Submitted by

Sher afzal Khan Babar Adnan Khan Aamir Khurshid Zeeshan Tariq Mehmood

Submitted to

Sir Kashir Asghar

Table of Contents
1. Introduction 2. Strategic goals 3. Pestle analysis 4. Swot analysis 5. Marketing 6. BCG Matrix 7. Product life cycle 8. Ansoff Matrix 9. Human recourse management 10. Financial projection 11. Recommendation 12. Conclusion 13. Appendices 14. References

INTRODUCTION
International trade city - a huge wholesale market in Yiwu is one of the cities located in eastern china. Happy Christmas Company is one of the

wholesalers in it, it sells Christmas products. Most of its clientele are in Europe and America. The year 2008 was the worst year for it, since it was established 10 years ago. The Companys normal sales used to be 60 million yuan, but in 2008 it went down to 35 million yuan. Due to high wage rate, high cost on production and international economic recession to

reduce the cost HAPPY CHRISTMAS COMPANY started downsizing and 300 workers were fired. Westerns customers due to financial crises were being more cautious when they were purchasing Christmas related

products. The group has used business techniques like PESTEL, SWOT, BCG and ANSOFF Matrix in order to evaluate current position of the company and sought out the ways where it should go and serve a potential market. The group suggests the company to go to Brazil, China and Mexico. Due to

limitation of data given in the case, this group is going to make some assumptions, which are... HCC has core competence in Christmas decoration industry. One of the missions of HCC is innovation. It only has product line in Christmas decoration.

STRATEGIC GOALS ( as assumed)

To become a market leader To better position the brand through corporate social responsibility

As a marketing oriented company it is very important to know the companys position in the market. Macro and Micro analysis is very necessary in order to move in a new market.

PESTLE ANALYSIS OF CHINA Political factors

China is a socialist republic country therefore it adopts socialist system in their political system in their decision making processes in governing the country. Chinas communist party is the ruling party. The stability of chinas government is quite moderate and stable. The business freedom is quite tight because of the regulations impose by the government.

Economic factors
GDP (official exchange rate) GDP (purchasing power) Un-employment Inflation rate Export Import $6.989 trillion $11.29 trillion 6.5% 5.4% $1.898 trillion $1.743 trillion

The government has directly and indirectly control over the banks and financial institutions. China has moderate corporate tax rate and high income tax rate. The government also gives subsidies to small businesses and industries to compete with foreign goods where they can sell at lower prices.

Social factors
Population: Religion: Education: Age Structure: 1,343,239,923 Buddist, Daoist, Christian 3-4% Literacy88% of adult population 0-14 years: 17.6% 15-64 years: 73.6% 65 years and over: 8.9% Trend and life style of china is volatile, such as level of consumption, attitude toward new product etc.

Technological factors
The achievements of science and technology in china is remarkable, rapid improvement in science and technology also creates more jobs in the manufacturing industry and also make the quality of life better and easier.

Environmental factors
The government takes serious matter on protecting the environment, where they impose many regulations and laws in protecting, preventing and controlling industrial pollution and improving urban environment. China is the largest carbon emitting country because its economy is based on production.

Legal factors
In china the labour laws are not in the favour of labour rather there are harsh treatments allowed if the production is affected because of any malfunctioning or mistreatment by the labour. However labour is amply and cheaply available which is easily trainable. The non salary cost of a worker is slightly high. Related material and detail for china pestle analysis see appendix 1.

PESTLE ANALYSIS OF BRAZIL Political factors

Brazil is a Federal republic; it has bi cameral legislative system. There are many political parties hence democracy prevails throughout the republic. President Lula has made economic growth and poverty alleviation top priorities. Export promotion is a main component in plans to generate growth and reduce what is seen as a vulnerability to international financial market fluctuations. To increase exports, the government is seeking access to foreign markets through trade negotiations and increased export promotion as well as government financing for exports.

Economic factors
GDP (official exchange rate) GDP (purchasing power) Un-employment Inflation rate Export Import $2.023 trillion $2.282 trillion 6% 6.5% $250.8 billion $219.6 billion

Many business groups and international organizations have highlighted the need for Brazil to improve its regulatory environment for investments.

Social factors
Population: Religion: Roman Catholic Education: Age Structure: 205,716,890 (74%). Literacy88% of adult population 0-14 years: 26.2% 15-64 years: 67% 65 years and over: 6.7% 81% of the total population is living in urban areas. This growth aids economic development but also creates serious social, security, environmental, and political problems for major cities.

