ROLE OF ENTREPRENEURSHIP IN ECONOMIC PERSONAL CHARACTERISTICS OF

DEVELOPMENT SUCCESSFUL ENTREPRENEUR

Business Entrepreneur
o it is defined as an entity engaged in o an individual who undertakes the risk
commerce and trade usually having a profit associated with creating organizing and
motive owning a business

Entrepreneur Successful Entrepreneurs

o it is defined as one who integrates the three o persistent
resources mainly land, labor, and capital in o creative
order to make another good o responsible
o inquisitive
o goal-oriented
Process of Establishing a Business o independent
o self-confident
o Identifying the types of business o risk taker
o getting the initial capitalization
o selecting the place for business
o direct operation and management of the
Skills needed by Successful Entrepreneurs
business
o getting profits and or losses o communication skills
o human relations skills
o math skills
Initial Capitalization o problem solving and decision-making skills
o technical skills
o sole proprietorship and partnership
o basic business skills

micro business
Communication Skills
o 1,500,001 or a small-scale business with
1,500,001 up to 15 million o effective communication is a vital tool for any
business owner
o can help to foster a good working
relationship
Medium scale
- 15 million to 60 million more or less
Forms of Communication
o conserving
Large scale
o body language
- No limit in capitalization o writing
o presenting
o negotiating
o mediating
o debating
o leading
o cross-platforming
o listening
Human Relation skills Basic Business Skills

o empathy
o creativity
o curiosity
o learning
o time management
o adaptability
o strategic thinking
o efficiency
o resilience
Math Skills
o communication
o business math o networking
o reading and interpreting tables o finance
o computing discount o branding
o solving problems related with percentage o sales
o determining unit cost
o budget
o financing GETTING THE INITIAL CAPITALIZATION
o credit
o understand income
o sales tax, utility tax, property tax and o personal savings
miscellaneous taxes - certificate of employment
o insurance programs
o cost of manufacturing o loan
o business performance

Back to back loan

Problem Solving Skills
- depositor saving deposit or time deposit
o evaluate each situation used as collateral to advance the same
amount of money for whatever purpose it
may serve
6 Problem Skills that any Entrepreneur should
master
SELECTING THE PLACE FOR BUSINESS
o critical thinking
o creativity/lateral thinking
o initiative
o persistence Good place for business
o flexibility/ adaptability - defined as the marketplace with a lot of
o self-discipline buyers on consumers or a place which is
easy to access like a terminal

