1.3 Marketing strategies Flashcards
What is a product portfolio?
The products a firm sells
Advantages to a large product portfolio?
Appeal to more needs
Helps spread risk
Remain up to date
Disadvantages to a large product portfolio
Product cannibalism
Expensive
May not increase sales
What is the product life cycle?
A technique to track the stages a product goes through.
Advantages of product life cycle
Aids decision making
Helps a firm determine the position of the products in their portfolio
Drawbacks of product life cycle
Subjective
Not all products go through each stage
Times spent in each stage can vary
Ignores external factors like economy
What is the development stage?
Complex and time consuming
High costs
High failure rate
Negative cashflow
What is the introduction stage?
Product is launched
Low sales but increasing
Negative cashflow
Struggle to sell through intermediaries
Investments in marketing
Low economies of scale
What is the growth stage?
Fast growing sales
+ve cashflow
intermediaries selling it
lower costs from economies of scale
Potential reaction from competition
What is the maturity stage?
Sales start to stabilise
Competition release alternatives
Strong finances
At end of maturity may need extention statergy
What is the decline stage?
Falling sales
lack of demand
weak cashflow
What is an extension statergy?
Extend the life of the product
Examples of extension statergies
Change prices, New features, redesign, new packaging
What is a rising star
High market growth + share
Likely to be profitable
Requires a lot of investment -> -ve cashflow at start
Funded by cash cows
What is a cash cows?
High market share, low market growth
established products and are likey to be profitable
Low chance of increasing profits in the future
Firms want as many as possible
Funds QM and RS
What is a Question Mark?
Low market share high market growth
Potential to be highly profitable however may fail
Net cashflow is likey to be -ve
requires a lot of attention
potential to become a cash cow
What is a dog?
low market growth and low market share
Scope for profits is low, market isnt growing
Can still be profitable if market exists
Some are worth keeping to get people buying other items from portfolio
