1.3.5 Marketing strategy Flashcards
Product life cycle:
- lifespan of a products sales
- launch to off the market
- sales and cashflow
- y-axis = sales
- x-axis = time
price: skimming (recoup R&D) or penetration in intro, discounts in decline
product: core product launch = need extension strategy (ES)
5 stages of product life cycle
- R&D
- Launch
- Growth
- Maturity
- Decline
- Extension strategy
Why is product life cycle important?
4 positives
- decision making
- visual/interpret
- flexible, different time spans
- stage influences marketing mix/plan
negatives of product life cycle
- considered overly simplistic
- products may not always follow model (rapid growth into decline)
extension strategy:
7 ways
modifies product = appeal = maintain sales in maturity
increase sales, differentiated =less risk, appeal new segment
ways: 1-moderate product/flavour 2-packaging/rebranding 3-use 4-size 5-image 6-advert campaign 7-name
product portfolio
-range of products that a business sells
market growth:
total a market has either increased or decreased based upon either value or volume
year 2 -year 1 divided by year 1 x100
market share:
proportion of total market sales that a firm has
sales of 1 firm divided by total market sales x100
boston matrix
-tool to analyse a product’s market share and growth within a market
high MG high MS: rising star
high MG low MS: problem child
low MG high MS: cash cow
low MG low MS: dog
adv and dis of having a wide product portfolio:
adv:
- revenue streams
- risk
- customer loyalty through portfolio
dis:
- opportunity cost
- harder to manage
- single product = damage brand
rising star
holding PROMOTION -high sales revenue -lots of investment/promotion -fierce competition -be in growth face of product life cycle
cash cow
milking
- high sales revenue
- not much investment/promotion needed
- less threat from competition/new entrants (established)
- reaching maturity of product life cycle (still customer loyalty)
problem child:
building e.g. advertise, diff, R&D MR
- increased investment/promotion (R&D)
- low sales revenue
- fierce competition (low demand)
- just launched, building customer loyalty
dog:
sell off/divest
- low in investment and sales revenue
- extension strategy
- poor profits
- get rid of/improve them
- in decline phase of product life cycle
4 Adv of boston matrix
1-simplistic/easy
2-where brands/products are within market
3-aid decision making
4-right time to launch/withdraw products