created by sir, ihsan ullah

Page No 1 Created by Sir, Ihsan Ullah

Table of Contents

Table of Contents____________________________________________1

What is management?What is management?______________________________________3

Functions of a managerFunctions of a manager_____________________________________3Planning______________________________________________________________3Organizing____________________________________________________________3Staffing_______________________________________________________________4Motivating (Leading)____________________________________________________4Controlling____________________________________________________________5

Organization Structure hierarchyOrganization Structure hierarchy____________________________6Top Level ManagementTop Level Management__________________________________________________6Middle Level ManagementMiddle Level Management________________________________________________7Bottom level management / First Line Managers/SupervisorBottom level management / First Line Managers/Supervisor_____________________7

What is planning?___________________________________________7Types of PlansTypes of Plans__________________________________________________________7

Short Range PlansShort Range Plans_____________________________________________________7Intermediate PlansIntermediate Plans____________________________________________________7Long Range PlansLong Range Plans_____________________________________________________8Man power PlansMan power Plans_____________________________________________________8Production PlansProduction Plans______________________________________________________8Marketing PlansMarketing Plans______________________________________________________8Tactical PlansTactical Plans________________________________________________________8

Process of PlanningProcess of Planning_________________________________________8Setting objectivesSetting objectives_______________________________________________________8Situational AnalysisSituational Analysis_____________________________________________________9Environmental OpportunitiesEnvironmental Opportunities______________________________________________9Course of ActionCourse of Action________________________________________________________9Budgetary AllocationsBudgetary Allocations___________________________________________________9Implementation and reviewImplementation and review_______________________________________________9

What is organizing?What is organizing?________________________________________10Types of OrganizationTypes of Organization__________________________________________________10Goals of an OrganizationGoals of an Organization________________________________________________11

Communix Institute of Information TechnologyFor Further Assistance Feel Free to Dial 0333-9165181


Environment of an OrganizationEnvironment of an Organization____________________________11Internal EnvironmentInternal Environment___________________________________________________11External EnvironmentExternal Environment___________________________________________________11

Skills Required by ManagerSkills Required by Manager________________________________12OrganizationOrganization__________________________________________________________12MultitaskingMultitasking__________________________________________________________12Discretion and Business EthicsDiscretion and Business Ethics____________________________________________12Dual FocusDual Focus___________________________________________________________12Employee TrustEmployee Trust________________________________________________________13FairnessFairness______________________________________________________________13Dedication to Continuous ImprovementDedication to Continuous Improvement_____________________________________13Strategic OrientationStrategic Orientation____________________________________________________13Team OrientationTeam Orientation______________________________________________________13

LeadershipLeadership_________________________________________________14Leadership StylesLeadership Styles______________________________________________________14AutocraticAutocratic____________________________________________________________14DemocraticDemocratic___________________________________________________________14Job-Centered/ Production-centered (Likert)Job-Centered/ Production-centered (Likert)__________________________________15Employee-centered (Likert)Employee-centered (Likert)______________________________________________15Reality-Centered (Argyris)Reality-Centered (Argyris)_______________________________________________15DeclarativeDeclarative___________________________________________________________15Theory XTheory X_____________________________________________________________16Theory YTheory Y_____________________________________________________________16Charismatic LeadershipCharismatic Leadership_________________________________________________16

The Product Life CycleThe Product Life Cycle_____________________________________17Introduction StageIntroduction Stage______________________________________________________17Growth StageGrowth Stage_________________________________________________________18Maturity StageMaturity Stage________________________________________________________18Decline StageDecline Stage_________________________________________________________19



What is management?What is management?Management means different things to different a person, that’s the reason that it has been defined by various scholars in different manners and from different perspectives. Some views agree management is an activity which applicable to any type of organization (profitable, non-profitable) where individuals are involved as a group to achieve certain goals.Some of the definitions put the term management in a very simple way saying,” management is making others do some work”. Some of the views also say that it is an organized effort of the individuals in an organization for the achievement of certain goals.

According to the activities performed by a manager many times such definitions are found which are based on the activities done by managers. Management is the process of designing and maintaining an environment in which individuals, working together in group efficiently accomplish selected aims.

All the definitions mentioned are accurate at the degree of perspective of the postulator. Since management is a social science. None can claim that which of the definition is more accurate and more meaningful.

