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Higher Business- Marketing > Marketing Mix- Product > Flashcards

Marketing Mix- Product Flashcards

1
Q

What is the marketing mix a combination of?

A

Product, price, place, promotion, people, process, and physical evidence that makes the marketing of a product successful

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2
Q

Product refers to…a product can be either a…. Or a…

A
  • what a business sells

- good or a service

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3
Q

What is the Product life cycle?

A

All products have a life cycle, some products go through the stages of a Iife cycle very quickly, known as fads, while others can have a life cycle that lasts many decades, eg Coca Cola

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4
Q

Stages of product life cycle

A
  • research and development
  • introduction
  • growth
  • maturity
  • saturation
  • decline
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5
Q

What is Research and development,
What is the impact on sales,
What is the impact on profits?

A
  • This is where a product is researched, designed and a prototype will be made. A large percentage of products will never progress beyond this stage.
  • there are no sales yet as the product is still being developed
  • No profit due to high costs associated with the development and there are no sales being made.
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6
Q

What is introduction,
Impact on sales,
Impact on profits?

A
  • Product is launched onto the market. Product is heavily advertised and sales will begin to increase.
  • sales are slow to begin with as customers are unsure of the product. Customers may have have to be persuaded to move from competitor products
  • Very little or no profit. High costs of advertising and low sales initially.
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7
Q

What is growth,
Impact on sales,
Impact on profits?

A
  • the product has been on the market for some time, consumers are fully aware of the product and are purchasing it, competitors may start to enter the market
  • sales start to rise rapidly. This can be the result of slightly reduced prices, lack of competition and/or consumer confidence in the product
  • profits are starting to be made (low profits) and losses from development and promotions during the initial stages are recouped
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8
Q

What is maturity,
Impact on sales,
Impact on profits?

A
  • The product has been on the market for some time. Competition enters the market
  • sales growth peaks and levels out. Many sales can still be made for a long time at this stage
  • profits can still be healthy but start to fall. The competition will take sales away and thus profits will fall
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9
Q

What is saturation,
Impact on sales,
Impact on profits?

A
  • the product suffers from too many competitors being in the market
  • sales begin to fall as consumers flock to competitors products
  • profits fall rapidly, especially if prices are slashed to encourage sales
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10
Q

What is decline,
Impact on sales,
Impact on profits?

A
  • the products life is nearing the end. The product will stop being produced.
  • sales fall rapidly and eventually the product will be withdrawn from the market
  • profits continue to fall. Eventually products may be sold at unit cost just to break even
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11
Q

What is meant by extending the product life cycle?

A

As sales and profits begun to fall as a product matures, a business can attempt to inject new life into the product, which is known as extending the product life cycle

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12
Q

What are the extension strategies and the impact of it?

A
  • lowering the price of the product (through a sale)=reducing prices will make the product more affordable and therefore appeal to more market segments
  • changing the place the product is sold (eg selling online)= making the product available in more places will mean it is seen by more potential customers (eg using e-commerce will mean the product can be sold worldwide)
  • Altering the methods of promotion= changing the way a product is promoted can increase sales simply by raising awareness of that product
  • developing variations of the product= developing new varieties can mean the product appeals to the tastes and desires of different market segments. Updating the product can utilise the latest technology so make customers want the product again.
  • rebranding of the product= changing the name of the product can create ‘hype’. A new name can appeal to different or wider market segments
  • changing the packaging= redesigning the packaging can make the product appeal to a new market segment
  • changing the use of a product= extending or changing the use of a product can make it appeal to new markets or suit seasonal tastes
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13
Q

What is product portfolio?

A

When a business has a range of products on sale

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14
Q

What are the two types of product portfolio?

A
  • product line portfolios

- diversified product portfolios

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15
Q

Product line portfolios

A

A product line portfolio involves having a variety of similar products on sale.

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16
Q

What are advantages of product line portfolio?

A

● A wide range of products can allow the business to meet the needs of a variety of customers
● Increase profits and profit levels remain steady
● Makes business easier to manage
● Profitable products can support the development of launch and new products
● Raise profile of the business
● Can lead to the company becoming market leaders
● Risk spread amongst products

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17
Q

What are the disadvantages of product line portfolio?

A

● Products can be spread to wide

● Business can lose focus on its key objectives

18
Q

What does having a range of products allow?

A

Having a range of products allows businesses to target different market segments and keep brands or products fresh by responding to changes in trends.

19
Q

What does each product in the portfolio being at different stages in the product life cycle allow?

A

Each product in the portfolio will be at different stages in the product life cycle. This allows the business to reduce risk and spread it over products because if they have only one product and that fails the business will fail.

20
Q

What is diversified product portfolio?