Technical Skills
DIRECT OPERATIONS AND MANAGEMENT
o coding
o wireframing
o the cloud
o big data Ii is important that the owner know something about
o online accounting and bookkeeping the product
o graphic design
One should know the material used, how the product
o communication
was produced and how to pack and sell them
o mobile
TYPE OF BUSINESS ORGANIZATION
4 TYPES OF BUSINESS ORGANIZATION
1.Sole Proprietorship
o Is a business owned and managed by only
one person
o Formed by a single individual
o Simplest form under which a business can
operate
o Don not have separate legal existence from
the owner
ADVANTAGE
• There are minimal cost and requirements
in the formation
• The owner can withdraw the assets and
profits of the business anytime at his or
her own discretion
• Decision making is solely in the hands of
the owner
• The duration of the life of the business
solely depend on its owner
• Owners can mix personal business
assets
• Simple taxation
DISADVANTAGES
• Resources are limited as the capital is
provided only by the owner
• The liability of the owner is unlimited as he is
accountable to all creditors of the business
• Infusion of knowledge in the management of
the business is limited to one person only,
which is the owner
2. Partnership
o is a business organization owned and
managed by two or more people who agree
to contribute money property or industry to a
common fund for the purpose of earning a
profit
ADVANTAGES
• There are minimal costs and requirements in
the information
• There are more funds contributed from the
investments of the partners
• There are infusion of more knowledge
experience and skills from two or more
partners
• There can be division of labor between or
among partners
DISADVANTAGES
• Unlimited liability
• Mutual agency
• Limited life
• Disagreements between or among partners
can lead to the withdrawal of one or more
partners
• Partner dissolution
OTHER FORMS OF PARTNERSHIP
• Limited partnership
➢ at least one partner has an unlimited
liability and at least one partner has a
limited liability
ADVANTAGE:
➢ Limited partners have limited
personal liability for business debts
as long as they do not participate in
management
➢ General partner can release cash
without involving outside investors in
management of business
DISADVANTAGE:
➢ General partners personal liable
for business debts
➢ More expensive to create than
regular partnership
➢ Suitable mainly for companies
that invest in real estate
• Limited liability partnership
➢ type of partnership that aims to
protect innocent from the malpractice
and wrongdoing of other partners
 ADVANTAGE:
➢ mostly of interest to partners in old
line professions such as low
medicine and accounting
➢ owners are not personally liable for
the malpractice and accounting
DISADVANTAGE:
➢ unlike limited liability company
owners remain personally liable
form many types of obligations
owned to business creditors
lenders and landlords
➢ Often limited to a short list of
professions
• Limited liability company
➢ have a features of both a corporation
and a partnership
➢ the owner called members and day
and joy limited liability
ADVANTAGES:
➢ owners have limited personal liability
for business debts even if they
participate in management
DISADVANTAGES:
➢ More expensive to create than
regular partnership
3. Corporation
o a form of business organization managed by
an elected board of directors the investors or
cold stockholders and the unit of ownership
is called share of stock
o is created by operation of law
o has the right of succession
o the law is the source of the power and
attributes
ADVANTAGES:
• The stakeholders only have a limited liability
• A corporation has continuous existence as
its life indefinite
• Shares of stocks can be transferred without
the consent off other shareholders
• Management of the corporations is vested
upon its board of directors
DISADVANTAGES
• A corporation entails may requirements and
is more costly than a partnership
• Distribution of net income depends upon the
declaration of dividends by the corporation
• in large corporations there is formal or
impersonal relationship between employees
and management due to the big number of
employees
4.Cooperatives
o it is a duly registered association of persons
with a common bond of interest were
voluntarily joined together to achieve a lawful
common, social, or economic and making
equitable contributions to the capital required
and accepting a fair share of the risk and
benefits of the undertaking in accordance
with a universally active accepted
cooperative principle
PURPOSES:
• to encourage thrift and savings mobilization
among the members
• to generate funds and extend credit to the
members for productive and provident
purposes
• to provide goods and services and other
requirements to the members
• to develop expertise and skills among its
members
• to acquire lands and provide housing
benefits for the members
• to ensure against loses of the members
• to promote and advance economic, social
and educational status of the members

CHARACTERISTICS
• It can sue and be sued under its own name
• It has the right of succession
• Members of a cooperative are subject to
limited liability
• It shall exist for a period nor exceeding 50
years from the date of formation
• Income of cooperative belongs to its
members
ADVANTAGES:
• the prices of products offered to consumers
are lower due to direct for cases of
cooperative members from producers or
manufacturers
• managed by the members, themselves thus
saving on management costs which leads to
lower prices of product inuring to the benefit
of the consumer
DISADVANTAGES
• there is limited capital due to underprivileged
members
• the cooperative is strictly for members only
and shares cannot be transferred to non-
members
• lack of efficient management as it is
managed only by its members
TYPES OF BUSINESS ACCORDING TO ACTIVITY
Business
o it is an organization that convert input or
resources such as materials, labor and
overhead into output which are usually either
goods or services
TYPES:
• Service companies
➢ Are firm that generally use their
employees to provide intangible
products to customers
➢ Example is law firm
➢ Banks, accounting, hospitals
• Merchandising companies
➢ It is a type of business engaged in the
buying and selling of goods
• Manufacturing companies
➢ Production of items to be sold
➢ Purchasing and converting of raw
materials to finished goods
BUSINESS PLAN
Internal environment
o consists of elements that have a direct
impact of on the business operations this
include the employees the board of directors
and the managers the elements of the
internal environment are directly control and
can be freely modified by the firm itself
External environment
o consists of factors that have indirect but
significant influence on the operations of the
business this factor can be controlled by the
firm
Two types of external environment
Microenvironment
o is also known as the operating environment
o it consists of the customers, suppliers
regulatory agencies and competitors
o the factors in this environment of a direct
relevance to the business operations but are
uncontrollable to a certain extent