Environmental factors
The lack of transportation infrastructure has long been seen as a major obstacle to economic growth. However, investment in infrastructure has more recently become one of the priorities of the Government. In 2007, it launched an infrastructure development program, the Growth Acceleration Program (PAC) to address the country significant road, rail, energy supply and other infrastructure needs.

Technological factors
Brazil is the leader in science and technology. The Brazilian government tries to develop and support innovation in business, for example in 2004 the Innovation Law was passed, is meant to provide incentives to increase innovative activities, facilitate

scientific and technological research by private companies and encourage collaboration between public and private sector.

Legal factors
Brazil has an established Civil Law system based on codification and statutory legislation. Brazil has also implemented strict environmental regulations. The Brazilian tax system is also a matter of complexity. Companies are generally subject to tax at a rate of 25% plus social contribution tax equal to 9% of accounting income. Related material and detail for Brazil pestle analysis see appendix 2.

PESTLE ANALYSIS OF MEXICO

Political factors
Public security issues have received more attention than private security. Public security includes absence of crime and corruption: 28 percent of Mexicans said that someone in their household had paid a bribe during the past year. Nine percent of Mexican GDP was spent on corruption, more than Mexicos education and defence budgets combined.

Economic factor
GDP (official exchange rate) GDP (purchasing power) Un-employment Inflation rate Export Import $1.185 trillion $1.657 trillion 5.1% 3.5% $336.3 billion $341.9 billion

Investor protections matter for the ability of companies to raise the capital they need to grow, innovate, diversify and compete. Excessive document requirements, difficult customs procedures, inefficient port operations and inadequate infrastructure all lead to extra costs and delays for exporters and importers, stifling trade potential.

Social factors
Population: Religion: Roman Catholic Education: Age Structure: 114,975,406 76.5% 86.1% 0-14 years: 28.2% 15-64 years: 65.2% 65 years and over: 6.6% Mexican people accept a hierarchical order in which everybody has a place and which needs no further justification. Mexico has an impressive education system, with both the private and public sectors playing an instrumental part in making university and vocational training in the country globally recognized.

Technological factors
Mexico has traditionally been unable to attract firms to build major research and development (R&D) facilities in the country but in April 2011, the government announced that it will revive its tax exemption scheme to encourage R&D expenditure in the private sector. According to the Mexican Academy of Sciences, the country buys 94% of its technology from outside sources.

Environmental factors
Mexico City is considered to be one of the most polluted cities in the world. In an attempt to speed up environmental contamination, the government has started an Environmental Service Payment Program. Related material and detail for china pestle analysis see appendix 3.

MICRO ENVIRONMENT
To measure micro environment: customers, competitors, distributors and suppliers are the four factors which have to be seen efficiently. The competition will be tough in these countries, as Happy Christmas Company is moving to an entire new market. There are many companies doing the same business in China Brazil and Mexico. Moreover, a new buying pattern named online shopping also becomes one of the

competitors to HCC. In order to add value to delivery, HCC have formed partnerships with suppliers and monitor supply availability with them.

After doing analysis of Macro and Micro environment a clear picture has shown by swot analysis.

SOWT ANALYSIS
Strength

Weakness quality and

Right products, reliability.

Customer lists not tested. Some gaps in range for certain sectors. We would be a small player. No direct marketing experience. We cannot abroad. Limited budget. Don't have a detailed plan yet. Delivery-staff need training. Customer training. service staff needs supply end-users

Superior product performance vs. competitors. Some staff has experience of enduser sector. Product innovations ongoing. Can serve from existing sites. Products have accreditations. Management confident. required

Need more sales people.

is committed and

Entrepreneurial spirit

Processes and systems, etc Slow progress.

Opportunity

Threats

Could develop new product. Profit margins will be good. End-users respond to new ideas. Could extend to overseas. New specialist applications. Could seek better supplier deals. New international markets Legislation could impact. Environmental effects would favor larger competitors. Existing core business distribution risk. Market demand very seasonal. Retention of key staff critical. Possible negative publicity.

MARKETING
The strategy that is going to adopt by Happy Christmas company will be first they will look a Marketing Mix which is called 4ps. Polycentric type of marketing will be used as it changes marketing mix according to situation, customers, segmenting, targeting and positioning. From the analysis we can easily find that not only government, but also the public have aware of environment.

