Product Life Cycle

Compaq notebooks 1. 0 INTRODUCTION Compaq calculating machine, based in Houston, Texas, is the worlds largest individual(prenominal) computer manuf snatchurer and the fourth largest information technology (IT) guild. From 1992-1997, the companys aggressive spicy volume PC st come ingy propelled it to high growth grade in revenues, while its leadership in PC servers sustained strong margins and drove profit growth. Starting in 1995, former CEO Eckhard Pfieffer began to transform Compaq from a pure PC company to a full-service IT company, with the goal of becoming a $50 billion company that could compete with the likes of IBM and Hewlett-Packard.The key strategic moves were the acquisitions of Tandem Computer and Digital Equipment Corporation in 1997 and 1998, giving Compaq a diverse line of technologies and service capabilities. Compaq began revamping its information systems in 1994, building global enterprise information systems to check its glob solelyy optimized manufacturing and order fulfillment operations. The systems were built primarily around SAP applications, running on Compaq PC servers and the Windows NT operating system in order to usher that large enterprise systems could run on Compaq hardw atomic number 18.Compaqs IT people were forced to distribute the SAP applications across ten interconnected sites around the world and sew extensively in order to run on Windows NT and meet Compaqs ineluctably. Compaq stumbled badly in 1998 as it faced raw(a) challenges in the PC merchandise and tried to assimilate Tandem and Digital. In particular, Compaq struggled to catch up with dell Computer, whose direct gross revenue build-to-order simulation gave it a big advantage in cost and speed over Compaqs indirect sales, build-to-forecast approach.When the company disappointed investors with poor results in 1999, the board removed Pfieffer, who had been credited for Compaqs previously stellar performance. Since Pfieffers departure, Compaq has reorgan ized itself along business lines, streamlined its distribution channels and developed a new electronic commerce strategy called NonStop eBusiness. Compaq has gone through with(predicate) a series of IT reorganizations aimed at giving business units more control over IT decisions and imagings. Compaqs new CEO, Michael Capellas, came to the company in 1998 as CIO and was the force back tooth this reshaping of the IT organization.It is likely that newly hired CIO Robert V. Napier exit continue the process in order to align IT with the new corporate structure, while also working to put on Compaqs e-business strategies. Since 2007 till now Compaq friendship has many harvests as follow in 2007 they provide laptop computer Compaq Presarios to their customer, in 2008 they improve and developed Aero 4/33c Notebooks, and in 2009 they provide new model E500S Notebooks, 2011 EZ2700 Desktops and LT 486/33 Desktops at the same year. 2. 0 Compaq Cash flow The issues of cash flow for each play of the merchandise brio cycle they be complete each other.Cash flow for a product as it moves on the life cycle curve will change. Its actually important to know and plan each spirit level for our product to be success. 2. 1cash flow in the five decimal points Introduction face, The introduction of a new product onto the market is typically characterised by very slow sales, which may grow besides very slightly over a long period of sentence. Whilst benefit will gradually improve during this stage, it may take until near the completion of the introductory stage in the PLC before the company witnesss dogmatic profitability.The reason for such low profitability during this stage is not so much the limited success of the product measured in terms of low, albeit growing, sales but the high costs of production and promotion that are required to try to develop customer sensory faculty. R&D expenses are real high for Compaq in especially in terms of smart laptop, becaus e now Compaq is moving in a new path of technology and there is no resource for them to use in order to reduce the R&D costs.Particularly in case of their new product Compaq Notebooks and Compaq Desktops that is already in introduction stage we net see some spectacular features for the first time about the Desktops. For example one of the new technologies that are used in Compaq Desktops is that it has a high type and high processor. So we can see clearly that all of these new technologies chip in a heavy cost for producers. That is the reason that Compaq invests at least 13% of its sales revenue into R&D activities every year. For example Compaq spent $45 million on R&D this year compared to its competitor Dell 25 million. Growing stageThe growth stage in the PLC typically involves a rapid growth in sales as early adopters replace pioneers as the main consumer group. Whilst pioneers are characterized as those consumers who purchase products almost immediately when new products a re launched, early adopters wait until the price starts to fall and some of the products potential weaknesses are ironed out. Compaq sales steadily increased as the product was promoted and became well known. It maintained growth in sales until 2010 through expanding the original product with new developments of quality, style, speed and price the total of cash flow.Compaq Desktops unit sales in 2009 14. 9 million PCs units and 10 million laptop units. Actually the growth stage for each company is a start point to collect its cash flow by the time, but for Compaq it starts form the first date of the product display directly. There are many devices in the market with Compaq product and run, why people prefer Compaq desktop? Quality, brand, price and speed. Maturity stage The maturity stage in the PLC is a key point for a firm because it marks the turning point in the products success.Typically, the growth in sales decreases quite importantly and manufacturers over-capacity (that is , larger than required inventories) results in a reaction by the firm and its competitors to slash price. In this stage Compaq desktop has a partner and that is Compaq Notebooks and Compaq Presario. This is the best extension strategy for this stage and it is totally clear that Compaq had planned for these year Compaq development groups knew that they bind to present such a powerful product with the capability of forepart in two stages at the same time.The total sales units in this year realise grown fast for Compaq in 2011 4. 