Macroenvironment
o is also known as the general environment
o it consists of the economic political social
legal and technical environment of the
business organization
o the factors in this environment are beyond
the control of the firm but are important
determinants of the success
Business analysis Models
Illustrations for SWOT Analysis Models
STRENGTH
• Good brand image
• Well-known name
• Good reputation
• Cost advantage in production
• High market share
• Confidence in the market
• Customer loyalty or repeat business
• More advanced technology
WEAKNESSES
• Ineffective in production
• Falling profit
• Falling sales of the product
• Declining age of the life cycle of a product
• Poor reputation
• Lack of innovation and change
• Lack of adequate capital or having some
financial problems
• Customers losing confidence or increasing
complaints on the business
• Poor management or inefficient
organizational structure
OPPORTUNITIES
• Possible development of new products
• Expansion into new markets
• Development of a global brand
• Joint development with other companies
• Possible growing demand for a product in the
market
• Possible government policies encouraging
the growth of the business and its certain
products
THREATS
• Changes in law or regulation which may
prohibit or affect the production of a business
• Growing competition from local companies
• Increasing competition from foreign
companies
• New products developed by other
companies
• Marketing activities or strategies which will
be implemented by competitors
PEST ANALYSIS
o is an analysis model examining the external
environment in the global factors that may
affect business
o it can provide a quick and their standing of
external pressures facing a business and
their impact and possible constraints on itsit
is usually divided into four external
influences on a business political, economic,
social, and technological
Illustrations for SWOT Analysis Models
POLITICAL
Purposes:
o to find a how political development locally
nationally internationally affect the strategy
of a business
Areas to be Considered:
1. consumer laws and regulation
2. political pressures
3. government use of certain business activities
including local national or international
government political issues affecting a
business
ECONOMIC
Purposes
o to find how economic factors may affect on
the business
Areas to be Considered
1. consumer activities, such as spending
patterns
2. economic conditions such as inflation,
unemployment, growth
3. government policies such as fiscal,
monetary, exchange rates
4. the changes in production and labor market
SOCIAL
Purposes
o to find what competitive advantage a
business may gain by social changes
Areas to be Considered
1. aging population trend which may increase
services for old people
2. birth rate increase which may affect baby
product markets
3. security condition increasing climate cause a
business to increase insurance cost
4. pressure groups such as environmental
groups local community groups which may
prevent a business from polluting a river
SWOT ANALYSIS
o Also called SWOT matrix
o It is a strategic planning and strategic
management technique used to help person
on organizing identity
o It is sometimes called situation assessment
or situational analysis
o Is an incredibly simple yet powerful tool to
help you develop your business strategy
STRENGTH AND WEAKNESSES
o Are internal to your company
o You have some control and can change
o Example: your team, intellectual property
OPPORTUNITY AND THREATS
o For external part
o Things that are going on outside of your
company and in the larger market
o You can take advantage of your
opportunities and protect against threat but
you can’t change them
o Example: competitors
STRENGTH WEAKNESSES

Characteristics of a Characteristics of a
TECHNOLOGICAL business which give its business which make it
advantages over its disadvantageous relative
o to find how new technologies might affect the competitors to competitors
business activities
Areas to be Considered
1. the rate of technological change OPPORTUNITIES THREATS
2. the development of IT
3. the wide use of internet Elements in a company’s Elements in the external
4. the creation of new materials for production external environment environment that could
that allow it to formulate endanger the integrity
and implement strategies and profitability of the
to increase profitability. business
 o High sales of domestic products
o Free labor force
o Large number of suppliers
STRENGTHS WEAKNESSES
o Own production
What do you do well? What needs improvement? THREATS
What unique resources can What do competitors do
you leverage? better o Increasing competition
What do 3rd parties see as What resources do you o Adverse demographic changes
your strengths? lack? o Changing needs
o Dependence on suppliers
o Company breakdown
o High level of corruption
OPPORTUNITIES THREATS