Functions of a managerFunctions of a manager

Planning

Selecting missions and objectives as well as the actions to achieve them which requires decision making.Plans are necessary to give an organization its goals and the way or strategy to achieve those goals. The manager should set the objectives and goals and make the best possible procedure to achieve those goals.

Planning may include functions like:

The policies that will help to achieve objectives. The program that a manager will carry out. The procedure that the manager will utilize. The time settled for the achievement of goals. The budgetary considerations that will be involved.

Organizing

Establishing and intentional structure of roles for people to fill in an organization.The manager should recruit skillful and qualified person who are best-fit for the activities to be done. Once the staff is recruited to carry out the



work the manager should divide them in groups and teams and assign them specific short term goals. These goals are small and less time consuming which are easily achieved by these groups but when at the end these small achievements are accumulated, they result in the achievement of huge goals and objective.

Organizing may include: the manager should create groups and assign specific goals to them He must establish relationships between his employees this intermesh will

help in the provision of information between the employees and the manager himself.

He must study the relationship between different units and should maintain progress reports. These progress reports will estimate the successfulness of the activity.

Organizing is a never ending process. All types of organizations are always in continual state of being reorganized. When goals and programs are changed the activities are also changed and same will be with organizing.

Staffing

Filling and keeping filled the positions in the organization structure.If the organization structure is complete and efficient it can assure the success of an organization but if there are spaces between them. Or the authority and responsibilities assigned to certain employees are not being fulfilled efficiently. It may cause disturbance in the progress, efficiency and success of the whole organization. If there are such cases. The manager should be immediate and quick in outlining these elements and should adopt the best policy to deal and cope the problem.

the manger should maintain the performance reports time to time The manger should provide OJT. The manager should provide them the training of new technology and

methods of training. The manager should also provide university level conferences and classes

which enhances the ability of the employees to work better.

Motivating (Leading)

Influence people, so that they will contribute to organizational and group goals.

Plans must be put into effect by people. The level of efficiency of any activity or achievement of goal depends upon the level of motivation in the individuals. The word motivation is not easy to achieve. It can not only be achieved by inspirational words. The manger should provide them the enviorment in which they are instigated by their inner to work harder. Some of the mangers create such drive force by giving the employees performance based incentives and bonuses, titles, hanging pictures as a best employee and so on.



The characteristics of an environment which can unleash the force of motivation in an individual are as following:

The degree to which the employee perceives that the goals of organization and his own goals are the same.

The employee relationship with his coworkers and with his supervisor must be pleasant at a degree that it creates and enthusiasm to work in an employee.

The job of the employee must meet his current needs and provide him the security for future in a manner that he is afraid of losing his job.

Controlling

Measuring and correcting individual and organizational performance to ensure that events conform to plans.

Through the controlling the manager can keep the organization on the track before it deviates too far from its goals. Many times the individuals involve in activities which are not a part of their goals. All the individuals should be goal directed.

Controlling involvesComparing actual events with the forecastsComparing results achieved with the objectives.Measuring actual costs against budgeted cost.

When there are variations which are not supposed to be. The manager redirects the individuals and groups toward the achievement of the goals.


Executives or Top Level management

Policy designers

Promotion mangers

Consultants, recruiters,

Selectors etc

Sup1Sup2 Sup3 Sup4 Sup5 Sup6 Sup7 Sup8 Sup9


Organization Structure hierarchyOrganization Structure hierarchy

In the above diagram we can see three levels of management

1. Top level management 2. Middle level management3. Bottom level management

These levels of management divide the authorities and responsibilities amongst the managers on different organizational level.Below we will see the responsibility and enactment performed by each level of Management.

Top Level ManagementTop Level Management

a. Develops and reviews longs range plans and strategies.b. Evaluate, analyze and scrutinize the overall performance of all the

departments and ensures healthy relations and collaboration.



c. Involve in the selection and recruitment of key positions.d. Consult subordinate managers in general problems.

Middle Level ManagementMiddle Level Management

a. Make medium range plans and create the overview of long range plans for the top management.

b. Analyzes managerial performance to determine promotions and hire and fire.

c. Establishment of departmental policiesd. Review daily and weekly reports on production and sales.e. Consults the subordinates on general issues and problems.f. Selection and recruitment of personnel.

