1.3.5 Marketing Strategy

Question 1

The product life-cycle

Answer 1

• contains five stages: development, introduction, growth, maturity, and decline

Question 2

Stage one: development

Answer 2

• The focus is on designing and developing the product
• The business usually incur high costs for research and development, market research, and product testing
• Cash flow is usually negative during this stage as the company is investing heavily in the product without generating any revenue
• The marketing strategy during the stage is focused on creating awareness and generating interest in the product

Question 3

Stage two: introduction

Answer 3

• The stage begins when the product is launched
• Characterised by slow sales growth as a product is still new and unknown to most consumers
• Cash flow is usually negative as the business usually incur high cost for promotion, advertising and distribution
• Marketing efforts are focused on creating awareness and generating interest in the product.

Question 4

Stage three: growth

Answer 4

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

Question 5

Stage four: maturity

Answer 5

• characterised by slowing sales growth as a product reaches its peak in terms of market penetration
• Cash flow usually positive during this stage of sales revenue continues to come in and cost a reduce through economies of scale and efficient production processes
• The marketing strategy aims to maintain market share and increase profitability by cutting costs and finding new markets.

Question 6

Stage five: decline

Answer 6

• Starts when cells begin to decline as the product becomes obsolete or is replaced by newer products
• The business focus shifts to managing the products decline and reducing costs
• Cash flow Flo usually turns negative as sales revenue declines and costs associated with the products decline increase
• The marketing strategy may involve discontinuing the product: reducing its price to clear inventory or finding new uses for the product

Question 7

Extension strategies to the product life cycle

Answer 7

• extension strategies refer to the techniques used by businesses to extend the life of a product beyond its natural life cycle
• designed to boost sales and maintain profitability for a product that has reached the decline stage of its life cycle
  There are two types of extension strategies:
• product-related
• promotion-related

Question 8

Product-related extension strategies

Answer 8

• involves changing or modifying the product to make it more appealing to customers and extend its life cycle and can be achieved by:
  
  • product improvements e.g. new phones each year
  • line extensions e.g. Diet Coke, Coke Zero
  • repositioning e.g. different markets to achieve more market share

Question 9

Promotion related extension strategies

Answer 9

• involves changing the marketing and promotion of the product to extend its life cycle and could be done by:
  
  • changes to advertising
  • price promotions e.g. cyber Monday
  • sales promotions e.g. loyalty programme

Question 10

Boston matrix & the prodcut portfolio

Answer 10

• the Boston matrix is used by businesses to analyse their product portfolio and make strategic decisions about each product
• used to allocate resources more affectively, optimising their cash flow and developing marketing strategies that align with the product’s potential

Question 11

Cash cows

Answer 11

• products with a high market share in a mature market (the entire market is no longer growing)
• they generate significant positive cash flow but have low growth potential
• they generate business invests minimal resources in cash cows as they are seen as stable sources of income
• marketing efforts focus on maintaining their market share and profitability

Question 12

Problem child/question mark

Answer 12

• products that 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
• 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
• if the investment doesn’t result in growing the business my discontinue the product
• marketing efforts focus on increasing their market share and brand recognition

Question 13

Stars

Answer 13

• products that have high market share in a high growth market
• these products company typically invests in starts to maintain or increase their market share
• 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
• stars are valuable assets and the business should focus on maximising their potential

Question 14

Dogs

Answer 14

• products that have a low market share in a low growth market
• they generate minimal revenue for the company and have no growth potential
• businesses often move away from these products to focus on more profitable products
• marketing efforts for dog products are minimal or zero

Question 15

Marketing strategies for different types of markets: mass markets

Answer 15

• focus on building brand awareness and appealing to a broad audience
• advertising campaigns
• mass media

Question 16

Marketing strategies for different types of markets: niche markets

Answer 16

• focuses on targeting a specific segment of the population and building relationships with them
• advertisement campaigns
• social media

Question 17

Marketing strategies for different types of markets: business to business (B2B)

Answer 17

• focuses on selling products to other businesses
• the emphasis is on building relationships with other businesses and demonstrating how your product can help the be more successful
• advertising campaigns containing case studies on the value of the product

Question 18

Business to consumer (B2C)

Answer 18

• focuses on selling products/ services directly to consumers
• emphasis is on building brand loyalty and creating a positive customer experience
• advertising campaigns = social media ads or influencer marketing campaigns

Question 19

Whys it good to develop customer loyalty

Answer 19

• help businesses to grow and be successful in the long term
• it drives repeat purchases which helps the firm to reduce marketing costs

Question 20

Developing customer loyalty: customer service

Answer 20

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

Question 21

Developing customer loyalty: loyalty cards

Answer 21

• a popular way for businesses to encourage repeat customers
• these cards typically offer rewards or discounts for frequent purchases

Question 22

Developing customer loyalty: saver schemes

Answer 22

• 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 period when food bills are usually higher e.g. Christmas