Marketing Strategy 1.3.5 Flashcards
what are the key uses of the product life cycle model
- forecast future sales trends
- Help with market targeting and positioning
- helps to analyse and manage the product portfolio
what are the 5 stages of the product life cycle
- development
- introduction
- growth
- maturity
- decline
key points about the development stage in a product life cycle (4)
- often time-consuming and complex
- uses significant resources
- may not be successful
- takes time for sales to be achieved
key points about the introduction stage in a product life cycle (4)
- a new product is launched so sales are likely low
- usually negative cash flow
- distributors may be reluctant to take the product on
- heavy promotion needed
key points about the growth stage in a product life cycle (5)
- fast growing sales (aided by wide distribution)
- rise in market share and capacity utilisation
- lower unit costs
- positive cash flow
- attracts new competitors because of market growth
key points about the maturity stage in a product life cycle (3)
- slower sales growth as rivals enter market
- cash flow remains positive
- market share slowly declines
key points about the decline stage in a product life cycle
- falling sales
- decline in profits
- weaker cash flow
- decline in capacity utilisation (switch to growing products)
why do products enter the decline phase
- technological advancements
- change in trends/tastes
- increased competition
- failure to innovate/develop
3 ways to extend the product life cycle
- lower the price
- change promotion methods
- innovate/develop
why is the product life cycle model criticsed
- shape and duration of the cycle varies on the product
- the length of each stage can not be reliably predicated
- decline is not inevitable
what does a product portfolio do
assesses the position of each product in a firm’s stock to determine the right marketing strategy
what is the most popular model used to analyse a product portfolio
the boston matrix
how does the Boston matrix categorise products
compares a product’s market share and market growth
what are the 4 categories of products in the Boston matrix
star, cash cow, question mark, dog
what are ‘star’ products
products with high market share and growth compared to competition, they often need heavy investment to sustain growth (e.g. the ipad)
what are cash cows
products with high market share, but low market growth - they are successful products which remain successful so have no need for investment (e.g. the iphone)
what are question mark products
products with low market share that operate in high growth markets - they have potential, but need investing (e.g. apple tv)
what are dog products
products with low market share and market growth which are not worth investing in, they only generate enough cash to breakeven (e.g. the ipod)
an advantage of using the boston matrix
useful tool for analysing a business’ product portfolio, and helping to make decisions
disadvantages of the boston matrix
- only a snapshot of the current position
- has no predictive value
what is a marketing strategy
a carefully evaluated plan for future marketing activity that takes into account the company’s objectives, resources, and opportunities for growth
what is the marketing strategy for mass markets
the products needs to be differentiated to make it interesting, but not too niche
what is the marketing strategy for niche markets
reinforce the distinctive characteristics of a product
what is the marketing strategy for B2C markets
focus on value for money and giving consumers what they expect (good customer service)
what is the marketing strategy for B2B markets
focusing on the target market and most effective deals (no emotional advertising needed)
