Marketing Mix - Product

Question 1

What is a product?

Answer 1

Product is the actual (good or service) product being sold.

Product is important because customers won’t buy something they don’t want; market research identifies what customers want.

The more products that are sold, the more chance the business will have of maximising sales

Question 2

How can an organisation change their product?

Answer 2

An organisation can change the product by bringing out a new one or making an adaptation to an existing product. This will invite new people to try it and will help to maintain existing customer loyalty.

Question 3

What are the six stages of the product life cycle?

Answer 3

The product life cycle has 6 stages:

• Development
• Introduction
• Growth
• Maturity
• Saturation
• Decline

Question 4

What is the product lift cycle stage: Development?

Answer 4

Research and development of the product. A number of activities are carried out (eg market research, test marketing, a prototype is built)

Question 5

What profitability does the product life cycle stage: Development have?

Answer 5

No sales, high costs. No profit

Question 6

What is the product life cycle stage: Introduction?

Answer 6

Product is launched onto the market. Product is heavily advertised and sales will begin to increase

Question 7

What profitability does the product life cycle stage: Introduction have?

Answer 7

Sales are low and costs are high. Very little, if any, profit

Question 8

What is the product life cycle stage: Growth?

Answer 8

The product has gained greater awareness and sales grow rapidly

Question 9

What profitability does the product cycle stage: Growth have?

Answer 9

Sales grow rapidly and profit begins to increase

Question 10

What is the product life cycle: Maturity?

Answer 10

Sales are at a peak and the product is well known in the marketplace. Extension strategies might be used at this stage to keep sales at a peak.

Question 11

What profitability does the product life cycle stage: Maturity have?

Answer 11

High profits

Question 12

What is the product life cycle stage: Saturation?

Answer 12

The end of maturity; everyone has the product and is no longer demanding it. This might be a single point of time or it might be for longer

Question 13

What profitability does the product life cycle stage: Saturation have?

Answer 13

High profits before they decrease

Question 14

What is the product life cycle stage: Decline?

Answer 14

Sales decline as newer and better products are introduced to the market. The product is no longer wanted. Product is eventually withdrawn

Question 15

What profitability does the product life cycle stage: Decline have?

Answer 15

Profits fall and a loss might be incurred eventually

Question 16

What is an extension strategy?

Answer 16

An organisation wants to keep its product at the maturity stage for as long as possible. This is because the product is more profitable at this stage. To do this, they have to inject new life into the product to keep it selling.

Question 17

Example of extension strategies? (9)

Answer 17

• Changing the appearance of the packaging to give the product a new image
• Changing the size, variety or shape of the product, as this makes it different from the original
• Improving the quality of the finished product by, for example, using higher quality raw materials
• Changing the method of promotion used to promote the product, for example, by offering a discount
• Changing the method of advertising the product to reach a large number of people
• Changing the price of the product (up or down) to reach a different market segment
• Changing the place the product is sold, for example, offering it online as well as in a shop
• Changing the name of the product
• Changing the use of the product so that it can be used for different purpose

Question 18

What is a product portfolio?

Answer 18

The range of items sold by a business?

Question 19

What are the advantages of a product portfolio? (6)

Answer 19

• 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

Question 20

What is the boston matrix?

Answer 20

A Boston Matrix (Boston Box) is often used to plot the range of products that an organisation offers. It can help the organisation to identify where product might need to be introduced or changed.

An organisation will try to have as many ‘star’ products as possible and will focus its marketing activities to try and achieve this.

Question 21

What are the stages of the Boston Matirx?

Answer 21

Problem Child/Question Marks Star
High market growth High Market Growth
And And
Low market share High market share

Dog Cash Cow
Low Market Growth Low market growth
And And
Low market share High market share

Question 22

What are the disadvantages of a product portfolio? (50

Answer 22

• 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 the 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