff, and the researcher used Stratified random sampling, so as to achieve desired representation from various levels of the staff members, from Edcomm Systems Limited in Kenya.

4.3 Sampling Technique

The researcher used Stratified random sampling-this technique involves when the researcher divides his population into different Strata by some characteristics which is known from previous research or theories to be related to the phenomenon under investigation, and from each of the smaller homogenous groups falling in each Strata, the researcher draws randomly a predetermined number of units. The advantages of Stratified sampling are to ensure that the resulting sample will be distributed in the same way as the population in terms of the stratifying criterion.

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4.4 Data Collection Methods.

The researcher obtained Primary data; which refers to the information obtained from the field, i.e. from respondent in the sample and the data that was derived from questionnaire and interviews. Questionnaire was used by the researcher to obtain important information about the population. Each item in the questionnaire was developed to address a specific objective, researcher question or hypothesis of the study. The researcher used Structured/ closed-ended questions this refers to questions which are accompanied by a list of all possible alternatives from the respondents select the answer that best describes this situation, Advantages of Structured / Closed-ended questions o They are easier to analyze since they are in an immediate usable form o They are easier to administer because each item is followed by alternative answers o They are economical to use in terms of time and money. Disadvantages of Structured / Closed-ended questions o They are more difficult to construct because categories must be well thought out. o Responses are limited, and the respondent is compelled to answer questions according to the researchers choices. The researcher also used Unstructured/ open-ended questions- this refers to questions which give the respondent complete freedom of the response, these free response questions permit an individual to respond in his or her own words.

13. Advantages of Unstructured / open-ended questions

o They permit a greater depth of response. When a respondent is allowed to give a personal response, usually reasons for the response given may directly or indirectly o Open-ended questions are also simpler to formulate mainly because the researcher does not have to labour to come up with appropriate response categories. o The respondents may give and insight into his feelings, background, hidden motivation, interests and decisions. o Open-ended questions can stimulate a person to think about his feelings or motives and to express what he considers to be most important. Disadvantages of Unstructured / open-ended questions o When the respondent is free to give and individual response deemed to be proper, there is a tendency to provide information which does not answer the stipulated research questions or objectives. o The responses given may be difficult to categorize and hence difficult to analyze quantitatively. Whenever information cannot be categorized, it is advisable to include it in the study in narrative form. Some openended responses are very useful for qualitative analysis. o Responding to open ended questions is time consuming. This may put off some respondent.

14. After the questionnaires were set, they were taken to Edcomm Systems Limited, and since some of the respondents were not available they were then left with the

receptionists and were then collected after three working days. The data obtained was edited for mistake, coded, key-punched in Excel software then used to validate and verify the information.

4.5 Data Analysis Methods

The researcher used Charts to analyze the data collected from Edcomm Limited. Charts are advantageous because they are relatively easy to interpret and understand. Bar charts represent the number of people falling in each category. Another way of displaying the same data is through Pie Charts- this allows the relative size of the different categories but brings out as well the size of each slice relative to the total sample.

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CHAPTER FIVE: DATA ANALYSIS, RESULTS AND FINDING

5.1 Data Tabulation & Analysis Table 1: Top Level Management

Sales& Analysis Marketing Manager Those who are satisfied with P.L.C as a marketing strategy Those who are not satisfied with P.L.C as a marketing strategy Total 4 4 4 3 2 3 1 2 1 Financial Manager Production Manager

Evaluation of PLC as a marketing strategy for Top Level Management

3 2.5 2 1.5 1 0.5 0 Satisfied Need Change Sales and Marketing Department Financial Department Production Department

Most of the Top management level felt that the PLC as a marketing strategy that has been implemented in the organization is not to the satisfaction level. Therefore there is a need for change 16.

Table 2: Middle level Management

Sales & Analysis marketing Manager Those who are satisfied with P.L.C as a marketing strategy Those who are not satisfied with P.L.C as a marketing strategy Total 6 5 1

Financial Manager

Production Manager

Evaluation of PLC as a marketing strategy for Middle level Management

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Sales and Marketing department Financial Department Production Department

Satisfied

Need Change

Most of the middle level management level felt that the plc as a marketing strategy that has been implemented in the organization is not to the satisfaction level. Therefore there is a need for change 17.

Table 3: Operational Staff

Sales & Analysis Marketing Financial Manager Production Manager

Manager Those who are satisfied with P.L.C as a marketing strategy Those who are not satisfied with P.L.C as a marketing strategy Total 10 10 10 2 8 6 5 3 7

Evaluation of PLC as a marketing strategy with Operational Staff

8 7 6 5 4 3 2 1 0 Satisfied Need Change Sales and Marketing Department Financial Department Production Department

Most of the operational staff level felt that the P.L.C as a marketing strategy that has been implemented in the organization is not to the satisfaction level. Therefore there is a need for change

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5.2 Conclusion and Recommendations

After describing and evaluating the marketing strategy used in Edcomm Systems Limited, it is clear that they are using Product Life Cycle {PLC} and looking at the findings in chapter four it is clear that the company needs to change its marketing strategy because not

every one is satisfied with it. Edcomm Limited needs to change its marketing strategy so as to identify their potential long-run opportunities given the market experience and core competencies. The company must develop concrete marketing plans that satisfy the marketing strategy and tactics going forward.

5.3 Limitation of the study

The interview not available for face to face encounter, they were very busy restricted study to a secondary data examination. Therefore, the researcher was not able to obtain the primary data. Time duration, there was not enough time to carry out the research, the researcher had only a month to carry out the research and produce the report. Due to confidentiality, some of the staff was unable to answer some of the questions, fearing that it would jeopardize their jobs.

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References:
Lokesh Koul, 2004, Methodology of Educational Research, New Delhi, India

Philip Kotler, Kevin Lane Keller, 2006, Marketing Management, 12e, Pearson Prentice Hall, USA

www.google.co.ke Philip Kotler, Gary Armstrong, 2006, 11e, Principle of Marketing, Pearson Prentice Hall, USA

Stephen P. Robins & Mary Coulter, 2005, Management 8th Edition, Pearson Education Inc, New Jersey USA

Tim Hannagan, 2002, Management Concepts and Practices, 3rd Edition, Pitman Publishing, Great Britain

Questionnaire:
1. At what level are serving this company?

Senior Management

Midlevel Management

Operational staff

2. How long have you worked in this organization and what is your job function?

3. What is your opinion on PLC as a marketing strategy?

4. Is your organization using PLC as a marketing strategy? Yes No

5. If your answer to the above question is YES, indicate which stage has been successful? _____________________________________________________________________ 6. Is the Marketing strategy been used by the organization efficient and effective in your opinion? Yes No

7. Which would be the best marketing strategy that the organization should use?

8. What is the customers perception of Edcomm Systems Limited? Excellent average Very good Good Average Below

9. What is the perception of major competitor vs. Edcomm Systems Limited?

10. Has the company participated in any corporate social responsibility? Yes No

11. If your answer to the above question is YES, indicate the date and event?