Marketing Strategies for SMEs Based on Product Life Cycle

Marketing Strategies for SMEs Based on Product Life Cycle Introduction: The journal article I have selected for my assignment is the MARKETING STRATEGIES OF SMEs BASED ON PRODUCT LIFE CYCLE A STUDY AMONG SMEs IN KOSOVO by Professor Bekim Marmullaku taken from the International Journal of Economics, Commerce and Management published in the United Kingdom on 9th September 2015 (http://ijecm.co.uk/wp-content/uploads/2015/09/3937.pdf) . The article has given me a unique insight into the practical aspects of marketing strategy implementation in a real world context. It has helped illustrate various instances of convergence as well as divergence from the marketing theory studied in class from the practical circumstances surrounding strategy implementation. It deals systematically from our understanding of the Product Life Cycle Model (PLC), which as stated in the paper is widely adopted by the Small-Medium Enterprises (SMEs) of Kosovo, and analyses its stage by stage execution and management in this real-life setting. Â   Â   Key Points of the Article The paper builds upon theory and goes into the application of marketing models in general and the PLC model in specific, in marketing strategies adopted by SMEs in Kosovo. As per theory, we study the PLC almost as an industry standard as one of the prominent frameworks in marketing that influences strategy. The model in principal dwells down to the various stages a product goes through (figure 1) following product development and commercialisation. As traditional PLC theory specifies the stages as introduction, growth, maturity and decline; Professor Marmullaku studies these specific stages in the context of their practical implications for SMEs in Kosovo. The introduction stage is unique in that it is the stage subject to the most difficulties in strategy implementation. Marmullaku analyses that SMEs at this stage are most vulnerable as it is the point where the product has been investment intensive and not as yet churning over as much returns. Therefore for SMEs that do not have as deep pockets, the smallest toe out of line can deem to be critically damaging for the business. He argues the lack of innovation is unable to win the distributors and the general environment is not conducive enough in Kosovo to propagate great chances of success at this stage of marketing. This is courtesy of a number of socio-political and economic conditions including the lack of financial capital, malpractices, market specific circumstances and other external factors. Professor Marmullaku explains the market specific dynamics of a copy-cat culture amongst Kosovo SMEs has particularly impacted marketing strategy implementation. The premature reduction of the prices charged by the SME products in the growth phase of the PLC is a direct result of this as well as other competition from larger firms operating at greater economies of scale. This is usually coupled with premature product expansion response by SMEs in a desperate bid to differentiate and retain profits because imitators are quick to launch substitutes. Also, the difficulty in practice in accurately identifying the very phase of the PLC the product is going through further exasperates the problem. Furthermore, adhering to theoretical expectations of strategy when products are at maturity, Marmullaku explains that SMEs in Kosovo that are serious about the product and the business continue to bear advertising costs even at this stage in a bid to maintain market share to hold on to customer base whilst the others present in this market are inclined to leave with the falling profits. The author argues that by the time the decline phase arrives, most firms in Kosovo dont have much appetite for prolonging the products. Only a few SMEs that are prominent and have the financial might may indulge in tampering with the marketing mix further but not to a large extent due to the specific socio-economic and political obstacles in Kosovo including factors such as the availability of technology; the absorption po tential of the general market; as well as other critical external factors. The Rationale for Selecting this Paper and its Contribution to Marketing Theory and Practise The rationale for selecting this paper is in principle that it systematically puts a context to the PLC theory we studied in class and analyses it. It illustrates the application of the PLC model in a real-life setting, its successes as well as its failures, how it is relevant and to what extent it is not. Ones understanding of marketing and the PLC model matures a great deal after reading this paper as one learns to appreciate that there are a host of impediments in the real world setting as every scenario is different. Textbook models and theory do tend to be idealistic but nonetheless give a general sense of the way to go about. In practise, Professor Marmullakus work implies how marketing strategies are not homogenous in how they are implemented by firms across different geographical markets. For instance, he states how it is not uncommon for firms in Kosovo to latch onto one marketing strategy model such as the Product Life Cycle Model and not pay sway to other theoretical tools used in more advanced markets. This is principle can ignite ones appreciation of market to market dynamics on a case to case