1.3.5 - Marketing Strategy

Question 1

What is Marketing

Answer 1

• The management process of identifying, anticipating and satisfying consumer demands for profit

Question 2

What is marketing strategy

Answer 2

The methods used by a business to achieve their marketing objectives

Question 3

What is the product lifecycle

Answer 3

• The stages a product will go through
  1. Development
  2. Introduction
  3. Growth
  4. Maturity
  5. Decline

Question 4

What is the product development phase

Answer 4

• This is the first stage of the product lifecycle where a product is designed and market research is analysed to produce a product which will satisfy customer needs
• Cash flow at this point is tight, this is a very expensive phase and at this point the product is not making any revenue and therefore no profit
• All capital at this point will just be an investment, there is always a risk of the product not being a success

Question 5

What happens in the introduction of product to market phase

Answer 5

• The introduction phase will involve high costs in research and development and the product may have been test marketed before launching, so profits may be negative
• Sales will be low as customers may not yet be aware of the products
• Advertising will be informative to let customers know that the
  product has been launched

Question 6

What happens in the growth phase

Answer 6

• Growth phase products are enjoying rapid growth in sales and profits
• At this stage the customers are aware of the product and demand is high
• A business may advertise the product to take advantage of the high demand

Question 7

What happens in the maturity phase

Answer 7

• Maturity phase products face intense competition now all the producers have joined the market
• Market is starting to be saturated
  – everyone has bought the product who is likely to buy
• Sales are high but profits are starting to fall
• Products have to be discounted to keep sales high – so prices may be
  lowered or the product may be put on sale

Question 8

What is the decline phase

Answer 8

• Decline phase products may be limited in production
• At this stage profits and sales have fallen and the product may be withdrawn from sale
• The business may decide to heavily discount to get any last sales before the product becomes obsolete

Question 9

How can a business extend the product lifestyle

Answer 9

• There are 2 main ways, Change the product, Change the promotion, the following examples come under both headings

1. updating packaging
2. adding more or different features
3. changing target market
4. advertising
5. price reduction

Question 10

How can product modification extend the lifecycle of a product

Answer 10

• Extension strategies are designed to extend the life of the product before it goes into decline
• One of the methods of extending the lifecycle is through product modification and a good example of this is cars, which retain the same engine but change the styling
• This strategy will either sell to a new market or remind the old market that its time to change the products to the new version

Question 11

What is a product portfolio

Answer 11

• • A product portfolio is the collection of
    all the products and services offered by
    a company

Question 12

What is the Boston Matrix

Answer 12

• The Boston matrix is a marketing planning tool which helps managers to plan for a balanced product portfolio
• It looks at two dimensions: market share and market growth, in order to assess new and existing products in terms of their market potential
• It helps marketing managers work out how much to spend on each product

Question 13

What is the boston matrix star

Answer 13

• A product in this quarter will have high market share and high market growth
• This product may be in the growth phase of the product life cycle
• Production of this product should remain consistent while profits are harvested

• Stars should become cash cows in time – if managed correctly

Question 14

What is the boston matrix question mark

Answer 14

• Also known in some books as a problem child
• A product in this quarter enjoys high market
growth but low market share
• This product may have just been launched on
the market and is building its customer loyalty
• Products should be invested in while their
market share builds

Question 15

What is the boston matrix cash cow

Answer 15

• Products in this quarter are reaching the maturity of their product life cycle but still have customer loyalty
• Products should be produced until sales start to decline

Question 16

What is the boston matrix dog

Answer 16

• Products in this quarter face declining sales in
declining markets
• Products may be in the decline phase of their
product life cycle
• For example video tapes or top hats
• These products should be removed from sale

Question 17

What are the uses of the boston matrix

Answer 17

• The Boston matrix is a good starting point when reviewing an existing product line to decide future strategy and budgets
• The conclusions drawn from such an analysis are to transfer the surplus cash from cash cows to the stars and the question marks, and to close down or sell off the dogs
• In the end, question marks reveal themselves as either dogs or stars, and cash cows become so drained of finance that they turn into dogs

Question 18

What are the limitations of the boston matrix

Answer 18

• Products may not be low or high market share they could be medium
• High market share does not always lead to high profits, there are high costs also involved with high market share
• Many people argue this matrix is too simple

Question 19

What are mass market strategies

Answer 19

• A mass market is one that caters for (almost) everyone, mass marketing is the process of selling products to all consumers regardless of age, gender, etc. in the same way
• These products can be marketed to consumers all over the world in the same way
• Large quantities produced mean lower average costs means EOS, which means high profits
• Media used will be; TV, radio, newspapers, mass media

Question 20

What are niche marketing strategies

Answer 20

• A market segment is consumers who can be grouped in different ways; income, gender, lifestyle, ethnicity, religion, age, interest
• A niche market is one that caters to a small subset of a segment and will target consumers in a very specific way
• Products are designed for a specific purpose
• Small turnover keeps larger firms from entering market
• Inelastic demand means higher prices can be charged
• Media used will be; specialist magazines, trade fairs, websites, word of mouth, leaflets

Question 21

What is B2B marketing

Answer 21

• B2B stands for Business to Business marketing. Many businesses just deal with other businesses rather than consumers. For example a school or college will have a paper supplier so they can keep giving you handouts and you can print your work out.
• Advertising needs to be informative rather than persuasive or “clever”
• This will typically involve larger transactions than with consumers (think paper again)
• Suppliers need to build up closer relationships with customers
• Focus will be on offering a quality product and a quality service

Question 22

What is B2C marketing

Answer 22

• B2C means business to consumer
• They are not looking to build up long term relationships with the supplier, maybe a one off purchase like a sofa
• Consumers want a variety of distribution channels for convenience e.g. online, click and collect, delivery etc.
• Short advertising messages which clearly point out the benefits
• Emotional connection with the product or supplier

Question 23

What is customer loyalty

Answer 23

• Businesses have discovered that it is much cheaper to keep a loyal customer than to gain new customers through marketing
• The expression “plugging the leaky bucket” is used – where business owners should focus on keeping their existing customers with loyalty schemes, discounts and extras rather than continually trying to attract new customers
• Customer loyalty is creating a product or service that ensures repeat purchases

Question 24

What is effective customer service

Answer 24

• Customer service can be defined as; the assistance and advice provided by a company to those people who buy or use its products or services, This can be :
• Before the purchase e.g. answering questions on the phone or by e-mail
• During the purchase e.g. on a car test drive, the sales person can answer questions on fuel economy, reliability and features of the car
• After the purchase e.g. repairs, warranties, guarantees and service plans

Question 25

What are loyalty cards

Answer 25

• Loyalty cards can work in a number of ways:
• They can improve customer retention e.g. a coffee shop making sure customers return by offering a stamp
• They can also collect important data on buyer behaviour and purchase decisions e.g. Boots advantage card, Tesco clubcard

Question 26

What are saver schemes

Answer 26

• Each week consumers can carry out their shopping and pay into a saver card – ready for Christmas
• They are rewarded by the supermarket for paying in. Here is the current ASDA scheme:
• Save £49 and get a £1 bonus
• Save £97 and get a £3 bonus
• Save £144 and get a £6 bonus