A

A diversified product portfolio involves having products for sale across completely different market segments

21
Q

Why is diversification a high-risk strategy?

A

Diversification is a high-risk strategy as the business is expanding to areas outside its core activities and experience and targeting different segments of the market.

22
Q

Advantages of diversified product portfolio

A

● To reduce risk of failure of one product, as one product might be doing better than another.
● To appeal to a variety of market segments, as different products will appeal to different types of customers.
● To increase sales and profits from selling different products, as customers will be able to buy a variety of products from the same business.
● To make introducing a new product easier, as customers will already be aware of the business.
● To increase awareness of the business, its reputation and its brand by having more than one product.
● To cope with products that are only demanded in certain seasons, as other products will gain sales at different times of the year.

23
Q

Disadvantages of diversified product portfolio

A

● Costs of promoting and advertising lots of different products could be high and could result in less profit.
● If one product receives a bad reputation or image this might impact on all products being sold by the business.
● Maintaining a varied product portfolio will involve a high cost of research and development.
● Cost of purchasing and maintaining machinery for different types of products might be high.
● Staff may require training on the features of different products which could be time- consuming and expensive.

24
Q

Advantages of product portfolio

A
  • Having different products can spread risk between markets. This mean there is less chance of a company making losses
  • Having a range of products can lead to greater brand awareness
  • Can encourage customer loyalty as customers are more likely to buy multiple products from the same brand
  • Easier to launch new products due to greater brand awareness
  • Can meet the needs to different market segments
  • Can allow for seasonal fluctuations
  • Allows for new products to replace products at the end of the product life cycle
  • Can increase profits from selling a range of different products
  • cash cows can fund other, riskier, ventures such as the marketing of stars
  • stars allow a business to be market leader in one area which will improve the brand image overall
  • question mark products give businesses an opportunity to invest and grow
  • dogs can be divested to reduce losses
25
Q

Disadvantages of product portfolio

A
  • Increased research and development costs due to multiple products being produced
  • Marketing and advertising costs may be high due to the promotion of a large range of products
  • Bad publicity incurred by one product may affect sales of all products within the portfolio
  • Resources may be spread too thin and this could affect the performance of existing cash cow products
  • dogs can drain a business of profits unless they are divested
26
Q

How can businesses analyse their product portfolio?

A

By using a Boston matrix

27
Q

What are the two fronts that can be analysed?

A

Market share- the percentage of sales in the market a product makes

Market growth- the overall potential for sales that the market has as a whole

28
Q

What are the 4 categories of the Boston matrix?

A
  • stars
  • cash cows
  • question marks
  • dogs
29
Q

Stars

A

-products that have a high market share in a high-growth market

30
Q

Impact of stars

A
  • stars need constant investment in marketing to keep ahead in a competitive market
  • stars allow a business to be a market leader
  • over time stars will decline into either question marks or cash cows
31
Q

Cash cows

A

Products that have a high market share of growth of a low growth market, eg Microsoft’s office software

32
Q

Impact of cash cows

A
  • cash cows should require little marketing expense due to lack of competition
  • funds generated can be used to further strengthen stars and improve riskier ventures, such as question marks
33
Q

Question marks

A

Products with low market share operating in high growth markets, suggests that they have potential but may need substantial investment to grow market share and the expense of large competitors

34
Q

Question marks impact

A
  • question marks can be invested in due to their position in a promising market
  • they need development of a strong marketing mix if they are to be turned into stars
35
Q

Dogs

A

-products that have a low market share of a market with low growth

36
Q

Impact of dogs

A
  • dogs can adversely affect profits
  • dogs should be divested due to the lack of market share and the declining market for the product. They cannot be turned into stars
  • dogs may generate enough cash to break even (rarely) people tend not to invest in it
  • dogs are usually sold or closed
37
Q

Products on top of the Boston matrix

A

Products on the top of the Boston Matrix are in the early stages of the product life cycle and are in growing markets, but the cost of developing and promoting them will not yet be recovered, This will drain resources.

38
Q

How can you balance with “cash cows”?

A

Balancing these with “cash cows” will mean that the revenue from the “cash cows” can be used to support products in a growing market. The development costs for “cash cows” are likely to have already been recovered and promotional costs should be low relative to sales.

39
Q

What are the main values of using the Boston matrix?

A

● A useful tool for analysing product portfolio decisions
● But it is only a snapshot of the current position
● Has little or no predictive value
● Does not take account of environmental factors
● There are flaws which flow from the assumptions on which the matrix is based

40
Q

How can the Boston matrix be criticised?

A

● Market growth is an inadequate measure of a market’s attractiveness
● Market share is an adequate measure of a products ability to generate cash
● The focus on market share and market growth ignores issues such as developing a
sustainable competitive advantages

Higher Business- Marketing (10 decks)

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