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N 18 (New) Issue 3: Refer Para 8.6 for importance of Product Life Cycle Costing. Case Study: Identification of Features, Strategies in Life Cycle JK Ltd is following Life Cycle Costing. Its four products Pa, Ps, P2, and Ps are in the Market respectively in Introduction, Growth, Maturity and Decline stages (phases). The Management wants to analyse the marketing challenges faced by the products to take strategical measures to stabilize the products in the market. For this purpose, the Board directed the Secretary to get a the product because of which the product is being classified in the respective stage, and two strategical measures to be taken to overcome the market challenges faced at the stage (phase). The Secretary received the report from all the Chiefs and handed them over to the Computer Operator to get it printed in a tabulated form. But the Operator, without understanding the significance of the products , phases, characteristics and strategies, mixed all the twelve items ((1+2)x4] and got it printed as a list as given below: 1. Over capacity in the Industry. 2. The Company can continue to offer the product to our Loyal Customers at a Reduced Price. 3. Few Competitor Produce basic version of our product. Product features may be improved or enhanced to differentiate our product from that of the competitors. 5. Attracting Customers by raising awareness about our product through promotion activities. 6. High volume of business and increase in competition. 7 Use the present product as replacement product for launching another new product successfully in the Market. & Value-based Pricing Strategies may be considered. 9. Profits start declining and at times become negative. 10. Maintain Control over product quality to assure Customer Satisfaction. 11. Strengthening or expanding channel and Supply Chain Relationships. 12. Prices may have to be reduced to attract the price-sensitive Customers. 8.12 Life Cycle Costing Strategies Characteristics (3) The items are required to be tabulated as in the format given below: Products Phases (Stages) (2) PA Introduction P3 Growth P2 Maturity PA Decline Required: Requirement Answer / Page Reference 10) Complete the Table given below by entering the 12 items under appropriate See Table below - category columns. You need not rewrite the items. Write the Serial Numbers of Refer Page 8.1, Para 8.2 and Page the items only in columns (3) and (4). 8.3, Para 8.4 (ii) List down the importance (any four) of Product Life Cycle Costing. Page 8.4, Para 8.6 (iii) State the benefits (any four) of Product Life Cycle Costing. Page 8.4, Para 8.6 [Part (ii) and (iii) is similar to RTP, M 02, N 02, N 04, M 06, M10] (a) Reduction in Variable Cost from * 375 (initial) to 188 (at the end of scale, (m) Learning Curve for labour intensive processes, (iii) quantity discounts for materials, promotional marketing efforts as a product reaches the maturity stage, etc. (6) Cost Increase from 7188 (at the end of maturity stage) to +225 (in decline stage) may be due to - unavailability of quantity discount, (i) additional efforts for Stock Clearance, etc. M09 Case Study: Life Cycle Costing - Basics Meena is a News Reporter and Feature Writer for an economic daily. Her assignment is to develop a feature article on "Product Life-Cycle Costing" including interviews with the Chief Financial Officers (CFO) and Operating Managers. Meena has been given a liberal budget for travel so as to research into the Company's history, operations, and market analysis for the Firm she selects for the article. Required: 1. Meena has asked you to recommend industries and Firms that would be good candidates for the article. What would you advice? Explain your recommendations. 2. Her Colleague was informally chatting with Meena and observed that lower prices would be charged when a product is out of demand or when a newer product version is launched by a Company, in order to get rid of old stocks. Is this observation correct? Which stage of Product Life Cycle is being dealt with in this case? 3. Outline the importance of Product Life Cycle Costing