4.5 PRODUCT Flashcards
Define ‘product’
a good/service offered to the market
To satisfy costumer needs/wants
Includes both tangible + intangible elements (design, branding, features)
What are the 2 product types
consumer products — sold to individuals (eg, food, phones)
Industrial products — sold to businesses (eg, machinery)
Define product life cycle
refers to stages product goes through (referring to its sales volume regarding the time its in the market) from its introduction to the market until its decline.
Stages typically include introduction, growth, maturity & decline.
Help businesses manage marketing & production strategies over time.
Draw a product life cycle
Y axis: sales volume
X axis: time
1) development
2) introduction
3) growth
4) maturity
5) decline
State a description, investment level, profitability, cash flow, marketing focus of:
Development
Product researched, tested & developed before launch.
Very High (R&D, prototypes)
Negative (no revenue)
Negative
Market research, product design, test marketing
State a description, investment level, profitability, cash flow, marketing focus of:
Introduction
Product launched to market. Sales are low and growing slowly.
High (promotion & distribution)
Negative or very low
Negative or break-even
Heavy promotion, awareness building, introductory pricing
State a description, investment level, profitability, cash flow, marketing focus of: growth
Sales increase rapidly; product becomes established in the market.
Moderate to High (scale-up)
Rising (economies of scale)
Positive (increasing inflows)
Market penetration, branding, improve distribution
State a description, investment level, profitability, cash flow, marketing focus of: maturity
Sales peak and growth slows; market becomes saturated.
Low (product is established)
Highest (costs stabilised)
Strong positive
Product differentiation, extension strategies, loyalty promotions
State a description, investment level, profitability, cash flow, marketing focus of: decline
Sales and profits fall as product becomes outdated or replaced.
Very Low (minimal spending)
Declining or negative
Declining or negative
Decide whether to discontinue, discounting, cost-cutting
Define extension strategies
techniques used by businesses to extend the life of a product beyond its natural life cycle to boost sales & maintain profitability for a product that has reached the decline stage of its life cycle.
State 4 examples of extension strategies
Product updates
Entering new markets / segments
Adjusting pricing or promotional strategy
Repackaging or repositioning
State the strategies by BCG matrix for stars
Stars — HOLDING strategy:
Invest heavily in marketing & innovation to maintain growth & market share.
Aim to transition them into future cash flows.
What is the Boston consulting group
- Used by businesses to analyse their product portfolio + make strategic decisions
- Classifies products into 4 categories based on their market share + market growth rate
describe the 4 categories of the BCG matrix and their strategic focus
Category Description Strategic Focus
Stars High market share in a high-growth market Invest to maintain growth and market dominance
Cash Cows High market share in a low-growth (mature) market Maximise profits, invest less, fund other products
Question Marks Low market share in a high-growth market Invest selectively; can become Stars or Dogs depending on strategy
Dogs Low market share in a low-growth market Divest or maintain if profitable short-term
State the strategy of BCG matrix fro cash cows
HARVESTING strategy:
Minimise investment while optimising profitability.
Use profits to fund growth in Stars or Question Marks
State the strategy of BCG matrix for question marks
BUILDING strategy
Assess potential through market research.
If promising, invest to ⬆️ market share, if not, consider withdrawal
State the strategy of BCG matrix for dogs
DIVESTING strategy
Withdraw or sell of products w/ little or no future profit potential.
Maintain only if they offer short-term revenue w/ minimal cost
State 3 limitations of the BCG matrix
Simplistic approach - only considers market share & growth, ignoring factors like competition, tech, etc…
Lack of focus on future - fails to predict market trends + changes in competitive environment
Time-consuming - accurately determining market share + growth rates requires expertise + frequent updates in rapidly changing markets
Define branding
creating a unique identity fro a product / company
Through distinctive names / logos / designs / messages
Which differentiate it from competitors builds costumer trust + loyalty
Define brand awareness
marketing term that describes the degree of consumer recognition of a product or service by its name, logo or sound.
Define brand development
process of continuously building + refining a brand’s image
Achieved through strategic marketing / product improvements
Aimed at ⬆️ costumer loyalty & market share
Define loyalty
when costumers will almost always chose one brand over another, they become committed to a firm’s brand + are willing to make repeat purchases over time.
Define brand value
the financial worth of a brand
Reflects how much more customers are willing to pay fro a branded product over a generic alternative
State 5 reasons of the importance of branding
Adds perceived value – consumers associate branded products with higher quality.
Enables premium pricing – strong brands can charge more than generic alternatives.
Builds customer loyalty – leading to repeat purchases and lower marketing costs.
Improves recognition and trust – helps a business stand out in crowded markets.
Reduces price elasticity of demand – loyal customers are less sensitive to price changes.