What market opportunities What is your competition

are present? currently doing?
How can you leverage your Do your weaknesses Mission and Vision
strengths? expose your business?
What trends can you take What threats can hurt your
advantage of? business?
Mission
o A statement of the organization
purpose and what to accomplish in
the bigger environment
INTERNAL o It serve as a guiding hand for the
employees of the company
o A Mission Statement defines the
company's business, its objectives
STRENGTH
and its approach to reach those
o Long market presence and goodwill objectives.
o Alliance membership o Must be Market oriented must be the
o Very good geographical location defined company purpose to satisfy
o Tourist potential in the place of business customers need
o Customer segments o Product oriented “we”
o Low indebtedness and company assets o Example: “Our mission is to provide
a global online marketplace where
practically anyone can trade
WEAKNESSES practically anything enabling
economic opportunity around the
o Lack of political support world”
o High expenses
o High competition
o Insufficient advertising
o Low number of own stores

EXTERNAL

OPPORTUNITIES
o Market expansion
o Extension of assortment
PRODUCT PRODUCT MARKET
ORIENTED ORIENTED
MISSION MISSION
STATEMEN STATEMEN
T T
HOTEL We rent We are
rooms exceptional
operators
contemporar
y four - and
five - star
hotels , and
we create
value in
every
encounter
with our
owners ,
guests , and
associates

We delight
our guests
every time by
creating
engaging
experiences
from our
heart
FOOD We sell foods We produce
MANUFACTURE and market
R better value
branded food
and
beverage
products for
the greater
mass of
Filipino
consumers
everywhere
in the country
PERSONAL We make We ensure
CARE lotion, face exceptional
powder , consumer
shampoo , care
and other experiences
personal that
care strengthen
products trust and
loyalty , and
contribute
insights that
drive growth
Vision – o Help establish a framework for ethical
behavior
o Long term goal of the company
o States how the future will look if the
• Externally (in public)
organization fulfills its mission. It gives
o Enlist external support
company and its employees a common goal
o Create closer linkages and better
that must be achieved through collective
communication with customers,
efforts of everyone in the organization.
supplies and alliance partner
o Vision statement also describes the desired
o Serve as a public relation tool
future position of the company. Elements of
• Microenvironment
mission and vision statements are often
o Company management
combined to provide a statement of the
o Suppliers
company’s purposes, goals and values.
o Intermediaries
However, sometimes the two terms are used
o Customers
interchangeably.
o Competitors
How mission and vision statement work: o Publics
• Macroenvironment
o Typically, senior managers will write the
o Demographic
company's overall Mission and Vision
o Economic
Statements. Other managers at different
o Natural
levels may write statements for their
o Technological
particular divisions or business units. The
o Political
development process requires managers to:
o Cultural
▪ Clearly identify the corporate
• Characteristics of Effectively Worded
culture, values , strategy and
Vision and Mission
view of the future by
• Vision:
interviewing employees ,
o Graphic – the vision projects to the
suppliers and customers
market the kind of company that the
▪ Address the commitment the
management wants to create and the
firm has to its key
kind of company it aspires to be.
stakeholders including
▪ (Example: “to make people
customers , employees ,
happy” Walt Disney)
shareholders and
o Directional – describes the path
communities
where the company wants to go and
▪ Ensure that the objectives are
presents specific plans to move
measurable , the approach is
forward in the future