Bottom level management / First Line Managers/SupervisorBottom level management / First Line Managers/Supervisor

a. Make short range plansb. Reviews performance of subordinatesc. Supervises day to day operationsd. Makes specific task assignmente. Maintain close contact with operative employees.

What is planning?Planning in short means getting ready to do something. it is the basic of all the functions performed by a manger. A manager should be able to forecast about what can happen tomorrow and according to the predictions he must be able to take advantage of the opportunities and to be aware of threats.Every manager should be able to plan effectively for example a manager should plan to bring positive changes in organization. To innovate new products, to plan for the sales of new products, to hire new technical staff and technology for increase and hi-fi performance. The manager must be able to produce and sell more in less time and to increase the utilization of the availed resources up to the maximum extent.According to sir Ackoff planning means to architect a desired future and how to bring it about. The definition is very concise and contains two components one is that it will be a design for future second it talks about the strategies of how to make this desired future a reality.



Types of PlansTypes of Plans

Short Range PlansShort Range Plans

These plans commonly provide guidelines for day to day activities in the organization. These ranges commonly cover maximum up to one year.

Intermediate PlansIntermediate Plans

These are the plans which are used to help achieving the result of the long range plans for example making franchises etc.

Long Range PlansLong Range Plans

These are the main purposes of an organization commonly they are designed to become a leader in the industry. These plans are made and then they are divided in to small plans and projects and those are called intermediate plans. Once intermediate plans are achieved they are like building blocks for these long range plans.

Man power PlansMan power Plans

These plans are made in order to meet the need of man power of employees they can be of short term as well as long term.

Production PlansProduction Plans

These are plans made to increase the production level or to optimize the quality of the products. They may also contain new techniques and methodology of brining innovation and new techniques of productions.

Marketing PlansMarketing Plans

These plans are made to improve the marketing wing of an organization. The commonly explore the channels of marketing how to target new markets and to attract new customers and make long living customer relations.

Tactical PlansTactical Plans

These plans are made to answer the question that how to utilize the resources of an organization for the best interest of the organization. These resources can be financial resources or human resources etc.

Process of PlanningProcess of Planning



Setting objectivesSetting objectives

Objectives are the targets for which planning is done. These are the prime parts of a plan. Setting objectives is like a winning line for an athlete. It is referred as a desired future. These objectives provide the path which leads in achieving the organizational goals. For example if a player wins the match. This win can give him the cup. Same is with the objectives, if the objectives are achieved they are as the whole goal is achieved for which the planning is done. Objectives are vital for the process of planning because all the efforts and hard work is done for the achievement of the objectives. These are like the road map towards success.

Situational AnalysisSituational Analysis

This is the second step in the planning process. In this step the planner must assess and appraise his weaknesses and strengths. It is a very essential activity and must be done precisely to the points. If there is some mistake it can even collapse the whole plan and the organization will and must bear unbearable losses.

Environmental OpportunitiesEnvironmental Opportunities

This step involves an appraisal and assessment of external environment. Such as competition, market situation, government policies, economic conditions, technology, current investment and profit earning ranks etc.Some of the scholars put both step two and three in one basket and call them SWOT (Strength weakness opportunity and threat) analysis.

Course of ActionCourse of Action

Based on the assessment of internal and external environment and goals in mind, a proper course of action must be designed. Course of action de facto converts your ideas and perceptions in to formal form or plan. It translates your perceptions about the opportunities and threats. The course of action must be near to exact if not exact, it should not engineered on the bases of false perceptions and fool’s sandwiches. Once the course of action is build, its cost should be compared with the benefits and risk elements must be pointed out.

Budgetary AllocationsBudgetary Allocations

Once the best course of action is opted, the next step in planning process is to set specific targets and allocate Resource. These resources must be expressed in Quantitative manner.



Budgets are allocation of resources in a proper manner; they help us to assess the total cost of a plan. It also warns us if we are on astray or if the plan is of raised bars as compared to our financial position.

Implementation and reviewImplementation and review

The last step in the process of planning is to implement the course of action. And to put short term pegs (objectives) and observe if the course of action is practical and helpful in achieving our goals. If the course of action is working perfectly then it should be carry on and if there is any problem then the whole process is to be scrutinized for the beginning and rectified the step necessary.



