Product Life Cycle & BCG Matrix Flashcards
Lecture 8 Developing the Marketing Mix
What are the 4 stages of the Product Life Cycle (PLC)?
- Introduction
- Growth
- Maturity
- Decline
Give details about the “introduction” phase of the PLC (4 points)?
- Sales slowly build
- Profit negative due to R&D / setup costs
- Priority is to build awareness
- High failure rate
Describe the “growth” phase of the PLC (4 points)…
- Sales increase
- Monopoly window
- Priority is tobuild the brand
- Need to think about “potential product” for when competitors enter the marke
Describe the “maturity” phase of the PLC (4 points)..
- Sales level out
- Competitors well established
- Risk of product becoming oudated, may need refreshing
- May need to target a different market
What happens in the “decline” phase of the PLC (2 points)?
What options does the firm have (3 points)?
- 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
What is the Boston Consulting Group (BCG) Matrix (3 points)?
Formed in 1968
A tool for firms to analyse their product line
Offers a snapshot a products current position in the market
What is the difference between a product line and a product range?
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
What are the 4 product classifications in the BCG Matrix?
Star
Question Mark (Problem Child)
Cash Cow
Dog
Give 5 characteristics of a “Star”?
- Rapid growth
- Dominates market share
- Requires high investment
- High profits
- Still has potential to grow
Give 3 characteristics of a “Question Mark”?
- Rapid growth
- Low market share (company doing something wrong OR product is new)
- Requires high investment
Give 4 characteristics of a “Cash Cow”?
- Low growth
- High market share
- Little investment required (well established)
- Still very profitable
Give 4 characteristics of a “Dog”?
- Low growth
- Low market share
- Product in decline - little investment
- Small/negative profits
What is Ansoff’s Growth Strategies Matrix?
A strategic planning tool for a company to determine strategies for growth
What are the 4 suggested marketing strategies in Ansoffs growth matrix?
Market Penetration
Product Development
Market Development
Diversification
Describe the “market penetration” strategy?
- Undercutting price/increasing promotional base of already established products
- Low risk