actionable and the vision is
▪ Example: “to bring inspiration
achievable
and innovation to every
▪ Communicate the message in
athlete in the world. If you
clear , simple and precise
have a body, you are an
language
athlete – Nike
▪ Develop buy-in and support
o Focused – the vision is very specific
throughout the organization
so managers are properly guided on
what to do in terms of resources and
• Internally (loob ng company)
strategies.
o Guide management's thinking on
o Flexible - Although the vision should
strategic issues, especially during
be focused, it allows room for
times of significant change
managers to change based on
o Help define performance standards
market situations, technological
o Inspire employees to work more
advancements, and customer
productively by providing focus and
preferences.
common goals
o Guide employee decision making
 ▪ Example: “Toyota will lead
the way to the future of
mobility, enriching lives
around the world with the
safest and most responsible
ways of moving people.
Through our commitment to
quality, constant innovation
and respect for the planet. We
aim to exceed expectations
and be rewarded with a smile.
We will meet our challenging
goals by engaging the talent
and passion of people , who
believe there is a better way”
– Toyota global
o Feasible – vision is achievable and
realistic
▪ Example: “ a personal
computer in every home
running Microsoft software” –
Microsoft
o Desirable – the vision is clear on why
the path is practically sensible and
serves the interests of members in
the long run.
▪ Example: “McDonald's vision
is to be the world's best quick-
service restaurant experience
being the best means
providing outstanding quality ,
service , cleanliness , and
value so that we make every
customer in every restaurant
smile”
o Easy to communicate – the vision is
easy to understand, articulated and
can be simplified into a powerful
slogan
▪ Example: “our vision is to put
joy in kids’ hearts and a smile
on parent’s faces” – toys r us
• Mission:
o A mission statement describes a
company's reason for its existence, it
answers the question why the
company exists. A good mission
statement identifies the company's
product and services: the customers'
needs that the company seeks to
satisfy: the target markets that it
wants to serve: and the approach to
be taken to satisfy customers' needs,
Lastly, it should present the
company's unique identity that
distinguish itself
▪ Example: Apple is committed
to bringing the best personal
computing experience to
students , educators , creative
professionals , and
consumers around the world
through its innovative
hardware , software , and
internet offerings
▪ Example: Facebook mission
is to give people the power to
share and to make the world
more open and connected.
PORTER’S FIVE FORCES ANALYSIS
o It is another tool that uses five industry forces
to determine the intensity of competition in an
industry in its profitability level
o Provides a framework for business unit
competitive actions
o Is a simple but powerful that you can use to
identify the main sources of competition
o Can help assess industry attractiveness
MICHAEL E. PORTER
o From Harvard University
o Studied a number of business organizations
and proposed that business level strategies
are a result of five competitive forces in an
environment
FIVE FORCES:
1. New entrants
2. Supplier power
3. Competitive rivalry
4. Substitutes
5. Buyer power
THREATS OF SUBSTITUE PRODUCTS o goods, services, events, person, places,
organization, ideas, experience
o Buyers ability to substitute your product
substitute that are easy and cheap to make
and reduce profits and eliminate the firm's
PRICE
competitive advantage
➢ number of substitutes product o is the sum of all values that customers give
available various propensity to a up to be the benefits of having or using a
substitute product
➢ swishing costs

