1.3.5 Marketing strategies

Question 1

What is the product life cycle?

Answer 1

The product life cycle describes the different stages a product goes through from its conception to its eventual decline in sales.

Question 2

What are the five stages of the product life cycle?

Answer 2

/Development
/Introduction
/Growth
/Maturity
/Decline

Question 3

Explain development?

Answer 3

The focus is on designing and developing the product. The business usually incurs high costs for research and development, market research, and product testing, cash flow is usually negative during this stage. Main focus is awareness and interest.

Question 4

Explain introduction?

Answer 4

The stage begins when the product is launched. Characterised by slow sales growth as the product is still new and unknown to most consumers. Cash flow is usually negative, efforts are still focused on awareness and interest or products.

Question 5

Explain growth?

Answer 5

The product enters this stage when sales begin to increase rapidly. The business focus shifts to building market share and increasing production to meet the growing demand. Cash flow usually turns positive and the strategy is to now differentiate the product.

Question 6

Explain maturity?

Answer 6

Characterised by slowing sales growth as the product reaches its peak in terms of market penetration. Cash flow is usually positive and the business can take advantage of this. The aim is to maintain market share and increase profitability.

Question 7

Explain decline?

Answer 7

Starts when sales begin to decline as the product becomes obsolete or is replaced by newer products. The business focus shifts to managing the product’s decline and reducing costs. Cash flow turns negative, the aim is to reduce price to clear inventory.

Question 8

What are the 2 types of extension strategies?

Answer 8

/Product-related extensions strategies
/Promotion-related extensions strategies

Question 9

Explain product-related extension strategies?

Answer 9

Involves changing or modifying the product to make it more appealing to customers and extend its life cycle and can be achieved in one of three ways.

Question 10

What are the 3 ways of product related extension?

Answer 10

/Product improvements
/Line extensions
/Repositioning

Question 11

Explain promotion related extension strategies?

Answer 11

Involves changing the marketing and promotion of the product to extend its life cycle and could include one or more of the following changes.

Question 12

What are the 3 ways of promotion related extension?

Answer 12

/Changes to advertising
/Price promotions
/Sales promotions

Question 13

What is the boston matrix?

Answer 13

The Boston Matrix is a tool used by businesses to analyse their product portfolio and make strategic decisions about each product.

Question 14

What are the 4 classes in the boston matrix?

Answer 14

/Cash cows - High share + Low growth
/Star - High share + High growth
/Question marks - Low share + High growth
/Dogs - Low share + Low growth

Question 15

Implications of a cash cow?

Answer 15

They generate significant positive cash flow but have low growth potential. The business invests minimal resources in cash cows as they are seen as stable sources of income.

Question 16

Implications of question mark?

Answer 16

There is often a negative cash flow as businesses usually invest in problem child products to increase their market share and turn them into stars. Marketing efforts focus on increasing their market share and brand recognition.

Question 17

Implications of star?

Answer 17

They generate significant positive cash flow and have the potential for continued growth. Marketing efforts focus on building brand recognition, increasing market share, and maintaining profitability.

Question 18

Implications of dogs?

Answer 18

They generate little revenue for the company and have no growth potential. Businesses often move away (divest) from these to focus on more profitable products.

Question 19

How are mass markets characterised?

Answer 19

Mass markets are characterised by large numbers of customers who have similar needs and wants. For example retail clothing.

Question 20

What do mass markets focus on?

Answer 20

Mass markets focus on building brand awareness and appealing to a broad audience.

Question 21

How are niche markets characterised?

Answer 21

Niche markets are characterised by smaller groups of customers with specific needs and want. For example luxury car dealerships or organic food stores.

Question 22

What do niche markets focus on?

Answer 22

Marketing strategies focus on targeting a specific segment of the population and building relationships with them.

Question 23

What does B2B stand for?

Answer 23

Business to business.

Question 24

What does B2B marketing focus on?

Answer 24

B2B marketing focuses on selling products to other businesses e.g. software companies selling to other businesses; manufacturers selling parts to other manufacturers.

Question 25

What does B2C stand for?

Answer 25

Business to consumer.

Question 26

What does B2C marketing focus on?

Answer 26

B2C marketing focuses on selling products/services directly to consumers for example clothing retailers. In B2C marketing the emphasis is on building brand loyalty and creating a positive customer experience.

Question 27

Why is customer loyalty so important?

Answer 27

Developing customer loyalty helps businesses to grow and be successful in the long term. Customer loyalty drives repeat purchases which helps the firm to reduce marketing costs when launching new products.

Question 28

What are the 3 most common methods of gaining loyalty from customers?

Answer 28

/Customer service
/Loyalty cards
/Saver schemes

Question 29

Explain customer service?

Answer 29

When customers have a positive customer service experience, they are more likely to return and recommend the business to others.

Question 30

Explain loyalty cards?

Answer 30

A popular way for businesses to encourage repeat customers. These cards typically offer rewards or discounts for frequent purchases.

Question 31

Explain saver schemes?

Answer 31

These schemes typically offer discounts or special pricing for customers who save money with them. This helps customers gradually save up some money that can be used at periods when food bills are usually higher for example christmas.