Product Life Cycle & BCG Matrix Flashcards

Lecture 8 Developing the Marketing Mix

1
Q

What are the 4 stages of the Product Life Cycle (PLC)?

A
  1. Introduction
  2. Growth
  3. Maturity
  4. Decline
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2
Q

Give details about the “introduction” phase of the PLC (4 points)?

A
  • Sales slowly build
  • Profit negative due to R&D / setup costs
  • Priority is to build awareness
  • High failure rate
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3
Q

Describe the “growth” phase of the PLC (4 points)…

A
  • Sales increase
  • Monopoly window
  • Priority is tobuild the brand
  • Need to think about “potential product” for when competitors enter the marke
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4
Q

Describe the “maturity” phase of the PLC (4 points)..

A
  • Sales level out
  • Competitors well established
  • Risk of product becoming oudated, may need refreshing
  • May need to target a different market
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5
Q

What happens in the “decline” phase of the PLC (2 points)?

What options does the firm have (3 points)?

A
  • Profits and sales fall
  • Substitutes may be the cause of declining sales

Firm can…

  • Maximise returns while possible
  • Sell the rights to the product
  • Withdraw the product
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6
Q

What is the Boston Consulting Group (BCG) Matrix (3 points)?

A

Formed in 1968

A tool for firms to analyse their product line

Offers a snapshot a products current position in the market

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7
Q

What is the difference between a product line and a product range?

A

Line: group of related products that targets a particular segment of the market e.g. pasta & sauces. Lynx shower gel & body spray

Range: Portfolio of products sold by a company e.g. Mars sells chocolate and pet food

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8
Q

What are the 4 product classifications in the BCG Matrix?

A

Star

Question Mark (Problem Child)

Cash Cow

Dog

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9
Q

Give 5 characteristics of a “Star”?

A
  • Rapid growth
  • Dominates market share
  • Requires high investment
  • High profits
  • Still has potential to grow
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10
Q

Give 3 characteristics of a “Question Mark”?

A
  • Rapid growth
  • Low market share (company doing something wrong OR product is new)
  • Requires high investment
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11
Q

Give 4 characteristics of a “Cash Cow”?

A
  • Low growth
  • High market share
  • Little investment required (well established)
  • Still very profitable
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12
Q

Give 4 characteristics of a “Dog”?

A
  • Low growth
  • Low market share
  • Product in decline - little investment
  • Small/negative profits
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13
Q

What is Ansoff’s Growth Strategies Matrix?

A

A strategic planning tool for a company to determine strategies for growth

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14
Q

What are the 4 suggested marketing strategies in Ansoffs growth matrix?

A

Market Penetration

Product Development

Market Development

Diversification

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15
Q

Describe the “market penetration” strategy?

A
  • Undercutting price/increasing promotional base of already established products
  • Low risk
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16
Q

What is the “Product Development” strategy?

A
  • Develop new products, introduce them into existing markets
  • Product directly competes with existing competitors. Must outperform them.
  • Medium risk
17
Q

Describe the “Market development” strategy?

A
  • New market found for existing produce
  • New segments -> market research required
  • Medium risk
18
Q

What is the “Diversification” strategy?

A
  • New product, new market
  • Product not necessarily in line with companies existing competencies (E.g. Virgin)
  • High risk