Marketing startegy(1.3.5) Flashcards
What is the product life cycle?
the different stages a product goes through from introduction to decline
What happens to the level of cash flow and certain marketing strategies during each stage of the cycle?
changes
What is marketing strategy?
core principle of business permitting a firm to understand how and when to promote their product
What are the product life cycle stages?
development
intro
growth
mature
decline
extension
What is the development stage?
designing and developing the product
usually sees a rise in costs for R&D market research and product testing
cash flow is likely negative as the firm is investing and not generating revenue
marketing focus gathering interest and awareness
What is the intro stage?
when the product is launched
see sale growth
cash flow will be negative high promo costs advertising and distribution expenditure
gathering interest and and awareness is still a priority
What is the growth stage?
sales are increasing
focus shifts to gaining more market share and increasing production to meet customer wants and needs
cash flow turns positive as sales revenue increases costs are spread out over large volume of production
now the firm will want to differentiate from competitors and build customer loyalty
What is the maturity stage?
sales begin to slow as product reaches peak in terms of market penetration
cash flow remains positive as sales revenue continues to come in and costs are still reduced due to EoS
marketing team aim to maintain market share and increase profitability by cutting costs and finding new markets
What is the decline stage?
firm shifts focus to managing decline and reducing costs
cash floe usually turns negative as sales revenue declines and costs associated with decline get higher
marketing team may discontinue the product or reduce its price to clear stock or may find new use
Two ways to extend the product life cycle
promotion related strategies
product related strategies
what is product related strategies?
changing the marketing and promotion of the product to extend its life cycle
changes to advertisement
price promotions
sales promotions
What is product related strategies?
changing or modifying the product makes it more appealing to consumers and extend the life cycle
product improvements
line extensions
repositioning
Boston matrix grid
Boston matrix star
high market share
high market growth
Boston matrix cash cow
high market share
low market growth
Boston matrix question mark
low market share
high market growth
Boston matrix dog
low market share
low market growth
How to use Boston matrix
to judge how to manage individual products and the product range given market conditions
recognise importance of using successful profitable products to fund development of stars and cash cows of the future
to see whether they have products in fast growing and potentially very profitable market sectors
Boston matrix usefulness
can help businesses analyse whether they have the portfolio that they want
managers can then establish their marketing strategy
Boston matrix best sections
most businesses want to have product mix or portfolio which has no question marks many stars and cash cows
in real world very few businesses are successful
Boston matrix useful
simplicity and clarity-quick snapshot of product portfolio, managers can make informed decisions
resource allocation-highlight growth opportunities, cash cow managed carefully, star needs maintained investment for sustained profit
promotes diversification of portfolio-reduce reliance on certain products e.g. dog category
strategic guidance e.g. invest maintain harvest or divest-stars need investment to maintain leadership, highlights growth opportunities e.g. question mark, cash cow can help other areas of the business out e.g. inefficiencies
Boston matrix not useful
lack of note for the product life cycle-dog might still be valuable niche market or early stages of cycle e.g. intro
can encourage short termism-prioritize short term cash flow from cash cows instead of investing in question mark then may be star
does not consider many external factors-competitor actions, brand strength overlooked, external shocks, inaccuracy
Developing customer loyalty
customer loyalty aids a firm in gaining a reliable customer
base, resulting in consistent demand higher sales revenue
and greater profits
marketing costs may decrease as repeat purchases are likely
Customer loyalty
positive customer experience
such as focused assistance can
prompt customers to return to the
business, and recommend it to
others who then may become
loyal customers themselves
Loyalty cards
encourage repeat custom
usually offer rewards or lower
prices for opting for their
company over competitors
Saver scheme
Customers who save money
with the company they offer
discounts/special pricing at
certain periods said
customers then save money
that can be used at periods
when food bills are high
Why is customer loyalty important?
Could lead to lower promotion costs upon launching new products or entering new markets
as repeat purchases are more likely
high sales volume which may result in more scale of production meaning purchasing
economies (bulk buying) and then economies of scale lesser cost per unit and so profit
increase
reduced price sensitivity consumers become not so bothered about price changes
meaning inelastic demand concerning price
Mass market marketing strategy
focus on brand awareness and appealing to large audiences
advertising platforms may include tv radio newspaper
these messages are often simple clear and direct, creating a strong brand identity that resonates with the large cement of population
Niche market marketing strategy
focus on segments of the population building relations
advertising platforms may include direct advertising mail etc
these messages are often detailed or include technical information that is relevant
B2B marketing strategy
They focus on building relations - how can that product help the other business?
advertising platforms may include what then demonstrations, case study
these messages include technical information focusing on key features that are relevant to the other firm