4Ps of Marketing Mix

Product

Price
This is the most important part of the marketing Mix as this is the only part which generates revenue. Happy Christmas products are the shopping product that is why HCC pricing strategy is different according to products and quality. The pricing strategy of the products will be geographical pricing, as happy Christmas company is offering its product to home country as well as other countries which has incurred other cost like shipping cost, promotional cost ,tax and tariff policy cost which can make the product less or more expensive.

Place (through Agility)

Placing and provision of the Christmas products will be done through agility services. Agility is a publicly traded company headquartered in Kuwait, with more than 550 offices in 100 countries. It offers logistics, storage, and infrastructure services to commercial businesses, government organizations, international institutions, and relief agencies worldwide. The company specializes in emerging markets and "challenging environments." HCC will acquire the services of Agility.

CHINA Road Freight

Road Freight services can connect HCC to entire China. Main hubs are in Shanghai, Guangzhou, Tianjin and Chongqing. Local distribution in China happens within 24 hours. Through agility services, management, expertise and resources the delivery will be easy and consistent to final destination.

Logistics
Agility China offers customer-driven solutions dedicated to meeting companys complex logistics needs, whether across the globe or within China. Logistics canters are strategically located throughout China. Warehousing will be done through Agility.

BRAZIL Sea freight

HCC can forward its products through Agility via Sea Freight. Although it is very costly for HCC because there is no direct route to brazil, but the advantage of sea freight is it take the goods in bulk which will be beneficial for the company. The main gateways are Santos, Paranagu, Rio de Janeiro, Salvador, Manaus and Vitoria.

Logistics
With specialized offices in Brazil of Agility, warehousing packaging etc will be done easily.

MEXICO Sea Freight

HCC can forward its products through Agility via Sea Freight, the advantage of sea freight is it take the goods in bulk which will be beneficial for the company.

Logistics
With specialized offices of Agility in Mexico, warehousing packaging etc will be done easily.

Related material about Placing see appendix 4.

Promotion
Advertising Wholesaler Bill Boards Magazines Television Internet Events before Christmas

Segmentation, targeting and positioning

HCC is an export-orientation, this report has divided the market into two parts: the foreign market and the domestic one. For each of the submarket, we can have two types of customers: resellers and end-user customers.

Segmentation
There are four essential conditions to measure whether the segmentation is useful or not, which are accessibility, substantiality, measurability and actionability (Kotler cited in Tynan and Drayton 1987). Resellers are the essential bond between companies and the end-users. We do need resellers because they can sell our products efficiently. We know that we can segment resellers by many different ways, but actually we think the organizational size is the most important variables we should focus on. So we divide the market into three categories: large organization, medium-size organizations and small size organizations. Under this segment, we can identify it in many sub-segments either. Here, we use choice criteria to segment the market. One segment is environmental friendly decorations. Another segment is general decorations. We use this criterion because company size will directly

influence the potential order and their formalization of buying and management processes. Also, when we can predict buying behaviour properly, it will lead to a large profitability to the company.

Targeting
We have decided to target those people who are young, single or newly married, and decided to target large size organization in the foreign country. Because larger the organizations have larger order potential. Another reason is that larger organizations are more standardized than middle and small companies, and they have more experience in segmenting market and making marketing mix which is useful for promoting our products. Considering large organizations have more distribution channels, it is much easier to keep our revenue up.

Positioning
A Market Analysis 2009) indicates that one of the most important factors in customers' minds is high quality. Meanwhile, environmentally friendly is an important factor people take into account when they choosing products. Against this background, we should take two factors into consideration when we position our products. The objective of positioning is to make our products different from our competitors, and a new series of Christmas products which are with high quality and eco-friendly. This company wants to tell consumers that "enjoy a merry Christmas with high quality and environmental friendly products". Generally, resellers are purchasing in a large order. So HCC sells its products through these resellers.

BCG Matrix

HCC falls in question marks of BCG matrix, because HCC will start from scratch. HCC is making investments in china, Brazil and Mexico. For this HCC requires huge amount of funds both in form of equity and loan from financial institutions. Currently, HCC is in the state of building their market share. They have no market share in all these new market, but growth in these markets is high. For this they have to build market share. Related material and details see Appendix 5.

Through Product life cycle it is clear that we are in introduction stage, as we are entering in entire new market. Although pestle analysis has shown us a greater opportunity for growth of Christmas products, but it can be not easy for us to compete and gain the market share. Related material and details see Appendix 6.