basis. Yoon wrote a great piece in the Harvard Business Review (HBR) in which he whilst appreciating the deferring nature of different markets stated more emphasis in strategy be placed on demand as opposed to the demographics when specifically catering to the culture of these different markets (Eddie Yoon, 2015). Marmullaku implies the pivotal role of innovation in PLC management and its lack thereof in the setting of Kosovo inhibits marketing policy. The importance of innovation in managing the PLC is also shared by the works of other research in marketing. It stresses that the changing taste of consumers in the various product offer levels across the cycle can be held into check by innovation (Gecevska, et al., 2010). The availability and access to technology is argued to be pivotal in managing the PLC as it assists innovation. The absence of this as seen in Kosvo can also perverse the very course of a product takes through the PLC. Technology therefore as a facilitator of product development and hence also PLC management is vital. Research in marketing has gone some way to appreciate how technological advances have simplified and sped up the process in the product development model (Morrel, 2015). Marmullakus emphasis on the importance of firms being financially sound in successfully executing a marketing strategy across the different stages is also enlightening. This is stressed as a key component of success particularly in the initial vulnerable introduction stages where the firm would have invested in the new product development stages. It is also implied how the general law and order as well as property rights as external factors are instrumental in marketing policy implementation. The me too.. culture in Kosovo is a prime example of this where the absence of patent protection forms a market that is not conducive to marketing strategy implementation. As stated by Professor Marmullaku, it harms the marketing strategy adopted by firms to the extent of forcing premature policy that is not in theoretical accordance to the stage the product is at in the PLC. The writ of the law and patents therefore in developed markets are used of a means of credible deterrence and go hand in hand with facilitating marketing goal ends (Russ Krajec , n.d.). Furthermore Professor Marmullakus appreciation of the scope of marketing strategy being limited to the nature of the specific market including but not limited to its absorption potential and the degree of international trade is particularly insightful. This is not to say that the specifics of the particular business such as its size and its location do not too play a crucial role. Professor Marmullaku sheds light on the difficulty in practically assessing the effects of different marketing strategies in the long-term. However it is interesting to note as Dhalla stated decades ago in the HBR of the then upcoming development of new econometric techniques for use in marketing to assess the secluded impacts of advertising and its payoffs over time (Dhalla, 1978). These techniques in this day and age are now widely deployed in many facets of strategy building such as using marketing mix modelling (Market Science Consulting, 2013) though naturally one would not expect such tools to be used due to the limitations in less developed markets as is the case in Kosovo. Finally, Professor Marmullakus recommendation of adopting a marketing strategy of focussing on specific products as well as differentiating strategies to differ from copy-cat competitors is innovative. This strategy in principle can be replicated in any relatively undisciplined market environment of the sort found in Kosovo as a means of circumventing the obstacles the PLC faces. Conclusion Professor Marmullakus work provided an invaluable insight in putting theory into context. It illustrates the application of the PLC in Kosovo that diverges away from idealistic textbook scenarios. His work particularly increases ones appreciation of the critical impact of external market characteristics stemming from the socio-political and economic context on the success of marketing strategy. One can take away that the application of marketing strategy should be tailored to the requirements of a market on a case to case basis and as discussed he has come up with an array of viable recommendations to this effect in his study of SMEs in Kosovo. References Anon., 2011. Product Life Cycle Stages. [Online] Available at: http://productlifecyclestages.com/wp-content/uploads/2011/08/product-life-cycle-stages.jpg Dhalla, N. K., 1978. Assessing the Long-Term Value of Advertising. Harvard Business Review. Eddie Yoon, 2015. The Mistake Companies Make When Marketing to Different Cultures. Harvard Business Review . Gecevska, V. et al., 2010. Product lifecycle management through innovative and competitive business environment. Journal of Industrial Engineering and Management. Market Science Consulting, 2013. Econometrics in marketing mix modelling. [Online] Available at: http://www.marketscienceconsulting.com/econometrics-in-marketing-mix-modelling/ Morrel, L., 2015. Technology could speed up new product development. marketingtechnew, 1 December. Russ Krajec , n.d. Advertising and Marketing Uses for Patents and the Deterrent Factor. [Online] Available at: http://krajec.com/advertising-and-marketing-uses-for-patents-and-the-deterrent-factor/