CHAPTER EIGHT + NINE

Question 1

What does brand sponsorships include? [4]

Answer 1

1. Manufacturers brand
2. Private label brand
3. Licensing
4. Co-branding

Question 2

What does brand development include? [4]

Answer 2

1. Line extension
2. Brand extension
3. Multi brands
4. New brands

Question 3

What does the product life cycle look like?

Answer 3

Question 4

What are the key drivers of product development? [6]

Answer 4

1. Consumers’ changing needs and desires
2. Existing technology becoming obsolete
3. A product reaching the end of its life cycle
4. Attempting to gain competitive advantage when competition is intense
5. An existing product is declining in popularity
6. A company’s desire to pursue specific corporate strategy objectives

Question 5

To survive in competitive markets, most organisations continually ___________ new products to add to their product range

Answer 5

develop

Question 6

When does new product development take place?

Answer 6

New product development takes place when a company develops original products, improves products and develops new brands through research and development

Question 7

Why is new product development beneficial?

Answer 7

New products are beneficial in that they bring customers new solutions and variety, and they are a key source of growth for companies

Question 8

What do ‘new’ products include? [5]

Answer 8

‘NEW’ product can include a variety of products:
1. New-to-the world
2. New product line
3. Additions to existing product line or line extensions
4. Improvements and revisions of existing products
5. Repositioned products

Question 9

What is the new product development process?

Answer 9

1. Idea generation
2. Idea screening
3. Concept
4. Marketing strategy
5. Business analysis
6. Product development
7. Test Marketing
8. Commercialization

Question 10

What is the product life cycle?

Answer 10

The product life cycle refers to a product’s sales and profits trajectory over its lifetime once it is launched

Question 11

Which stages does the product life cycle involve?

Answer 11

product development, introduction, growth, maturity and decline

Question 12

What are the stages of the product life cycle?

Answer 12

*Product development: New product is developed & sales are zero
* Introduction: A period of slow growth as the product is introduced to the market
* Growth: A period of rapid market acceptance & increased profits
* Maturity: Slow down of sales as most buyers have accepted the product
* Decline: The period when sales fall & profits drop

Question 13

What does the BCG positions look like as a product life cycle?

Answer 13

Question 14

Starts when a new product is launched – these products are ___________ Marks.

Answer 14

Question

Question 15

What happens during the introduction stage? [4]

Answer 15

• Growth is extremely slow in the introduction stage as the product is in unknown to the market.
• Profits are low (or even negative) as sales are low and expenditure (for distribution and promotion) is very high.
• Promotions need to create awareness and target those who are willing to buy new, unknown products.
• Promotions also need to geared towards long-term sustainable growth, rather than a short-term spike.

Question 16

If a product is successful enough in the market, it may enter the growth stage and go from a Question Mark to a _____.

Answer 16

star

Question 17

What happens during the growth stage? [4]

Answer 17

• The market is now more aware of the product and sales start to climb rapidly.
• Competitors also begin to enter the market.
• Product improvement and promotion is essential
  to gaining competitive advantage.
• Firms can choose to push sales for maximum profit, or push product improvement and promotion to gain market share (and maximize profit in the next stage).

Question 18

When sales begin to slow down, profit is maximized and market share is high, products enter the maturity stage. Here, they become ______ _______

Answer 18

cash cows

Question 19

What happens during the MATURITY stage? [3]

Answer 19

• This stage is a lot longer than other stages and the majority of products fall into this stage; thus most marketing efforts are for mature products.
• Competition is intense in this stage and the market eventually reach overcapacity, resulting in the decline of profits.
• Maintaining market share is key to extending the duration of this stage and is done through entering new markets, improving the product or modifying the marketing mix.

Question 20

What happens during the decline stage? [4]

Answer 20

• Also known as the post-maturity stage.
• Sales and profits rapidly decline.
• If the product still has potential, investing in the product again can extend is life for a second growth or maturity stage.
• If a product is no longer needed and is reaching the end of its life, it should be slowly phased out of the market (harvesting) and then dropped completely.

Question 21

What are the types of new product adopters? [5]

Answer 21

1. Innovators
2. Early adopters
3. Early majority
4. Late majority
5. Laggards

Question 22

What are influences on new product adoption? [5]

Answer 22

• Relative Advantage–the degree to which the new product appears better than existing products.
• Compatibility the degree to which the new product fits the values and experiences of potential customers.
• Complexity- the degree to which the new product is easy to understand or use.
• Trialability- the degree to which the new product may be tried on a limited basis.
• Communicability–the degree to which the results of using the product can be observed or described to others.