Product + Boston Matrix Flashcards
Product life cycle (5)
- Introduction
- Growth
- Maturity
- Decline
- Extension
Delisting -
- may find it more difficult to maintain distribution as stores may drop your product for more popular brands
Price (in 4 stages)
Intro:
- May enter with low price to gain sales or high price if the demand is high
Growth:
- May be able to maintain a relatively high price
Maturity:
- Likely to consider cutting down to sustain sales
Decline:
- Cut the price to boost sales
Product (in 4 stages)
Intro:
- Likely to only have limited versions
Growth:
- May develop over varieties/models
Maturity:
- May start to focus on best sellers as demand is not growing fast any longer
Decline:
- Focus on the most profitable models
Distribution (in 4 stages)
Intro:
- May be limited as the product is not yet established
Growth:
- Will become wider as more businesses will want to sell the product
Maturity:
- May focus on best-selling distribution channels
Decline:
- Delisting - may find it more difficult to maintain distribution as stores may drop your product for more popular brands
Promotion (in 4 stages)
Intro:
- May focus on raising awareness of the product
Growth:
- Continue to raise awareness
Maturity:
- Focus on benefits of this product compared to rivals
Decline:
- Reduced to focus on most cost effective methods
Extension strategies (def + 4)
- to prevent sales of product from falling and avoid or delay the decline stage of the product life cycle
1. Increase promotional expenditure to renewed interest in the product or to increase usage of the product
2. Revamp the product in some way (new packaging/flavours)
3. Find new target market segments for the product
4. Find new usage occasions for the product
Portfolio analysis - (3)
- Occurs when the business wants to analyse the overall position of the collection
- Plots the position of each product in terms of market share and the relative growth of the market
- The size of the circle drawn to illustrate each product highlights the size of its turnover
Industrial products -
- materials and services used to operate a business
Consumer products -
- products purchased for personal use
Convenience goods -
- a category of consumer goods which are bought frequently, quickly and with a minimum of emotional involvement
Shopping goods -
- consumer goods that the customer typically compares for suitability, quality, price, features, etc. before selection and purchase
Speciality products -
- a product that certain consumers will actively seek to purchase because of unique characteristics or loyalty to a specific brand
Product life cycle -
- the amount of time a product goes from being introduced into the market until it’s taken off the shelves
New product development -
- the complete process of turning an idea into a marketable new product
Boston Matrix (4)
- Dogs
- Cash cows
- Question marks
- Stars
Dogs (4)
- Low share
- Slow market growth
- Either invest
- Or let them decline and then remove
Extensions strategies for dogs (5)
- Find new uses
- Increase usage
- Find new market segments
- Promote more effectively
- Modify the product
Cash cows (5)
- Well - established
- High market share
- Market growing slowly (mature)
- Don’t need much promotion as already well - known
- Generate cash for the business
Question marks (4)
- Fast - growing markets
- Relatively small market share as not established yet
- Don’t know if they will be profitable or not
- The business might want to invest in them, protect and grow
Stars (6 + conclusion)
- Fast-growth market
- High market share
- Leader
- Keep investing
- Keep promoting
- Invest in distribution
=> to ensure they remain stars
The values of Boston Matrix (3)
- If all the products in the business are cash cows the managers might worry about future development of the business -> invest in question marks and stars to help ensure future sales.
- If all the products are dogs with slow market growth and low market share -> drastic action must be taken.
- Managers would aim for some well - established products to help fund the development and success of new products. They will have a balanced portfolio in which the mature, established products help prepare the business for the future.
Balanced portfolio -
- is an appropriate mix of products in terms of their market shares and market growth
Analysis of new product development decisions:
New product development involves investment to modify an existing product or replace it with a new one; might take several month or several years.
New product development might be required (5)
- Existing products are coming to an end of their life cycle
- The opportunities are opening due to changes in the market
- There is a desire to build on the strength of the brand
- It is a way of achieving growth
- To match what competitors are doing
Risks with new product development (2)
- Many product ideas do not make it to actual production -> idea proves not to be viable in terms of producing it and making a profit or because of technical problems along the way
- Many products do not sell well and might be withdrawn -> the market has not been understood properly; promotional problems or competitor actions
Process of a new product development (6 + conclusion)
- Generate ideas for new products
- Analyse ideas
- Select ideas to develop
- Develop prototypes
- Test products
- Launch
=> When considering whether to invest in a new product, managers will consider the likely time it will take to recover the initial spending (the payback) and the rate of return on investment.
Relative market share -
- a metric that shows a company’s position in the market compared to its main competitor
Who becomes who in Boston Matrix
Dog either removed or -> question mark -> stars -> cash cows -> finance question marks