721 thousand units. Declination stage Clearly, at this point, Compaq had to make a key business decision. Sales were falling the product was in decline and losing its position. Should Compaq let the product die, i. e. withdraw it from the market and kick the bucket space for their new product. 2. 2 The Degree of Competition Faced by the harvest-tide by Applying Porters Five Forces of Competitiveness. The degree of competition amongst the competitors is very high. Successful products attract other competitor businesses to start selling similar products or service.This indicates the third stage of the life cycle maturity. This is the time of uttermost profitability, when profits can be used to continue to build the brand. However, competitor brands from both Compaq itself (e. g. dell) and other company (e. g. acre) offered the same benefits and this slowed down sales and chipped away at computers market position. Compaq continued to support the development of the brand but some products (such as quality, price and style), struggled in a crowded market. 3. 0 Improving the familiaritys Financial PerformanceRecommendations to improve performance will be focused on the product attributes and benefits with the aims to enhance driving experience and build brand personality. 3. 1 Promotion Sales promotions have a significant effect on the behavior of consumers and disdains people. Such promotions can bring in more profits for the manuf acturers because they concede price discrimination. 1. Price discrimination Producers can introduce price discrimination through the use of sales promotions. They can charge different prices to different consumers and trade segments depending on how sensitive each segment is to particular prices.Coupons, special sales events, clearance sales and discounts are examples to explain the phenomenon. 2. Effect on consumer behaviour as sales promotions are mostly announced for a short period, customers may feel a sense of urgency and stop comparing the alternatives. They are persuaded to act now rather than later. 3. Effect on trade behaviour Short-term promotions present an opportunity and encourage shrouders to forward buy. This forward buying ensures that retailers wont to go out of stocks. As dealers have more than the normal stocks, they think it advisable to advertise in ocal media, ar hunt downd displays and offer attractive promotion deals to consumers. These actions dish in inc reasing the store traffic. 4- Exterior bod Exterior design is the key product attribute that plays an important role in enhancing the overall product brand image. We will look at compaq out-of-door design in terms of Shape Many feel that the overall design of compaq is not unequalled enough. compaq must invest in building its creativeness and innovative on it to have own characteristic outlook/shape of product brand image. intensity Product color the range offered by compaq in general not attractive or unique.As one of its core values is customer focus, compaq has to focus to be really customer oriented, knowing what the customers want and offer the range of colors that appeal to different market segment effectively. 5- Interior Design Interior design of the laptop refers to its overall instrument panels such as the keyboard, the dash board, the other accessories and special feature in the laptop which is perceived as not stylish. The materials used are also felt as average lo w quality. Throughout the years, there is not much improvement in this area which can WOW the consumers.In fact, all these features will help to create using experience. Interior design with aesthetic features and good sound protection will make the customer feels joy and unrestrained thus creating a strong positive feeling with the laptop using experience. 3. 2 Length of the Product tone Cycle Be Prolonged Compaq Company has many problems and some customers needs when they solve these problems the length of product life cycle will be longer, from improving their product, quality and price and other needs such as style color etc. Increasing Sales a promotion can stimulate product sales.Manufacturers commonly reduce the price of a product to induce customers to make a purchase. In the short term this can increase the number of units sold, which can lead to increased market serving in the long run if the customer permanently switches from a competitors brand. 4-Brand Loyalty sales promotions can also be used to increase brand awareness and loyalty. Clubs or special memberships provide consumers discounts or promotions for continued use. 5-Impulse Sales Sales promotions can generate impulse sales. A customer may not be aware of a product until she enters a store and sees a sign advertising a sale price.Impulse sales also result from in-store demonstrations. 6- Exterior Design Exterior design is the key product attribute that plays an important role in enhancing the overall product brand image. We will look at Compaq exterior design in terms of Shape Many feel that the overall design of Compaq is not unique enough. Compaq must invest in building its creativity and innovative on it to have own characteristic outlook/shape of product brand image. Color Product color the range offered by Compaq generally not attractive or unique.As one of its core values is customer focus, Compaq has to focus to be really customer oriented, knowing what the customers want and offe r the range of colors that appeal to different market segment effectively. 