Product

Question 1

What is product

Answer 1

Any goods or service offered for sale to a customer

Question 2

What is product portfolio

Answer 2

The mix of products a business produces or sells

Question 3

What does the product portfolio do for a company

Answer 3

1 spreads fix cost
2 allows for greater economies of scale
3 allows targeting of wider markets
4 reduces risk
5 smoothies out overall sales
6 creates opportunities for growth

Question 4

What is product breadth and depth

Answer 4

breadth is the number of product lines a business produces or retails
Depth is the number of product varieties within each product line

Eg a company like proctor and gamble is made up of 20 brands (depth)- there will be different sizes of Duracell batteries and also sold in different size packs - increasing product portfolio

Question 5

What is the advantage of product depth

Answer 5

1 increase the number of repeat buyers looking for variations of the product
2 allows targeting of different market niches eg rechargeable

Question 6

What is a brand

Answer 6

1 name given to a product to help differentiate from other similar products
2 a product consumers rely on for quality value and service
3 involves a distinct identity for a product with which users can identify
4 a name , term, sign, symbol or design which identifies a sellers products. And differentiates them from competitor products
5 a product which can be identified easily by consumers and in their eyes has value, properties or an image that separates it from the competition

Question 7

Why is marketing often brand driven

Answer 7

to establish a product with a separate identity in the consumers mind, make the product desirable, wanted

Question 8

What are the advantages of branding

Answer 8

1 create increased consumer loyalty
2 separate the product from the herd
3 increase price inelasticity of demand
4 increase value of the business
5 to ease customer choice

Question 9

What are the disadvantages of branding

Answer 9

1 high cost of advertising
2 loss of brand value for one product can affect a whole range of similarly branded products
3 brands invite competition
4 high cost of research and development in ensuring the brand continues to develop and lead the market

Question 10

What is a unique selling point/proposition USP

Answer 10

Product or service has a feature that can be used to separate it from the competition

Question 11

What is product differentiation

Answer 11

making the product different from the competition

Question 12

How can product differentiation be achieved

Answer 12

1 methods of promotion - creating a personality for the product
2 packaging - eg ecco
3 form - making it look different from competition
4. Provision of add ones - extended warenty
5 quality and reliability

Question 13

What are the 5 stages of a products life cycle

Answer 13

1 introduction
2 growth
3 maturity
4 saturation
5 decline

Question 14

Describe introduction

Answer 14

1 product is new to market
2 is unknown to customer
3 price can be high and sales restricted to early adopters. 4Profit often low as development costs have to be repaid and advertising expense is high

Question 15

Describe the growth stage

Answer 15

1 Product is becoming more widely known
2advertising tries to strengthen brand and develop image
3 profits may start but advertising is still high
4 prices may fall

Question 16

Describe maturity stage

Answer 16

1 product range may be extended
2 competition may increase and has to be responded to
3 advertising should be used to firm the image in customers minds
4 sales are at peak
5 profits should be high

Question 17

Describe the saturation stage

Answer 17

1 few new customers are gained as replacement purchases are the trend
2 business should try to reduce costs so prices can be more flexible
3 battle to survive is beginning
4 profit may begin to decline

Question 18

Describe the decline stage

Answer 18

1 sales may fall fast and product range may be reduced with business just concentrating on core products
2 advertising costs reduced
3 profits fall
4 prices fall

Question 19

Which stage does a business try to make the product stay in and why

Answer 19

In the maturity stage as it maximise profits and helps the business get the greatest return on money invested

Question 20

Describe the straw and fire life cycle of a product

Give examples of such products

Answer 20

1 product does not follow typical life cycle of a product
2 the product quickly moves through all the stages
3 indtoduction is short and market saturation is reached in a matter of months
4 sales are very high and product dominates the market for a short time

Good examples of straw and fire products ate children’s toys eg furies, cabbage patch dolls

Question 21

What are extension strategies

Answer 21

used to extend the life cycle o the product

Question 22

When might extension strategies be used

Answer 22

1 when a new product has not been developed to replace an aging one
2 if a product has a declining market share in a growing market

Question 23

List some extension strategies

Answer 23

1 repositioning the product in the market place
2 relaunching the product aiming at a different segment
3 using now with policy

Question 24

Give an example of a product that has been transformed because of extension strategy

Answer 24

Lucozade was seen as a drink for poorly children now marketed as a sports drink

Question 25

What is the Boston matrix

Answer 25

1 devised by Boston consultancy. Group in 1960s
2 allows analysis of business products by dividing them into 4 categories

Question 26

What do the categories that the products are placed in depend on

Answer 26

Their market share and level of growth occurring in the market

Question 27

Draw the Boston matrix

Question 28

Describe the properties of cash cows and give an example

Answer 28

(High market share- slow growth)
1 profitable products
2 expenditure on things like advertising is low
3 customers know and understand the product - brand established
4 development costs have been recouped increasing profits

Examples Cadbury dairy milk, Kellogg’s corn flakes

Question 29

Describe the properties of stars and give an example

Answer 29

1 market is immature
2 new customers and competitors attracted to the market
3 products have high market share in a fast growing market
4 products have have high levels of revenue but high costs
5 advertising and expenditure is high
6 brands have to be established and product needs to develop into a cash cow

Example Apple ipad

Question 30

Describe the properties of question marks/problem children

Answer 30

(Low market share in fast growing market)
1 worst situation for professional marketing
2 product is in a fast growing market but product is not selling
3 being beaten by competitors
4 worth doing something as new market may replace existing market

Question 31

What may help a product that is a question mark

Answer 31

1 relaunch or a basic redesign may increase sales

Eg in 1980s jeans out of fashion Levis launched 501s - adverts suggested jeans were worn for fashion adverts used a pop song

Contrast - many competitions launched to iPad most have ended up as question marks and eventually withdrawn

Question 32

Describe the properties of dogs

Answer 32

1 low market share - low growing or shrinking market
2 knot worth spending money in redevelopment, redesign or advertising as product unlikely to recoup this revenue
3 may still be in a little profit
4 dogs take up management time, tie up assets and have low returns

Question 33

Why would a company continue to sell dogs

Answer 33

1 still make some profit as no development cost or advertising
2 supply niche market
3 company can claim provide full range of products
4 company can appear ethical

An example carpet sweeper

Question 34

Why use the box matrix

Answer 34

1 judge how to manage individual product range, given market conditions
2 recognize the importance of using successful profitable products to fund development stars and cash cows for the future

Question 35

What does the Boston Matrix help a business to do

Answer 35

analyse if they have a portfolio they want that matches the business objectives
Use this analysis to establish a marketing strategy and obtain the desired portfolio

Question 36

What is the most desirable portfolio for a business

Answer 36

1 have a product mix or portfolio that has no problem children, many cash cows and stars that look like developing into cash cows