Ansoff Matrix
Ansoffs product/market growth matrix suggests that a business attempts to grow depend on whether it markets new or existing products in new or existing markets.

HCC falls in market development box of ANSOFF Matrix, because of global economic crises and cut back in profit, HCC has decided to take its existence product into a new market. To move into new market all the analysis have been done and it is decided that entering in new market will result in high profit. Related material and details see Appendix 7.

HUMAN RESOURCE MANAGEMENT

Human resource management is considered as backbone of any company. Human Resource management according to happy Christmas Company is that they have to

adopt HR policies that are concerned with international business. Some of the policies that are to be used by HAPPY CHRISTMAS COMPANY are as follows.

Equal Employment Opportunity policies Employee classifications Workdays, paydays, and pay advances Overtime compensation Meal periods and break periods Payroll deductions Vacation policies Holidays Sick days and personal leave (for bereavement, jury duty, voting, etc.) Performance evaluations and salary increases Performance improvement Termination policies

HR manager will have to accommodate employees in their virtual work locations and find ways to manage corporate culture, specialization and employee orientation. In order to obtain and maintain a competent workforce, they must act as organizational performance experts and shape employees behaviour without face to face meetings. They must be knowledgeable of other cultures, languages and business practises. They will be required to develop and manage an international workforce, maintain written and unwritten corporate policies for transportability to other cultures, keep top management informed of the cost of not paying attention to the transnational issues and provide their services to a variety of locations worldwide. Training and development is another area. It is not just identifying training needs and giving the required training. It is foreseeing and anticipating the requirements and developing suitable training so that the employees are well-equipped to handle the challenges. Competencies for a HR Department In order to effectively deal with all the changes and challanges, HR

professionals must develop competencies that will allow them to carry out their roles, competences like:

Flexibility Team work Communication Decisiveness Leadership Strategic planning Network building Client service orientation Organizational awareness Self confidence Sharing of expertise Global and cultural understanding Multiple language competencies

HR managers will continually be required to prove their effectiveness and their existence. Happy Christmas Company will be expected to understand international business practices and promote cultural diversity within the

organization, to understand the core business of the company, and will need to prove that their initiatives and programs are result-oriented. After

thorough study of pestle of the country and company it became necessary to re-hire the employees which have been terminated, as they already worked with HAPPY CHRISTMAS COMPANY. Secondly the work burden will increase in order to meet with customer demands.

FINANCIAL PROJECTION
In today globalized world and competition in international market it is very necessary to know a financial position and make financial projection for 5 to 10 years. Here we are going to make a plan for HAPPY CHRISTMAS COMPANY on the basis of its available assets and capital that it has. The process of creating financial projections for a happy Christmas business we are going to make cash flow, balance sheet, NPV and IRR which will show us where will stand after 5 years.

NOTE:

All the data given below is assumed

BALANCE SHEET
ASSETS Current Assets Cash Account Receivable Fixed Assets Plant Land Equipment Total Assets 50,000 80,000 LIABILITIES Current Liabilities Account Payable Other Liabilities Long-term Liabilities Equity Long term loans Total Liabilities 50,000 150,000

2,00,000 3,50,000 2,00,000 8,80,000

4,00,000 2,80,000 8,80,000

HAPPY CHRISTMAS COMPANY

5 Years Cash Flow Projection
Opening Cash Balance CASH IN Cash from Sales Loan TOTAL CASH OUT Salaries Marketing Expenses Web site creation & Maintenance Market Research Media Relations and PR (include writing) Advertising Total Marketing Expenses Facilities Office: Rent Office: Utilities Office Cleaning and Waste Management Total Facilities Expenses R & D Expenses Agility Distribution and logistics Expenses Taxes 3,00,000 xxx xxx xxx xxx 2,50,000 xxx xxx xxx 1,50,000 1,00,000 3,50,000 25,000 3,00,000 xxx xxx xxx xxx 2,50,000 xxx xxx xxx 1,50,000 1,00,000 3,50,000 25,000 3,75,000 xxx xxx xxx xxx 3,00,000 xxx xxx xxx 2,00,000 1,50,000 3,50,000 2,5000 3,75,000 xxx xxx xxx xxx 3,00,000 xxx xxx xxx 2,00,000 1,50,000 3,50,000 2,5000 4,00,000 xxx xxx xxx xxx 3,50,000 xxx xxx xxx 2,00,000 2,00,000 4,00,000 30,000 12,00,000 4,00,000 16,50,000 12,00,000 4,00,000 20,45,000 12,50,000 4,00,000 24,90,000 12,50,000 4,00,000 27,10,000 14,00,000 4,00,000 30,80,000 Year 1 50,000 Year 2 4,45,000 Year 3 8,40,000 Year 4 10,60,000 Year 5 12,80,000

