1.3.5 Product life cycle and Portfolio Flashcards
what is the product life cycle
a pattern of sales over time that products follow during its life
what does the product life cycle help us do?
-forecast sales trends
-marketing targeting and positioning
-analyse and manage a product portfolio
-focus investment in products
what stage occurs before the product is launched?
development stage
give the four stages of the product life cycle
introduction, growth, maturity, decline
what is the introduction stage?
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
strategies in the introduction stage
-encouraging customer adoption
-high promotional costs for awareness
-skimming or penetration pricing
what is the growth stage?
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
strategies in the growth stage
-promote brand awareness
-market penetration
-wider target customer base
what is the maturity stage?
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
strategies in the maturity stage
-capacity and production management
-promotion is focused on differentiating
-intensive distribution
-adopt extension strategies
what is the decline stage?
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
strategies in the decline stage
-maintain market share
-minimise marketing spend
-discount items to maintain sales and cash flow
-support loyal customers
what are extension strategies?
they attract new users by:
-developing new uses of the product or new products
-repositioning product in the market
what are some issues with the product life cycle model?
-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
extension strategies involve changing the… or….
PRODUCT OR PROMOTION
extension strategy methods for products
-adding extra functions or features
-changing materials
-launching product variants (diff size, shape etc)
extension strategy methods for promotion
-targeting a new market segment
-finding new uses for the product
-increasing use of product among existing customers
why is new product development so important?
it is key for long term success
but the process can be expensive and time consuming, also there is the possibility of failure
factors of developing a new product
-pricing
-branding
-R+D
-market research
-packaging design
-product design and engineering
-advertising
problems with new product development
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
what needs to happen is a company sells a wide range of different products?
marketing managers need to be continually developing new products and getting rid of products with falling sales
what do businesses use to analyse their product portfolios often?
they use a tool called the
Boston Matrix
name the four components of the Boston Matrix
Star, cash cows, question marks and dogs
what are the stars in the BM?
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
what are the cash cows in the BM?
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
what are the question marks in the BM?
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
what are the dogs in the BM?
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
mass market marketing strategy
focuses on building brand awarreness to a broad audience
adverts are designed for a large number of people
benefits of mass market marketing strategies
-high distribution levels
-greater control of advertising and promotion
-has pricing influence in market
niche market marketing strategy
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
benefits of niche market marketing strategy
-able to meet consumer needs more precisely
-can charge higher prices
-less direct competition
what is B2B?
business to business
(selling products to other businesses)
B2B marketing strategy
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
what is B2C?
business to consumer
(selling products and services directly to consumers
B2C marketing strategy
-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