What is organizing?What is organizing?The term organization has been discussed from different perspectives with different aspects of usage. Some of the writers think that is merely a collaboration of a group of people for the achievement of some objectives or for the fulfillment of certain goals. People from different walks of life have defined it according to their own views but there are some factors which are found in common in all the definitions willingness to serve, group of people, sharing common interest or objectives.

Types of OrganizationTypes of Organization

There are various types of organization for example formal, informal, profitable, unprofitable etc.

1. Formal organizationThe type of organization which has a planned structure with certain rules, laws, an effective channel of communication, delegation of authorities and responsibility, respect for each other with a mission to achieve certain goals.Examples: business organizations, government organizations, certain social organizations.

2. Informal organizationThese organizations are not formally planned and there are no specific rules or responsibilities, these organizations are created by the combination of people who are having some common interests or habits in general like a community of friends, smokers, back benchers etc.

3. Profitable organizationThese are groups of people, who put there efforts and skills in order to earn profit. Like the laborers of a production unit who combine there whole efforts in order to bring out the production needs against which they are rewarded with salaries and incentives etc.

4. Non-profitable organizationsPeople who are not organized in order to earn profit are called non-profitable organization. These organizations are commonly social service organizations who are to serve the humanity or they may be government organizations in order to give humans non-profitable services like polio organization or population control department etc.



Goals of an OrganizationGoals of an Organization

All the organizations are commonly made or they become for some specific goals and these goals are in common of the interest of all the members. These goals can be financial reward, French benefits, incentives or psychological needs like love affection, brother hood etc. all these goals can be divided into further three types.

1. OfficialThese goals are not confidential and are not harmful if expressed in general masses and even some times they are required to be expressed. Like the rules regulations of an organization, prospectus etc.

2. OperativeThese are the goals which are aimed to rectify the working process of an organization; they may affect the working speed, performance level and quality management matters etc.

3. OperationalThese are the measuring-points for the success of an organization. They are like pegs of success and are commonly short term, once they are approached the organization estimates the exact and acquired standard and then analyzes the ratio if the ratio is effective then the goals are applied as a permanent part of course of action if not then they are commuted

Environment of an OrganizationEnvironment of an OrganizationThe environment of an organization is divided into two types.1. Internal Environment 2. External Environment

Internal EnvironmentInternal Environment

The internal environment contains factors which are near to the organization and almost under the control and influence of the organization. Organization can easily improve them and innovate in the current status of the organization. These factors include the technology of present in the organization, labor, working system, process, raw material, supplier and so on. If some problem arises in the internal environment the organization can easily approach and rectify it.

External EnvironmentExternal Environment

The external environment contains factors which are far more inaccessible to the organization. Organization can neither control them nor influence them as it wants. If there is some problem in the external environment it can not be solved by the organization. Factors which can externally affect



the organization are Demographics, Political conditions, competitors, Government, financial institution, public, customers, etc.

Skills Required by ManagerSkills Required by ManagerThere are various skills required by a manger to Perform effectively some of which are as under.

OrganizationOrganization

Management requires an orderly approach. Organized files, strong time management skills and personal efficiency are key to the Management. You’re dealing with people’s lives and careers here, and when a manager requests a personnel file or a compensation recommendation that lines up with both the organization and the industry, it won’t do to say, “Hold on. I’ll see if I can find it.”

MultitaskingMultitasking

Manager will deal with an employee’s personal issue one minute, a benefit claim the next and a recruiting strategy for a hard-to-fill job the minute after. Priorities and business needs move fast and change fast, and colleague A who needs something doesn’t much care if you’re already helping colleague B. You need to be able to handle it all, all at once.

Discretion and Business EthicsDiscretion and Business Ethics

Managers are the conscience of the company, as well as the keepers of confidential information. As you serve the needs of top management, you also monitor officers’ approaches to employees to ensure proper ethics are observed. You need to be able to push back when they aren’t, to keep the firm on the straight and narrow. Not an easy responsibility! Of course, you always handle appropriately, and never divulge to any unauthorized person, confidential information about anyone in the organization.

Dual FocusDual Focus

Management professionals need to consider the needs of both employees and management. There are times you must make decisions to protect the individual, and other times when you protect the organization, its culture, and values. These decisions may be misunderstood by some, and you may catch flak because of it, but you know that explaining your choices might compromise confidential information. That’s something you would never do.



