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
5 dis of boston matrix
1-subjective
2-overly simplistic
3-only 4 categories
4-current market share info = difficult future prospects
5-costs aren’t considered high MS not = high profit
even distribution through matrix
business is developing new products at right time
type of product lifecycle extension strategy
- product:
- ensure remain in maturity stage rather than decline/withdrawn
- less risky than new product
- builds on customer loyalty
- less expensive than developing new product - promotion
- re-packaging
- discounts
- rebranding
- new markets
- more frequent use
mass market
- market for goods/products produced in large quantities
- all consumers regardless of age/gender etc
- customers = majority in market, needs/wants = general
- higher production output & capacity EOS
- success associated with low cost operations, heavy promotion and widespread distribution or marketing leading brands
- ignores market segment, product standardised
- appeal to larges portion of market = most sales
- lower price EOS
- advertising TV, national, inshore promotion
niche market
- highly differentiated, specialist promotional strategy
- targets smaller segment of a larger market, customers = specific needs/wants
- less competition, clear focus for brand, build specific skills/knowledge charge higher price, profit margins higher loyal customers
- lack of economies of scale, risk of dependant on 1 product/market, attract competition if successful, vunerable to changes in the markets
- advertise specifically people through mail, Emil, person 2 person (promotion), charge higher premium price, tailored to specific segment by aesthetics/functionality
- full page magazine advertising, improve customer service
business to consumer
- short messages clearly pointing out benefits
- variety distribution chain = convenience
- technological brands/retailers e.g. amazon
- maintain good relationships with customers = return back (loyal)
- marketing strategy has to fit in with marketing objs
- emotional connection with product or supplier e.g John Lewis the bear and the hare
business to business
- companies sell products/services to other businesses
- dont buy with emotion
- transactions often on order/invoice system
- larger scale orders (invoices)
- relationships between supplier and customer
- few buyers, involve larger transactions
- price cost saving focus
- quality serve
- informative advertising rather than ‘persuasive/clever’
- process of selling products/services to business buyers for use in their companies e.g Costco
customer loyalty
-a preference for a product or brand based on experience and or an emotional attachment, which inclines buyers to repeat purchase away from rivals
- loyalty cards and saver schemes are methods of attracting customer loyalty
- selling more to existing buyers is easier and cheaper than finding new ones = saves on promotional costs
loyalty cards
- e.g. Tesco club cards
- focused on incentivising purchases by rewarding spending e.g. every pound at Tesco = club card point
- 44%of companies have a greater focus on customer acquisition vs 18% focus on retention
- costs 5x as much to attract a new customer than to keep an existing one
why is there low or negative cash flow originally
high R&D
low sales
high promotion
how can a business understand consumer behaviour
MR: questionnaires, interviews, focus group, observations (footfall)
analyse loyalty data
segmentation and consumer profiles
customer loyalty
preference for a product or brand based on experience and or emotional attachment which inclines buyers to repeat purchase away from rivals
how can a business influence consumer behaviour and build loyalty?
- strong branding/invest in brand (added value)
- message/slogan/identity customer relate to
- strong ethical stance
- adapt/localise product
- sales promotions (promotional spending)
- associated products
- loyalty/reward scheme
- tailor adverts = e-commerce
- good customer service (added value)
- physical environment
- active market research (market orientation)
- build social proof (social media) influence word of mouth