Miscellaneous expenses Closing Balance

30,000 4,45,000

30,000 8,40,000

30,000 10,60,000

30,000 12,80,000

40,000 14,60,000

IRR helps an investor in judging the financial health of an investment project by comparing it to investor's cost of capital. An IRR higher than the cost of capital will result in a profitable investment. Calculation:-

NPV & IRR

Year 0 1 2 3 4 5

Initial Investment Discount Factor 10% Discounted Figures NPV Initial Investment Discount Factor 15% Discounted Figures NPV IRR Lower Rate (a) Upper Rate (b) PV 1 (A) PV 2 (B) A+B b-a (A/A+B)*b-a IRR [a+(A/A+B*(b-a)]

(1,000,000) 445,000 1 0.909

840,000 0.826 693,840

1,060,000 0.751 796,060

1,280,000 0.683 874,240

1,460,000 0.621 906,660

(1,000,000) 404,505 2,675,305 (1,000,000) 445,000 1 0.870

840,000 0.756 635,040

1,060,000 0.657 696,420

1,280,000 0.572 732,160

1,460,000 0.497 725,620

(1,000,000) 387,150 2,176,390

10% 15% 2,675,305 2,176,390 4,851,695 5% 3% 13%

RECOMMENDATIONS
Happy Christmas Company should more focus on Research and

Development, it will keep the company up-to-date about trends, likes and dislikes in a global market. Happy Christmas Company should more focus on quality in comparison with other competitors. Happy Christmas Company should more focus on innovations that its

product attracts the customer more. The company should organize events in the countries where it offer its products so that people get more excited and attract toward products which will result in great sales of the products. It should focus on the products and events that gives message of care love etc.

CONCLUSION
After thorough study what we have concluded, that Happy Christmas

Company should more concentrate on innovations and quality products. It should focus on customers demands likes and dislikes and should meet their demands in order to compete in the market. Although global economic crises effected this company, but they should keep ready theselves to meet the challenges and unforeseen events or natural disasters which is a threat but also can avail it as opportunity. we should improve our service to both end-users and resellers. A good service will directly influence customers' brand loyalty and indirectly

influence customer sales. Retaining customers is a hard work for company and also cost a lot. If HCC can gain customer lifetime value through serving them with long-term satisfaction, it can guarantee a sustainable profit from them.

APPENDIX
Appendix 1
Christmas in China is one of the major colourful festivals and events in China. Christmas in China is celebrated by the Chinese people by decorating their houses with beautiful paper lanterns and Christmas trees. As the substantial population of the Chinese people are not Christians, but there are about 10 million baptized Christians making up 1 per cent of the population. The Chinese people celebrate the birth of Lord Jesus at during Christmas Day. Christmas Day in China is celebrated with much pomp and splendour. The Chinese revel in celebrating Christmas in a traditional way with hardly any Western influence. Over the recent years, the popularity of midnight mass has grown immensely during Christmas in China. Almost about 20 years ago, there was no Christmas in China. Owing to the fact that most of the Chinese are not Christians, the Chinese people hardly celebrated Christmas. But today Christmas in China is one of the popular festivals in China. Christmas day is celebrated with much passion throughout the country. Tax policies
Tariff rate Income tax rate Corporate tax rate GDP (billion) GDP per capita Unemployment rate Inflation rate FDI inflow (millions) Tax Burden % GDP Government expenditure % GDP

3.9 45.0 25.0 7900 5962 4.2 5.9 108300 18.3 19.9

Population (billions)

1300

Based on the rates and statistics given, we can see that china has moderate corporate tax rate and high income tax rate, because of lower tax rate many MNCs started to open their business in china and the numbers of FDI have increased rapidly.

Appendix 2
Christmas in Brazil is celebrated with great pomp and fervour. Tourists from various corners of the globe descend in this fabulous South American country to enjoy Christmas in Brazil. Majority of the population in Brazil is Christians, even the Muslim and the Buddhist population of the country celebrate Christmas in Brazil with equal fervour and enthusiasm. Brazil Christmas is an important event of this beautiful country of the South American continent.

