Product - 111

Question 1

Define product portfolio

Answer 1

The product portfolio is the mix of products the business produces and sells.It helps the business because it:
-spreads fixed costs
-allows for greater economies of scale
-allows the targeting of wider markets
-reduces risk
-smooths out overall sales
-creates opportunities for growth

Answer 2

It is a name, term, sign, symbol or design that identifies a seller’s products and differentiates
them from competitors’ products.
(+)Create brand loyalty - repeat purchases >increase market share
(+)Differentiate the product> develop brand image and help recognition
(-)High costs of advertising+ research and development
(-)Invite competition

Question 3

What is:
-unique selling point
-Differentiation

Answer 3

-Something that differentiates the product
from its rivals
-Making the product different from competitors. Can be done by:
*Promotion - creating personality for the product
*Packaging
*Form - look different from competitors
*The provision of add-ons
*Quality and reliability
-Differentiation also gives them more price control

Question 4

Explain the stages of the product life cycle

Answer 4

1a)Development (cash flow only)
1)Introduction - The product is launched onto the market but sales are usually slow – a good deal needs to be spent for promotion in order to boost sales.
2)Growth - As sales increase, the business will hope to earn enough money to pay back their initial investments.
3)Maturity - Sales increasing/revenue increasing – cash can be reaped from sales once they have stabilised during the maturity stage.
4)Saturation - As the product enters the saturation phase there is slower rate of growth –
competition may be entering the market.
5)Decline -Sales of the product begin to fall – decisions have to be made as to whether to support the product or remove it from the market.

Question 5

Define an extension strategy

Answer 5

A plan for lengthening the life cycle of a product or brand, or to generate more sales. Likely to be implemented during the maturity or decline stages. Can be done by:
-relaunching the product, aiming at a different segment
-Increasing promotion
-Lowering the price
-New feature, to attract new customers

Question 6

Evaluation of product life cycle

Answer 6

(+)helps with planning, check the stage they’re at and make changes to their marketing strategy’s
(+)Help plan for problems at different stages. By analysing similar products’ life cycle they can avoid making mistakes
(-)Its simple. Many products will not follow this shape of sales growth
(-)A fall in sales might not mean a product is entering decline,there are also other external factors that need to be considered

Question 7

What is the Boston matrix and what does each stage mean?

Answer 7

The Boston Matrix shows
the market share of each of business’ products and the rate of growth of the markets in which they operate.
*Dogs - low market growth rate, low relative market share
*Question marks - High market growth, low relative market share
*Cash cows - high relative market share, low market growth
*Stars - high market growth, high relative market share

Question 8

Evaluate the use of the Boston matrix

Answer 8

(+)Analyse their existing situation and decide what to do next
(+)Market growth and relative market share are available to the company, making it relatively easy to construct
(-)it can predict what will happen
(-)less effective in high-growth markets, where the competitive situations are far more dynamic