1.3.5 Marketing Strategy Flashcards
What does the product life cycle show?
It shows the sales of a product over time
What are the 5 stages of the product life cycle?
. Development . Introduction . Growth . Maturity . Decline
What is the research and development stage?
The R&D develop the product and the marketing department markets it. However costs are high with a high failure rate due to not enough demand.
What is R&D?
Research and development
What is the introduction stage?
. The product is either launched in one or several markets. Businesess have to make their product appeal to customers as much as possible leading to the product being promoted a lot.
. penetration pricing is used to increase sales
what is the growth stage?
. Sales grow fast leading to new and repeat customers
. competitors may be attracted to this market so promotion is used to differentiate them
. product is improved and developed and it may be targeted at a different market segment
. rising sales encourage outlets to stock product
What is the maturity stage?
. sales are at a peak and profitability increases
. At saturation sales may begin to drop
. Not many new customers
. Fierce competition in the market so sales may drop
What is the decline stage?
. The product does not appeal to customers anymore
. Product may stay profitable if promotional costs are low
. If sales continue falling product is withdrawn
. Decline stage is not inevitable (good products with good promotion and branding sell for decades)
What are extension strategies?
Used to improve sales of products that are starting to decline (keeping the product going strong for longer)
Examples of extension strategies?
. Product development
. Promotion
A different term for product portfolio?
Product mix
What is a product line?
Related products with similar characteristics, uses or target customers
Example of a product line?
The Nestle Kit Kat product line consists of Kit Kat 2 finger, 4 finger, KitKat chunky…
What is a product portfolio?
A combination of product lines that a business produces
Example of product portfolio?
Nestles product portfolio includes product lines like Kit Kat, Nespresso, shredded wheat…
Why does a business aim to have a variety of different products (product portfolio) at different stages of the product life cycle?
If one product fails the business should be able to depend on the others
What is the Boston matrix?
Compares market growth with market share
What are the four sections of the Boston matrix?
. Question marks (problem child)
. Dogs
. Cash cows
. Stars
What are questions marks in the Boston matrix?
. All new products are questions marks
. Products with low market share and high market growth
. needs heavy marketing and could succeed or fail
What are cash cows in the Boston matrix?
. high market share but low market growth
. in their maturity phase
. produced in high volumes so costs are low
. bring in a lot of money
What are stars in the Boston matrix?
. high market share with high market growth
. future cash cows
. in profitable growth phase
. spend lots of money on promoting to keep market share
. money spent to increase capacity to keep up with demand
What are dogs in the Boston matrix?
. low market share with low market growth
. lost cause
. if it’s still profitable the business will harvest profit in short term
. if it’s not profitable it can be sold off
What does the Boston matrix show?
Shows where a businesses products are positioned in the market
What decisions depend on the products position in the Boston matrix?
Marketing decisions. E.g a business uses money from its cash cows to invest into question marks
What can’t the Boston matrix predict with a product?
Cant exactly product what will happen with a product. a products profit may one different to what the matrix suggests. E.g a dog has falling sales but stays profitable
Who does mass marketing need to appeal to?
To appeal to a wide audience instead of individual market segments
Features in a mass marketing strategy?
. Needs to have mass appeal
. Should clearly show any USPs of the product
. Have to promote their products a certain way to stay competitive
Examples of businesses promoting in a certain way to stay competitive?
. Expensive ad campaigns
. Sponsorship and product endorsement deals
. Promotional activities like % discounts
. customer loyalty cards and saver schemes can get repeat customers
Features of a niche marketing strategy?
. More emphasis on creating a product that is differentiated or unique
. More specialised
. The business needs to understand the needs, values and aspirations of the consumer
. Need to find cost effective ways of raising awareness due to they tend to have low budgets
. Concentrate on building a reputation and building customer loyalty
What is B2B Marketing?
The sale of one businesses product to another business
What is B2C Marketing?
The sale of a businesses product to a customer
Features of B2B Marketing?
. Informative
. Advertised in trade journals and trade shows
. B2B customers have no emotional connection to the product
. Customers are concerned about savings of potential revenue
. Effective customer service
. Build strong relationship between the 2 businesses
. Focuses on the needs of the consumer
Why is customer loyalty important for repeated purchases?
. Strong customer service builds a strong brand and customer loyalty
. Sales people make the customers feel happy so they are more likely to make a sale
. After sales service makes the customer feel valued so they may return to buy again
How do businesses invest in the customer? And example
. Strong customer service
. Ensuring the customer is good and feels valued
. E.g A luxury waiting room with complementary drinks
What do loyalty cards do?
They help tie a customer in with a particular service provider or retailer
In what markets are loyalty cards useful?
Useful when there are many substitutes or when the product is purchased regularly
Example of a loyalty cards scheme?
Coffee shops give out loyalty cards where the customer collects a stamp on every time they buy a drink. A certain number of stamps =a free drink
What are saver schemes?
Customers collect points based on how much they spend
Example of saver scheme?
Tesco club card where the points give customers vouchers for money off their next shop (and also vouchers for other businesses)