The special items sold during Brazil Christmas include splendid wreaths made from exotic flowers, Santa dolls riding canoes, surfboards and dolphins, tapa cloth angels, and a comprehensive range of other local products.

Appendix 3
Christmas in Mexico is a special day which is celebrated in a large scale in the land of Mexico. It is a celebration which is observed with great enthusiasm. Christmas time is a fun time which all the people enjoy with great zeal and enthusiasm. There is a big difference between the celebrations of Christmas that is observed throughout the world from that which is celebrated in the country of Mexico. Some of the specialty that you are going to see during Mexican Christmas is the decoration of Christmas Trees. The Christmas tree is decorated with candies, apples and cookies which are tied with red ribbon to give the tree a pretty look. Homes are decorated with candles, streamers and stockings are hung in the fireplace as part of ritual.

People, particularly the youth and kids dress in colorful dresses and roam about the streets. There are special programs organized which depict different phases of life of Jesus Christ. It is basically a celebration of light, love and peace which is celebrated with friends and loved ones. There are restaurants and bars that remain open throughout the night to allow the party loving people come and celebrate the whole night.

Appendix 4
Distribution Channels Exporters have four options for placing their products in foreign market, Depending on their business interests and local demand. Direct Export Under this approach, exporters negotiate directly with importers, whether Individuals or companies. This requires more time and greater financial resources from exporters. Direct export involves detailed market research to identify potential buyers and continuous telephone contacts and email correspondence. Similarly, Brazilian and Mexican importers prefer direct contact with suppliers, to the extent the exchanges foster trust and allow for immediate and direct decision making. The modality also makes it easier to clarify technical questions regarding a given product. The primary benefit involves the opportunity to negotiate more favourable financial terms and conditions through the elimination of intermediaries. Indirect Export Indirect export means, rather than dealing directly with the companies to which the respective products are to be supplied, exporters work through brokers. For small-scale enterprises, introducing their products through brokers is often the best strategy, given the extensive knowledge brokerage firms have of the domestic market and their close ties with potential buyers. Both of these advantages serve to facilitate product advertising in target markets. As a consequence, market research and transaction costs are reduced, as brokers handle the related business and customs procedures to ensure the entry of the imported goods.

Commercial Representatives Exporters may opt to secure independent professional services or companies to act as their commercial representatives in Brazil and Mexico, compensating them through commissions based on sales volumes. These professional services do not import directly, but focus on identifying Brazilian and Mexican clients for imported products. Opening an Office in Brazil and Mexico Exporters that find promising opportunities in the Brazilian and Mexican market may choose to open a local office to maintain direct and ongoing contacts with potential importers. The office could also assume primary responsibility for the pertinent import procedures, in which case it must be registered as a commercial import firm.

Appendix 5
Stars - Stars are high growth businesses or products competing in markets where they are relatively strong compared with the competition. Cash Cows - Cash cows are low-growth businesses or products with a relatively high market share. These are mature, successful businesses with relatively little investment that the company needs for its Stars. Question marks - Question marks are businesses or products with low market share but which operate in higher growth markets. This suggests that they have potential, but may require substantial investment in order to grow market share at the expense of more powerful competitors. Dogs - Unsurprisingly, the term "dogs" refers to businesses or products that have low relative share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in.

Appendix 6
Introduction Stage At the Introduction (or development) Stage market size and growth is slight. it is possible that substantial research and development costs have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up

distribution channels. It is highly unlikely that companies will make profits on products at the Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product. Growth Stage The Growth Stage is characterised by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale)and possibly better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage. Maturity Stage The Maturity Stage is, perhaps, the most common stage for all markets. it is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to be restricted to product modification and improvement and perhaps to improve production efficiency and quality. Decline Stage In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Care should be taken to control the amount of stocks of the product. Ultimately, depending on whether the product remains profitable, a company may decide to end the product.

Appendix 7 Market Penetration

Market Penetration is the name given to growth strategy where the business focus on selling existing products into existing Market.

Market Development
Market development is the name given to growth strategy where the business seeks to sell its existing product into a new Market.

Product Development

Product development is the name given to growth strategy where the business aims to introduce new product into existing Market.

Diversification
Diversification is the name given to growth strategy where the business markets new products in new Markets.

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