BARGAINING POWER OF BUYERS
o How easy is it for buyers to drive prices
down?
➢ number of customers
➢ size of each customer order
➢ price elasticity of demand
➢ buyer’s ability to find the substitute
and
➢ switching costs
BARGAINING POWER OF SUPPLIERS
o This is determined by how easy it is for your
suppliers to increase their prices
➢ number and size of suppliers
➢ uniqueness of each supplier’s
products
➢ ability to form to find a substitute
PLACE
o location of the market and means of
distribution used in reaching it
PROMOTION
o it includes all the ways you felt your customer
about the product or services and how you
then market and sell to them
o advertising, public relation, sales promotion,
direct marketing, personal selling
PEOPLE
o develop the habit of thinking in terms of the
people inside and outside of your business
who responsible for every element of your
sales

PHYSICAL EVIDENCE

MARKETING MIX o the environment in which the service is

delivered and where the firm and customers
interact and any tangible components that
facilitate performance or communications of
o it is a dynamic combination of product price
the service
place and promotion that enable a company
to offer something to the market for
consumers consumption

4 P’s

PRODUCT
o it is anything that can be offered to a market
for attention acquisition use or consumption
that might satisfy a want or a need
 PRODUCT DECISION & STRATEGIES
Product – Anything offered to a market for attention,
acquisition, use, or consumption that might satisfy a
need or want.
Service – A form of product that consists of
activities, benefits, or satisfactions offered for sale
that are essentially intangible and do not result in the
ownership of anything.
THREE LEVELS OF PRODUCT
• Augmented Product
o Installation
o Delivery and credit
o Warranty
o After sale service
• Actual Product
o Packaging
o Brand name
o Quality level
o Design
o Features
• Core Product
o Core benefit or service
Product Classification
Products and services fall into two broad
classes based on the types of consumers that use
them – consumer products and industrial
products.
Consumer-Products Classification
➢ Consumer products are products and
services bought by final consumer for
personal consumption
➢ Consumer products include:
o Convenience products – consumer
product that the customer usually
buys frequently, immediately, and
with a minimum of comparison and
buying effort.
o Shopping products – are less
frequently purchased consumer
products and services that customers
compare carefully on suitability,
quality, price, and style.
o Specialty products – Consumer
products with unique characteristics
or brand identification for which a
significant group of buyers is willing to
make a special purchase effort.
o Unsought products - consumer
products that the consumer either
does not know about or knows about
but does not normally think of buying.
Industrial-Products Classification
➢ Products bought by individuals and
organizations for further processing or for
use in conducting a business.
➢ The three groups of individual products and
services includes:
o Materials and parts
o Capital items
o Supplies and services
BRANDING DECISIONS
• Branding
➢ Identifies and helps differentiate the goods or
services of one seller from those of another.
➢ It consists of a name, sign, symbol, or some
combination thereof.
• Brand name
➢ Is the part that can be vocalized.
• Brand mark
➢ Is something that cannot be verbalized, such
as symbol, design, or unique packaging.
BRANDING STRATEGIES
1. Individual Branding
- Requires the company to provide each
product or product line with a distinctive
name.
- Ex. P&G – Tide and Ariel detergent, Head &
Shoulders, and Pantene shampoo,
Safeguard.
2. Family Branding
- Uses the same brand name to cover a group
of products or product lines.
- There are several variations of family
branding including its use primarily with
related items, its use with all company items
regardless of whether they are use-related
(General Electric), and the use of a family
name combined with individual product
name.
PACKAGING DECISIONS Step 2: Idea Screening

