Assessment task
Part 3
A product in the decline stage of the product lifecycle can still be profitable. A company might decide to maintain such a product if some demand is likely to continue to exist and competitors have left the market. Points to such a scenario, with other marketers of traditional photographic products exiting and demand for the product remaining low but constant. A company will drop a product in the decline stage if management decides that the product will no longer yield acceptable profit margins. If one of Lanen’s two major competitors in the traditional photographic equipment market drops out, then Lanen has a good chance of winning over the existing competitors customers. The competitors exit provides a potential for growth for Lanen. If traditional photographic equipment is in the decline stage of the product life cycle, then managers need to decide whether to maintain the line. Lanen needs to know that there is a significant market for Snip, that there are customers who want what the product will deliver.
The demand for such products has not changed much over the past year, and most competitors have exited this business is an argument for discontinuing the line. Management can reasonably expect that these products will continue to turn profits, though in a limited way. Dropping the products that are not selling, and therefore creating costs rather than profits for Lanen, would be much more relevant during product development or test marketing. In concept testing, Snip may only be represented symbolically, so component support may well be irrelevant. Goes the other way, suggesting that consumers want, but don’t currently have, an option for a slim, high quality camera. Competitors drastically lowers prices, demand for the higher priced brand is likely to dip, the competition is trying to stay afloat, doesn’t tell us whether it is the best for lanen to make a similar approach. Would invest resources in improving optical cameras, which are in the decline stage. This strategy would make more sense in the maturity stage.
Customers love portability that comes without the expense of image quality, customer’s love the value that Snip is being developed to deliver. This strengthens the case for moving forward with development. Points to a potential opportunity for Lanen. It makes much more sense to enter during the introductory stage of the product life cycle than, say the decline stage. Favours keeping the product line but focusing more on marketing it abroad which is the right step and is a strategy more appropriate for the introduction or growth stage, suggests that these customers want, but cannot currently afford, cameras like Snip. Perhaps a good market for the future, but this by itself isn’t enough to justify further investment in development .Component supply for Snip should not be a problem, which is strength for going ahead with development.
Input costs are going to increase as a long term component supply agreement is coming to an end which tells us that it is going to become more expensive to manufacture the traditional photographic products, which further wears away the attractiveness of the product line and does not apply to a product in the decline stage,
