3 Product decisions: product life cycle & product portfolio 22

Question 1

What is a product?

Answer 1

Anything that is capable of satisfying customer needs and wants

Question 2

What are the 7 P´s?

Answer 2

Product, Price, Promotion, Place, People, Process, Physical

Question 3

What is the product life cycle model?

Answer 3

A theoretical model that describes the stages a product goes through over its life.

Question 4

What is the product life cycle model used for?

Answer 4

Used for: forecast future sales trends and help with market targeting and positioning

Question 5

What are the stages of the product life cycle model ?

Answer 5

5 stages: Development, Introduction, Growth, Maturity, Decline/End

Question 6

Convenience products …

Answer 6

1.Bought frequently, little planning or shopping effort and low customer involvement
2.PRICE: tends to be LOW
3.PLACE: widespread distribution
4. PROMOTION: mass promotion
E.g: crisps, toothpaste

Question 7

Shopping products …

Answer 7

1.Bought less frequently (“than convenience products”), customers careful on suitability, quality, price, brand etc
2.PRICE: tends to be HIGHER “ “
3.PLACE: selective distribution (fewer outlets)
4.PROMOTION: advertising by producer and resellers
E.g: fashion clothing, home furnishings

Question 8

Speciality products …

Answer 8

1.Buyers make a special effort when buying, unique characteristics
2.PRICE: HIGH
3.PLACE: exclusive distribution or limited outlets
4.PROMOTION: more carefully targeted
E.g: luxury cars, advanced consumer electronics

Question 9

PLCM Development stage …

Answer 9

Often complex & time-consuming
High failure rate
Long lead time before sales are achieved

Question 10

PLCM Introduction stage …

Answer 10

New product launched on the market
Low capacity utilisation & high unit costs
Usually negative cash flow (low level of sales)

Question 11

PLCM Growth stage …

Answer 11

Fast growing sales
Rise in capacity utilisation
Cash may become positive
The market grows, profits rise but attracts the entry of new competitors

Question 12

PLCM Maturity stage …

Answer 12

Slower sales growth as rivals enter the market
High level of capacity utilization
High profits for those with high market share
Cash flow should be strongly positive
Weaker competitors start to leave the market

Question 13

PLCM Decline stage …

Answer 13

Falling sales
Decline in capacity utilisation
Market saturation and/or competition
Decline in profits & weaker cash flows

Question 14

How to extend the Product life cycle?

Answer 14

Lowering the price
Changing the product, re-styling and product improvement
Looking for alternative distribution channels
Respositioning the product

Question 15

What is the Boston Matrix ?

Answer 15

A model used to analyze the strategic position of product and brand portfolios

Question 16

What are the 4 areas of the Boston Matrix ?

Answer 16

1. Question marks: high MG / low MS
2. Stars: high MG / high MS
3. Dogs: low MG / low MS
4. Cash cows: low MG / high MS

Question 17

What is the Boston Matrix measured in ?

Answer 17

MARKET SHARE: does the product being sold have high or low market share?
MARKET GROWTH: are the numbers of potential customers in the market growing or not