• Packaging ➢ The purpose is to identify good ideas and

➢ The activities of designing and producing the drop poor ones to avoid spending any more
container or wrapper for a product. money on developing them
• A product’s package serves several ➢ Criteria used:
functions: o Is the product truly useful to
➢ Protection consumers & society
➢ Facilitating use o Availability of market
➢ Promoting the product o Does it mesh well with company’s
➢ Providing information about the product objectives & strategies
o Do we have the people, skills &
resources to make it successful
NEW-PRODUCT DEVELOPMENT STRATEGY o Does it deliver more value to
❖ A firm can obtain new products in two ways: customers than competing products
• Through acquisition – by buying a whole o Is it easy to advertise and distribute
company, a patent, or a license to produce o Availability of technology
someone else’s product. o Availability of raw materials
• Through new product development o Risk exposure, profitability,
❖ In business, New Product Development cost/benefit
(NPD) – is the term used to describe the o Government priority
complete process of bringing a new product or o CRITICAL SUCCESS FACTOR
service to market. Step 3: Concept Development and Testing
➢ Product Idea
NEW-PRODUCT DEVELOPMENT STRATEGY o is an idea for a possible product that
the company can see itself offering to
Idea Generation → Idea Screening → Concept the market.
➢ Product concept
Development and Testing → Marketing Strategy →
o Is a detailed version of the idea stated
Business Analysis → Product Development → Test in meaningful consumer terms.
Marketing → Commercialization ➢ Product image
o Is the way consumers perceive an
actual or potential product.
NEW PRODUCT DEVELOPMENT PROCESS
1. Develop Product Ideas
Step 1: Idea Generation
into Alternative Product
➢ Is the systematic search for new product Concepts
ideas obtained internally and from:
d
C D
C I S 2. Concept Testing – Test
O
U S U the Product Concepts with
M
S T Groups of Target
P P Custommers
T R P
E
O I
L
T
M B
I I
E U
T T E
R R
O O 3. Choose the Best One
S S
R R
S S
Step 4: Marketing Strategy Development
➢ Designing an initial marketing strategy for a
new product based on the product concept.
➢ Marketing strategy statement Formulation
❖ Part 1 Describes Overall:
o Target Market
o Planned Product Positioning
o Sales & Profit Goals
o Market Share
❖ Part 2 Describes Short-Term:
o Product’s planned price
o Distribution
o Marketing Budget
❖ Part 3 Describes Long- Term:
o Sales & Profit Goals
o Marketing Mix Strategy
Step 5: Business Analysis
➢ A review of the sales, costs, and profit
projections for a new product to find out
whether these factors satisfy the company’s
objectives.
Step 6: Product Development
➢ A strategy for company growth by offering
modified or new products to current market
segments. Developing the product concept
into physical product in order to ensure that
the product idea can be turned into a
workable product.
Business Analysis
Review of Product Sales, Costs, and Profits
Projections to See if They Meet Company
Objectives
If NO, Eliminate
Product Concept
If YES, Move to Product
Development
Step 7: Test Marketing
➢ The product and marketing program are
tested in more realistic market settings.
• Standard Test Market – full marketing
campaign in a small number of representative
cities.
• Controlled Test Market – a few stores that
have agreed to carry new products for a fee.
• Simulated Test Market – test in a simulated
shopping environment to a sample of
consumers.
Step 8: Commercialization
➢ Commercialization is the introduction of the
new product into the marketplace.
➢ d
Where To
How?
When? Whom?
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PRODUCT LIFE-CYCLE (PLC)
The course of a product’s sales and profits over its
lifetime. It involves five distinct stages:
1. Product development
• Begins when the company finds and develops
a new-product idea. During product
development, sales are zero and the
company’s investment costs amount.
2. Introduction
• Is a period of slow sales growth as the product
is introduced in t he market. Profits are
nonexistent in this stage because of the heavy
expenses of product introduction.
3. Growth
• A period of rapid market acceptance and
substantial profit improvement.
4. Maturity
• A period of slowdown in sales growth because
the product has achieved acceptance by most
potential buyers. Profits stabilize or even
decline because of increased marketing
outlays to defend the product against
competition.
5. Decline
• The period when sales show a downward drift
and profits erode.
MARKETING STRATEGIES: Introduction Stage
• Product – offer a basic product
• Price – skimming or penetration pricing
• Distribution – build selective distribution
 • Advertising – build awareness among early Sales → Peak sales
adopters and dealers/resellers
Costs → Low cost per customer
• Sales Promotion – heavy expenditures to
create trial. Profits → High profits
Marketing Objectives → Maximize profit while
defending market share
MARKETING STRATEGIES: Growth Stage
Product → Diversify brand and models
• Product – offer product extensions, service,
warranty Price → Price to match or best competitors
• Price – Penetration pricing
Distribution → Build more intensive distribution
• Distribution –Build intensive distribution
• Advertising – build awareness and interest in Advertising → Stress brand differences and
the mass market benefits
• Sales Promotion –reduce expenditures to
take advantage of consumer demand
PRODUCT LIFE-CYCLE STRATEGIES PRODUCT LIFE-CYLE: Decline Stage

❖ Maturity Stage Summary of Characteristics, Objectives & Strategies

o Sales of the new product continue to Sales → Declining sales
climb and then peak as the majority
of the target market(s) have tried the Costs → Low cost per customer
product Profits → Declining profits
o Profits continue to grow and stay
positive throughout Marketing Objectives → Reduce expenditure and
o Competition is most intense at this milk the brand
stage; many versions and brands
Product → Phase out weak items
o Strategies to prolong this stage:
▪ Modify the market Price → Cut Price
▪ Modify the product
▪ Modify the marketing mix Distribution → Go selective: phase out unprofitable
❖ Decline outlets
o Sales of the new product drop quickly Advertising → Reduce to level needed to retain
as the target market(s) move on to hard-core loyal customers
other things
o Profits decline as competitive
pressures force lower prices and set
promotional spending at a level that
maintains the share
o Competition has declined as weaker
brands have left the market
o Decisions about the product
▪ Maintain spending levels to
fight it out for what is left
▪ Harvest by cutting spending
and riding it out
▪ Drop the product and move
on to the next thing

PRODUCT LIFE-CYLE: Maturity Stage

Summary of Characteristics, Objectives & Strategies