Employee TrustEmployee Trust

Employees expect manager to advocate for their concerns, yet you must also enforce top management’s policies. The manager who can pull off this delicate balancing act wins trust from all concerned.

FairnessFairness

Successful Management professionals demonstrate fairness. This means that communication is clear, that peoples’ voices are heard, that laws and policies are followed, and that privacy and respect is maintained.

Dedication to Continuous ImprovementDedication to Continuous Improvement

Manager needs to help, coach and develop their employees. The goal is continued improvement and innovation as well as remediation. And looking to their own houses, the Management professional also uses technology and other means to continuously improve the Manger’s function itself.

Strategic OrientationStrategic Orientation

Forward-thinking Management professionals take a leadership role and influence management’s strategic path. In gauging and filling the labor needs of the company, devising compensation schemes, and bringing on board new skill sets leading to business growth, they provide the proof for the often-heard management comment, “People are our most important asset.”

Team OrientationTeam Orientation

Once, companies were organized into hierarchies of workers headed by supervisors. Today, the team is king. Managers must consequently understand team dynamics and find ways to bring disparate personalities together and make the team work.



Leadership Leadership

A lot of research is done on the concept of leadership. The researchers have contributed considerable amount of efforts and knowledge in order to clarify the exact meaning and definition of leadership and therefore it has been defined by from different perspectives by different scholars. Below are discussed some of the definitions and concepts proposed by different scholars.Leader ship is the ability to influence the thoughts and ideas of others in order to achieve certain goals.OrLeadership is the ability which changes deviation to goal directed behavior.OrLeadership is the relationship between two lots of people one leader and the other follower.OrLeadership style is the manner and approach of providing direction, implementing plans, and motivating people.

Leadership StylesLeadership Styles

AutocraticAutocratic

This style is used when leaders tell their employees what they want done and how they want it accomplished, without getting the advice of their followers. Some of the appropriate conditions to use it is when you have all the information to solve the problem, you are short on time, and your employees are well motivated. Some people tend to think of this style as a vehicle for yelling, using demeaning language, and leading by threats and abusing their power. This is not the authoritarian style, rather it is an abusive, unprofessional style called bossing people around. It has no place in a leader's repertoire. Such style of leadership is built by power. The subs are commonly motivated by fear. When the leader asks a subordinate to do a task, the subordinate is supposed to do the task without questioning.

DemocraticDemocratic

This style involves the leader including one or more employees in the decision making process (determining what to do and how to do it). However, the leader maintains the final decision making authority. Using this style is not a sign of weakness; rather it is a sign of strength that your employees will respect.



This is normally used when you have part of the information, and your employees have other parts. Note that a leader is not expected to know everything. this is why you employ knowledgeable and skillful employees. Using this style is of mutual benefit. it allows them to become part of the team and allows you to make better decisions. The leader of such style encourages the subordinates to take part in the decision making group there is relation of respect and dignity amongst the lots of leading and followers. Humans are valued as humans and not animals they are motivated by fulfilling their needs (physiological, psychological).

Job-Centered/ Production-centered (Likert)Job-Centered/ Production-centered (Likert)

In this style of leadership the leader keeps his subordinates under pressure and forces them by any mean to increase the production. The leader does not focus on the human aspects of the subordinates. In this style the production or performance is judged on daily bases and salaries and wages are rounded off if there is a bit problem in the achievement of daily production performance.

Employee-centered (Likert)Employee-centered (Likert)

Under this style the subs are given the freedom to do the job as they would please to do. There is no pressure and unnecessary influence from the leader. The objectives and the duration of achievement is made clear to the subs and they are given freedom to achieve the goals the way which is more feasible and convenient to them. Good performance is praised as well as rewarded with bonuses and incentives.

Reality-Centered (Argyris)Reality-Centered (Argyris)

According to this view the proponent says that the leadership style should be adopted according to the situation. If the subordinates are obtuse or blunt and are not willing to work the way they should do then there should be punishment for them, and if they are willingly interested in their jobs are good in their performance then they should be valued.

DeclarativeDeclarative

In this style, the leader allows the employees to make the decisions. However, the leader is still responsible for the decisions that are made. This is used when employees are able to analyze the situation and determine what needs to be done and how to do it. You cannot do everything! You must set priorities and delegate certain tasks.



