Marketing strategy

Question 1

What does the Boston matrix assume?

Answer 1

• Market share can be gained through investing in marketing.
• Market share gains will always generate cash surpluses.
• Cash surplus will generate when the product is in the maturity stage.

Question 2

What is the question mark?

Answer 2

Low market share operating in high growth markets.
- Products that could have lots of potential but would need lots of investment to increase market share.

Question 3

What is the dog?

Answer 3

Low market share in low growth markets.
- May make enough cash to break even but aren’t worth investing in.

Question 4

What is the star?

Answer 4

High growth products in competitive markets.
- Require heavy investing to sustain growth but eventually growth will slow down and assuming the product maintains its market share, stars will become cash cows.

Question 5

What is a cash cow?

Answer 5

Low growth products with a high market share.
- Mature and successful products that don’t require any investing.
- They need to managed for continued profit.

Question 6

What are the pros and cons of a business using the Boston matrix?

Answer 6

Pros:
- Good to use when analysing product portfolio decision.
- Provides a base for management to decide on future decisions.
- Simple and easy to understand.

Cons:
- Market growth is an inadequate measure of a markets attractiveness.
- Only a snapshot of the products position.
- Doesn’t take into account environmental factors, just the growth and market position.
- Based on assumptions and predictions.

Question 7

What is a marketing strategy?

Answer 7

A set of plans to achieve a specific marketing objective.

Question 8

How do mass markets consider the 4P’s?

Answer 8

Product:
- Close substitutes, no clear USP, low production costs and economies of scale.

Price:
- Similar prices, fear of price wars, competitive pricing, dominant business sets price.

Place:
- Multiple distribution channels, fast moving goods.

Promotion:
- Above-the-line promotion due to high target consumers.

Question 9

How do niche markets consider the 4P’s?

Answer 9

Product:
- USP, higher production costs and higher quantity.

Price:
- Flexible pricing, less competition so higher prices can be charged.

Place:
- Direct channels (Producer to customer), Exclusive distributor (sole distributor of a product).

Promotion:
- Below-the-line promotion where they target specific consumers.
- Expenditure of promotion isn’t wasted.

Question 10

What are the methods to developing customer loyalty?

Answer 10

Communication:
- If customers are well informed about a product they are likely to return.

Customer service:
- Customers are likely to return if they experience high quality customer service.

Customer incentives:
- Rewarding customers with for example loyalty cards will encourage them to return.

Personalisation:
- May address customers by their first name or send birthday and Christmas cards to build relationships.

Preferential treatment:
- Many like the idea of receiving special treatment e.g. VIP lounges at airports.