1.3.5 Marketing Strategy Flashcards
what are the 5 stages of the product life cycle
- development
- introduction
- growth
- maturity
- decline
what is the development phase of the product life cycle
involves research and development and marketing
costs are high and there are no sales to cover the costs
this results in a high fail rate
what is the introduction phase of the product life cycle
- product is launched
- promotion is heavy, businesses must ensure they have the capacity for the demand that this creates
- price skimming may be used here to cover the costs of the development phase
- alternatively price penetration can be used to encourage sales
what is the growth phase of the product life cycle
- sales grow rapidly from new and repeated customers
- competitors may be attracted to the market
- promotion has to differentiate the product
- product may be improved or developed
what is the maturity phase of the product life cycle
- sales hit a peak
- profitability hits a peak as fixed costs of development are paid off
- saturation is reached, sales drop, and prices may be lowered to stimulate demand
- not many new customers
- competition is high
what is the decline phase of the product life cycle?
- product doesn’t appeal to customers anymore
- sales fall rapidly
- product may be withdrawn or sold to another company
- decline isn’t inevitable, quality products with a great design can sell for decades
what are extension strategies?
- an effort to boost sales when they are declining
-this could be done through promotion or product development
what is a product line
- consists of related products that share similar characteristics, uses or target customers
- e.g. nestle produces kitkat’s but in many forms, the two-finger KitKat, 4 finger and KitKat chunky
what is a product portfolio
- contains a variety of different products are different stages in the product life cycle
- e.g. nestles product portfolio consists of KitKat, Nescafe, and Shredded Wheat
what is the Boston matrix?
- model used for product portfolio analysis
- compares market growth with market share
- puts products into categories: stars, cash cows, question marks and dogs
What are the characteristics of a star in the Boston matrix
- high market share and high market growth
- in growth and a profitable stage
- promotion key to maintain market share
- must keep up with growing demand
What are the characteristics of a cash cow in the Boston matrix
- have high market share and low market growth
- they are in the maturity phase of the product life cycle
- they don’t require much investment as the brand is well known and EOS has been produced
- very profitable
What are the characteristics of a question mark in the Boston matrix
- products that have high market growth and low market share
- all new products lie here
- they aren’t profitable yet, they could succeed or fail
- they require heavy marketing to stand a chance
What are the characteristics of a dog in the Boston matrix
- Have low market share and low market growth
- if still profitable the business will harvest profit for the short term
- if no longer making profit the product may be sold
How can the Boston matrix be used
- shows how a business products are positioned in the market
- helps a business make decisions
What is a mass marketing strategy
- products/services that appeal to the whole market
- creating mass appeal with strong branding and promotion, this is important as mass markets tend to be highly competitive
when operating in a niche market what marketing strategies would be used
- creating a product that is differentiated or unique compared to what’s available in the mass market
- USP’s are essential
- requires more specialised market research on the specific target market
- establishing brand loyalty and adding value (important as there is less demand than in the mass market)
What is B2B marketing
- The sale of products or services from one business to another
- takes a more informative approach to marketing
- strong emphasis on building a long-term relationship between the two businesses
- needs to understand the clients specific needs as usually involves large sales with high stakes
What is B2C marketing
- The sale of a business’ product or service to a consumer
- takes a more emotional approach to marketing
- often uses media like TV and radio
How can customer loyalty be achieved
- positive customer service
- after sales service for problems or enquiries about the product
- loyalty cards, help tie a consumer to a service or retailer
- saver schemes, e.g. tescos club card