This is not a style to use so that you can blame others when things go wrong, rather this is a style to be used when you fully trust and confidence in the people below you. Do not be afraid to use it, however, use it wisely!

Theory XTheory X

This view was proposed by Mc Gregor he said that these are the basic views which leaders have about their subs. Leaders who are in favor of theory x think that average people are dull and don’t want to work and it is a human inheritance so they should be force in the way which suits best.

Theory YTheory Y

Leaders who are in favor of theory Y are more concerned with human aspects. In this regard they think that humans are not machines and therefore should not be forced or punished, instead they should be motivated by incentives and bonuses. If they subs are given the best level of self esteem they can also shoulder the responsibilities which they are asked to.

Charismatic LeadershipCharismatic Leadership

A Charismatic leader is one who provides an environment full of energy and positive reinforcement. If you are naturally charismatic, you are very fortunate! This is a trait that is not so easily learned.Charismatic leaders inspire others and encourage them to be their best. Employees and group members want to impress a charismatic leader, so they work hard and strive to succeed.



The Product Life CycleThe Product Life Cycle

A product's life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product. If a curve is drawn showing product revenue over time, it may take one of many different shapes, an example of which is shown below:

Product Life Cycle Curve

The life cycle concept may apply to a brand or to a category of product. Its duration may be as short as a few months for a fad item or a century or more for product categories such as the gasoline-powered automobile.

Product development is the incubation stage of the product life cycle. There are no sales and the firm prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities.

Introduction StageIntroduction Stage

When the product is introduced, sales will be low until customers become aware of the product and its benefits. Some firms may announce their product before it is introduced, but such announcements also alert competitors and remove the element of surprise. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product. These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits.

During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. The following are some of the marketing mix implications of the introduction stage:



Product - one or few products, relatively undifferentiated Price - Generally high, assuming a skim pricing strategy for a high profit margin

as the early adopters buy the product and the firm seeks to recoup development costs quickly. In some cases a penetration pricing strategy is used and introductory prices are set low to gain market share rapidly.

Distribution - Distribution is selective and scattered as the firm commences implementation of the distribution plan.

Promotion - Promotion is aimed at building brand awareness. Samples or trial incentives may be directed toward early adopters. The introductory promotion also is intended to convince potential resellers to carry the product.

Growth StageGrowth Stage

The growth stage is a period of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted. Once the product has been proven a success and customers begin asking for it, sales will increase further as more retailers become interested in carrying it. The marketing team may expand the distribution at this point. When competitors enter the market, often during the later part of the growth stage, there may be price competition and/or increased promotional costs in order to convince consumers that the firm's product is better than that of the competition.

During the growth stage, the goal is to gain consumer preference and increase sales. The marketing mix may be modified as follows:

Product - New product features and packaging options; improvement of product quality.

Price - Maintained at a high level if demand is high, or reduced to capture additional customers.

Distribution - Distribution becomes more intensive. Trade discounts are minimal if resellers show a strong interest in the product.

Promotion - Increased advertising to build brand preference.

Maturity StageMaturity Stage

The maturity stage is the most profitable. While sales continue to increase into this stage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced. Competition may result in decreased market share and/or prices. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors' customers to switch, increasing usage per customer, and converting non-users into



customers. Sales promotions may be offered to encourage retailers to give the product more shelf space over competing products.

During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. Marketing mix decisions may include:

Product - Modifications are made and features are added in order to differentiate the product from competing products that may have been introduced.

Price - Possible price reductions in response to competition while avoiding a price war.

Distribution - New distribution channels and incentives to resellers in order to avoid losing shelf space.

Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to get competitors' customers to switch.

Decline StageDecline Stage

Eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintained longer. Unit costs may increase with the declining production volumes and eventually no more profit can be made.

During the decline phase, the firm generally has three options:

Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product.

Harvest it, reducing marketing support and coasting along until no more profit can be made.

Discontinue the product when no more profit can be made or there is a successor product.

The marketing mix may be modified as follows:

Product - The number of products in the product line may be reduced. Rejuvenate surviving products to make them look new again.

Price - Prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for continued products serving a niche market.

Distribution - Distribution becomes more selective. Channels that no longer are profitable are phased out.

Promotion - Expenditures are lower and aimed at reinforcing the brand image for continued products.


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