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Figure 11.3: Sales and Profit Life Cycles

Figure 11.3: Sales and Profit Life Cycles. Product Life-Cycle Marketing Strategies. Issues in Collecting and Using Information #6. Invasion of customer privacy e.g., use of medical databases to sell healthcare products Information and ethics

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Figure 11.3: Sales and Profit Life Cycles

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  1. Figure 11.3: Sales and Profit Life Cycles

  2. Product Life-Cycle Marketing Strategies

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

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

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

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

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

  8. Figure 9-2: Barriers and Profitability

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