Marketing

Question 1

Product life cycle definition

Answer 1

Period of time that a product appeals to the consumer

Sales are not constant: there are variations in level of demand, amount of competition, market share etc

Question 2

Stages of the product life cycle

Answer 2

• Introduction - new to market, few customers, low profits/loss
• Growth - more known, high advertising costs
• Maturity - product range increased, increased competition, sales at their peak
• Saturation - few new customers, profits maintained but may start to fall
• Decline - sales fall fast, range reduced

Question 3

Product portfolio

Answer 3

Selling a range of products

Question 4

Benefits of product portfolio

Answer 4

• Spread risks - decline in one product may be offset by sales in another
• Different target markets - increase revenue due to larger target market
• Less vulnerable to changes in the market

Question 5

Drawbacks of large portfolio

Answer 5

• Many managers may have to be employed - costly
• Development costs are very high
• Publicity of one could be harmed by another product

Question 6

Extension strategies

Answer 6

• Update design - new image to draw a new audience
• Re-branding - changing name and total appearance of product
• Target new markets - eg expanding abroad (can be costly)
• Change product - eg ‘now with ….’ or limited edition

Question 7

What is the Boston Matrix?

Answer 7

Splits products into 4 categories based on market share and market growth

Used to manage product mix (portfolio)

Question 8

What does the Boston Matrix look like?

Answer 8

Market growth
High Low
High
STARS CASH COWS
Market
Share
PROBLEM DOGS
Low CHILD

Question 9

Categories of the Boston Matrix

Answer 9

• Stars - high revenue but high advertising costs
• Cash Cows - mature successful products, continued profit
• Problem Child/Question Mark - have potential but need investment
• Dogs - not worth investing in, usually sold or closed

Question 10

What is the Boston Matrix used for?

Answer 10

• To judge how to manage individual products and product range
• To recognise the importance of using successful, profitable products to fund other products
• To analyse if a firm needs to add to or change a portfolio

Question 11

What are the 4P’s of marketing?

Answer 11

Price

Product

Place

Promotion