1.3.5 Marketing Strategy

Question 1

What is the product lifecycle?

Answer 1

• Describes the different stages a product goes through from its conception to its eventual decline in sales

Question 2

What are the 5 stages involved in the product lifecycle?

Answer 2

Development
focus is on designing and developing the product
Business usually incurs high costs for research & development, market research, and product testing
Introduction
Stage begins when product is launched
Characterised by slow sales growth as product is still new & unknown to most consumers
Growth
Product enters this stage when sales begin to increase rapidly
Business focus shifts to building market share and increasing production to meet the growing demand
Maturity
Characterised by slowing sales growth as product reaches its peak in terms of market penetration
Decline
Starts when sales begin to decline as product becomes obsolete or replaced by newer products
Businesses focus shifts to managing the product’s decline &reducing costs

Question 3

What is the implication of development for the businesses cash flow & marketing strategies in the Product lifecycle?

Answer 3

• Cash flow is usually negative during this stage, as company is investing heavily in product without generating any revenue
• The marketing strategy during this stage is focused on creating awareness & generating interest in the product

Question 4

What is the implication of introduction for the businesses cash flow & marketing strategies in the Product lifecycle?

Answer 4

• Cash flow is usually negative as the business usually incurs high costs for promotion, advertising and distribution
• Marketing efforts are focused on creating awareness and generating interest in the product

Question 5

What is the implication of growth for the businesses cash flow & marketing strategies in the Product lifecycle?

Answer 5

• Cash flow usually turns positive during this stage as sales revenue increases & costs are spread out over a larger volume of production
• The marketing strategy is to differentiate the product from its competitors and build brand loyalty

Question 6

What is the implication of maturity for the businesses cash flow & marketing strategies in the Product lifecycle?

Answer 6

• Cash flow- usually positive during this stage as sales revenue continues to come in & costs are reduced through economies of scale & efficient production processes
• The marketing strategy aims to maintain market share & increase profitability by cutting costs and finding new markets

Question 7

What is the implication of decline for the businesses cash flow & marketing strategies in the Product lifecycle?

Answer 7

• Cash flow usually turns negative as sales revenue declines and costs associated with the product’s decline increase
• The marketing strategy may involve discontinuing the product, reducing its price to clear inventory, or finding new uses for the product

Question 8

Define ‘extension strategies’ within the product lifecycle.

Answer 8

• Extension strategies refer to techniques used by businesses to extend the life of a product beyond its natural life cycle

Question 9

What are extension strategies designed to do?

Answer 9

• Boost sales &
• Maintain profitability
  for a product that has reached the decline stage of its life cycle

Question 10

What are the two types of extension strategies?

Answer 10

• Product related extension strategies
• Promotion related extension strategies

Question 11

What is a product- related extension strategy?

Answer 11

Involves changing/modifying the product to make it more appealing to its customers & extend the lifecycle
This can be done in 1/3 ways:
- Product improvement e.g. Samsung releases new versions of its Galaxy Smartphone every year with upgraded features and improvements to the previous model
- Line extensions Coca-Cola introduced Diet Coke and Coke Zero as line extensions of its original Coca-Cola
- Repositioning

Question 12

What are promotion related extension strategies?

Answer 12

Involves changing the marketing & promotion of the product to extend its life cycle
& could include one or more of the following changes:
* Changes to advertising e.g Kellogg’s continues to recreate adverts for its Corn Flakes cereal which has been around since 1906

• Price promotions e.g. Cyber Monday occurs on the first Monday after Thanksgiving in the USA & electronic firms discount prices significantly to boost sales of their products

Question 13

What is the boston matrix?

Answer 13

• A tool used by businesses to analyse their product portfolio & make strategic decisions about each product

Question 14

What does the matrix classify products into depending on & what are these classifications?

Answer 14

Classifies products into 4 categories based on their market share & the market growth rate:

• Cash Cow
• Problem Child/ Question mark
• Star
• Dog

Question 15

What are cash cows?

Answer 15

• Products with a high market share in a mature market
  (The market is no longer growing)

Question 16

What is the problem child/question mark?

Answer 16

• Products have a low market share in a high growth market
• These products have the potential to become stars if the company invests in their development

Question 17

What are star products?

Answer 17

• Have a high market share in a high growth market
• The company typically invests in stars to maintain or increase their market share

Question 18

What are dog products?

Answer 18

• Have a low market share in a low- growth market

Question 19

What are the implications of cash cows?

Answer 19

• Generate significant positive cash flow but have low growth potential
• Business invests minimal resources in CC’S as seen as stable sources of income
• CC’S are valuable assests & can be used to fund the development of new products

Question 20

What are the implications of the problem child/question mark?

Answer 20

• Often a negative cash flow as businesses usually invest in problem child products to increase their market share and turn them into stars
• If investment does not result in growing- business may discontinue the product
• Marketing efforts focus on increasing their market share and brand recognition

Question 21

What are the implications of star products?

Answer 21

• Generate significant positive cash flow & have potential for continued growth
• Stars are valuable assets and the business should focus on maximising their potential
• Marketing efforts focus on building brand recognition, increasing market share, and maintaining profitability

Question 22

What are the implications of dog products?

Answer 22

• Generate little revenue for the company & have no growth potential
• Businesses often move away (divest) from these to focus on more profitable products
• Marketing efforts for dog products are minimal or zero

Question 23

What marketing strategies are used for mass markets?

Answer 23

• Focus on building brand awareness & appealing to broad audience
• Advertising campaigns are usually designed to reach as many people as possible & use mass media such as TV, radio etc.
• Messages are often simple & the goal is to create a strong brand identity that resonates with a large segment of the population

Question 24

What marketing strategies are used for niche markets?

Answer 24

• Targeting a specific segment of the population & building relationships with them
• Advertising campaigns- usually more targeted & may use social media to reach potential customers
• Messages often more detailed & include technical information that’s relevant to the specific needs of target market

Question 25

What marketing strategies are used for Business to Business (B2B)?

Answer 25

• Emphasis is on building relationships with other businesses & demonstrating how your product can help them be more successful
• Advertising campaigns may include case studies that demonstrate the value of your product/service
• Messages are often more technical & may focus on features and benefits that are relevant to other businesses

Question 26

What marketing strategies are used for Business to Consumer (B2C)?

Answer 26

• Emphasis on building brand loyalty & creating a positive customer experience
• Advertising campaigns may include social media ads or influencer marketing campaigns that appeal to the emotions of consumers
• The messages are often more emotional & may focus on the lifestyle benefits of using the product/service

Question 27

What are the 3 commonly used methods of developing customer loyalty?

Answer 27

• Customer Service
  When customers have positive customer service experience, they are more likely to return & recommend the business to others
• Loyalty cards
  Popular way for businesses to encourage repeat customers
  These cards typically offer rewards/ discounts for frequent purchases
• Saver schemes
  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 e.g Christmas