Figure 11.3: Sales and Profit Life Cycles
Product Life-Cycle Marketing Strategies
Issues in Collecting
and Using Information #6
Invasion of customer
privacy

e.g., use of medical
databases to sell healthcare
products
Information and ethics

e.g., guidelines for sharing
of confidential information
McGraw-Hill/Irwin
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TM 5-13
Bargaining Power of Buyers
Concentrated or large volume sales
 Purchased products are a significant
fraction of buyer’s costs
 Products are standard or undifferentiated
 There are few switching costs
 Low profits - pressure on suppliers
 Buyers pose threat of backward
integration
 Buyer has full information

Bargaining Power of Suppliers
Concentrated suppliers, fragmented
buyers
 Little substitution threat
 Customer is not an important buyer
 Supplier’s product is important input
 High buyer switching costs
 Suppliers pose threat of forward
integration
 Government - defense, timber, regulation

Rivalry: Price competition, advertising,
product introductions, customer service..
Numerous Competitors: More mavericks
 Slow Industry Growth
 High Fixed or Storage Costs (Excess
capacity often leads to price wars)
 Lack of Differentiation = commodity
 Foreign Competitors
 High Strategic Stakes
 High Exit Costs

Likelihood of retaliation to entry
History of retaliation
 Established firms with substantial
resources such as cash, borrowing
capacity, excess productive capacity,
distribution leverage
 Established firms with illiquid industry
assets
 Slow industry growth - can’t absorb new
competition.

Figure 9-2: Barriers and Profitability