1.3.5 Product life cycle and Portfolio

Question 1

what is the product life cycle

Answer 1

a pattern of sales over time that products follow during its life

Question 2

what does the product life cycle help us do?

Answer 2

-forecast sales trends
-marketing targeting and positioning
-analyse and manage a product portfolio
-focus investment in products

Question 3

what stage occurs before the product is launched?

Answer 3

development stage

Question 4

give the four stages of the product life cycle

Answer 4

introduction, growth, maturity, decline

Question 5

what is the introduction stage?

Answer 5

a new product is launched and promotion is used to create awareness

sales are low and rising slowly
high costs per unit
limited distribution
negative cash flow

Question 6

strategies in the introduction stage

Answer 6

-encouraging customer adoption
-high promotional costs for awareness
-skimming or penetration pricing

Question 7

what is the growth stage?

Answer 7

the product gains market acceptance, it may start to be modified or the range may increase

increasing sales
unit costs fall with economies of scale
increasing distribution
cash flow may become positive

Question 8

strategies in the growth stage

Answer 8

-promote brand awareness
-market penetration
-wider target customer base

Question 9

what is the maturity stage?

Answer 9

core products are focused on as they are the most profitable channels, it also highlights differences with competitor’s pricing

slower sales growth
low unit costs= efficiency
high profits

Question 10

strategies in the maturity stage

Answer 10

-capacity and production management
-promotion is focused on differentiating
-intensive distribution
-adopt extension strategies

Question 11

what is the decline stage?

Answer 11

business focuses on profitable items, and competitors leave the market

-falling sales
-rising unit costs with excess capacity
-no promotion
-falling profits and weak cash flow

Question 12

strategies in the decline stage

Answer 12

-maintain market share
-minimise marketing spend
-discount items to maintain sales and cash flow
-support loyal customers

Question 13

what are extension strategies?

Answer 13

they attract new users by:
-developing new uses of the product or new products
-repositioning product in the market

Question 14

what are some issues with the product life cycle model?

Answer 14

-the shape and duration of cycle varies with each product
-strategies can alter the life cycle
-lengths of time cannot be reliably predicted
-decline is not inevitable
-hard to know where a product is in its life cycle

Question 15

extension strategies involve changing the… or….

Answer 15

PRODUCT OR PROMOTION

Question 16

extension strategy methods for products

Answer 16

-adding extra functions or features
-changing materials
-launching product variants (diff size, shape etc)

Question 17

extension strategy methods for promotion

Answer 17

-targeting a new market segment
-finding new uses for the product
-increasing use of product among existing customers

Question 18

why is new product development so important?

Answer 18

it is key for long term success
but the process can be expensive and time consuming, also there is the possibility of failure

Question 19

factors of developing a new product

Answer 19

-pricing
-branding
-R+D
-market research
-packaging design
-product design and engineering
-advertising

Question 20

problems with new product development

Answer 20

understanding the needs and wants of the market can be hard
finding and committing resources needed for the product development to succeed to can difficult and expensive

Question 21

what needs to happen is a company sells a wide range of different products?

Answer 21

marketing managers need to be continually developing new products and getting rid of products with falling sales

Question 22

what do businesses use to analyse their product portfolios often?

Answer 22

they use a tool called the
Boston Matrix

Question 23

name the four components of the Boston Matrix

Answer 23

Star, cash cows, question marks and dogs

Question 24

what are the stars in the BM?

Answer 24

high market share and high growth rate
-lots of investment in these to maintain their market share
-positive cash flow and valuable assets
-they focus on maximising their potential, building brand recognition and maintaining profits

Question 25

what are the cash cows in the BM?

Answer 25

high market share and low growth rate
-generate positive cash flow
-low investment (stable source of income)
-marketing focuses on maintaining market share and profitability
-valuable assets used to fund other development projects

Question 26

what are the question marks in the BM?

Answer 26

low market share and high growth rate
-investment is needed here for their development
-negative cash flow
-if investment does not grow the business, the product may be discontinued
-marketing is focused on increasing market share and brand recognition

Question 27

what are the dogs in the BM?

Answer 27

low market share and a low growth rate
-generate little revenue for the company with no growth potential
-businesses often divert form these to focus on more profitable products
-minimal marketing efforts

Question 28

mass market marketing strategy

Answer 28

focuses on building brand awarreness to a broad audience
adverts are designed for a large number of people

Question 29

benefits of mass market marketing strategies

Answer 29

-high distribution levels
-greater control of advertising and promotion
-has pricing influence in market

Question 30

niche market marketing strategy

Answer 30

focuses on targeting a specific segment of the population
adverts are more targeted and may use social media to reach potential customers
messages are more detailed with specific technical information

Question 31

benefits of niche market marketing strategy

Answer 31

-able to meet consumer needs more precisely
-can charge higher prices
-less direct competition

Question 32

what is B2B?

Answer 32

business to business
(selling products to other businesses)

Question 33

B2B marketing strategy

Answer 33

demonstrate how your product helps a business be more successful
-adverts show the value of the product
-technical messages, highlighting key features and relevant benefits
-price and reliability factors are considered the most

Question 34

what is B2C?

Answer 34

business to consumer
(selling products and services directly to consumers

Question 35

B2C marketing strategy

Answer 35

-building brand loyalty and creating a positive customer experience
-more emotion is used here as they focus on having an ever-growing base of customers