4. CONCLUSION Compaq business model has been analyzed in conjunction with the marketing mix that is employed to list its target Market. They build their brand name with their tagline, Compaq philosophy of low fares is aimed to make computers affordable for everyone. Compaq also aims at making using easy, convenient and fun for its customers.Their services and their pricing work together to identify their target market, however, their promotional activities and their distributional channel is aggressive developed, planned, and executed to target both foreigners and locals alike. Moreover, more advertising model should be developed and Compaq need to identify more suitable areas for distribution as more and more loss potential target could be captured which will at end generate huge revenue for Compaq. Reference Bliss, J. (1998). Expense May Thin Ranks Of AAP Plan, Computer Reseller News, April 13..Business Wi re, CompuCom Co-Locates with Compaq to Increase Manufacturing Efficiency and Reduce Product language Time and Cost, 7/7/98. Business Wire, Compaq Leverages Microsoft Partnership In Aggressive Internal Windows 95 Transition Global Rollout Will Enhance Customer Support, 8/15/95. Commercial Times (Taiwan), Compaq to Bring Taiwan Partners into Web-based Business System,. Compaq Annual Report, 1998. Compaq Annual Report, 1999. Compaq Annual Report, 2000. Compaq Annual Report, 2001. Compaq Annual Report, 2002. Compaq Annual Report, 2003. Compaq Annual Report, 2008. CNET News. om, Compaq inks deal with PCOrder. com,, June 29, 1999. Crothers, Brooke, Compaq sees shortfall, plans reorg, CNET News. com, June 17, 1999. Dedrick, Jason and Kenneth L. Kraemer, 1998. Asias Computer Challenge Threat or Opportunity for the United States and the World? New York Oxford University Press. Hamblen, Matt and Kathleen Ohlson Compaq Reality Sinks In, ComputerWorld, 6/21/99, Page 30 hoovers Online, Compaq profile. Industry Week, Whats Really Driving Apples Recovery, 3/15/99. Jackson, D. ()1998). ERP Glitches Disrupt Compaq Order System, The Australian 10 Nov, p36.Product life cycleThe Product Life Cycle is indeed important in marketing since it tells the manufacturers when is the right time to launch a product and how should they launch it. The cycle is concerned with the changes in the product, price, distribution, and the promotion. The Product Life Cycle has four phases, the introduction stage, growth, stage, maturity stage, and the decline stage.The introduction stage deals with the launching of the product. It concerns the product, price, distribution and promotion of the product. One good example for this is the Nokia N80i. This mobilise has a lot of other features that other phones do not have or it has combined features of different phones and it has turned into N80i. It is a good example because it has incisively entered the market, and with the latest features, it can on ly be afforded by those who have extra $500 in their pockets. It is during this stage that one promotes his product, giving out leaflets or pamphlets, having conferences, and the like. And I believe that Nokia has done well in this part.Second, comes the growth stage. This is the time when the company focuses on the growth of the revenue and their product being the preference product of the consumers. During this stage, the company heightens the distribution of the product. The growth stage is when you improve and make innovations on your product. One successful example would be the portable videodisk players.Portable DVD players have been launched for quite some time now. Furthermore, everybody is aware that there is this certain product available in the market. As of now, there is a variety of portable DVD players. They come in different colors and can play different kinds of file according to the buyers liking. It is definitely a good example for this stage.The third stage or ra ther the maturity stage is when the product is at its peak in the market. This is considered to be the most profitable stage. This is when price are decreased to have more buyers. Sales promotion is a must during this stage to maintain market share. This is also the stage wherein the company aims their product to different from the other supercede products in the market.For instance, personal computers have long been in the market. A lot of computer brands have also arose in the market, like, BenQ, Dell, Apple, and Linux. They have their own individuality and have their own identity. Furthermore, the prices of their personal computers have already decreased in comparison with its prices when it was first launched in the market.The last stage would be the decline stage. This stage is the time to decrease in production and price. This is when the product is almost obsolete, or there has been a change in the preferences of the consumers. Here are some ways to deal with the decline sta ge. The company may close shop or to fully stop production and sales, continue production at a lower rate while hoping competitors will close or leave the market. It can also be observed that in this stage, the distribution of the product becomes limited.This is what happened in the traditional cameras which only operate with film. Only few companies sell this kind of cameras, unlike then, when almost all of the camera manufacturers compete to have the best kind of camera with film. scarcely then, it has already been replaced by digital cameras that are a lot cheaper in the long run (since there are no costs for photo develop and film), and they also provide an instant preview of the picture and are equipped with different settings for different uses.As of now, cameras that operate with film are cheaper than digital cameras. Yes, traditional cameras are almost obsolete. It is only available for some photo and camera stores in the country. And there are almost no promotional offers for this product.As express earlier, products have cycles, thats why they have innovations to remain attractive and profitable in the market.REFERENCESBool, Hans. (2007). A Normal Product Cycle-Some Examples. Ezine Articles. http//ezinearticles.com/?A-Normal-Product-Life-CycleSome-Examples&id=480455Komninos, Ioannis. (2002). Product Life Cycle Management. Urban and regional Innovation Research Unit. http//www.urenio.org/tools/en/Product_Life_Cycle_Management.pdfProducts-Product Life Cycle. Tutor2u. http//www.tutor2u.net/business/marketing/products_lifecycle.aspThe Product Life Cycle. NetMBA. http//www.netmba.com/marketing/product/lifecycle/The Product Life Cycle (PLC). Marketing Teacher. http//marketingteacher.com/Lessons/lesson_plc.htm