Product Portfolio

Question 1

Define product portfolio

Answer 1

Range of products are firm has
(firms have more than one product so they want to analyse the overall position of the portfolio products)

Question 2

How can a product portfolio be analysed?

Answer 2

Using the Boston matrix this is based on market share – does the product sold Have a low high market share compared to others in the market?
and it’s also based off market growth – our numbers of potential customers in the market growing or not

Question 3

What is the description of a ? In the product life-cycle.

Answer 3

Low market share in a high growth market
likely to be in the introduction stage of the product life-cycle. It could provide high profits in the future
may and prosper but equally may fail.

Question 4

What is the strategy for? Marks in the product life-cycle.

Answer 4

High levels, investments protect and grow these products so they are cash absorbing
Could choose to drop the product – this is why it’s called a? – Managers aren’t sure what to do with them.
They have to choose which ones to invest in in which ones they should allow a fail
they are supported through Cashcow

Question 5

Describe the star in the product life-cycle

Answer 5

High market share in a high growth/fast growing market
Likely to be in the growth stage of the product life-cycle
Likely to be cash neutral
Will usually become cash cows when the market mature is I.E low market growth

Question 6

What is the strategy for stars in the product life-cycle?

Answer 6

Need protecting from competitors products – build barriers to entry E.G branding customer loyalty quality

Keep promoting and gaining more distributions to ensure they remain stars
Profit from cash cows keep them in this position

Question 7

Describe the cash cow in the product life-cycle

Answer 7

High share of a slow growing market

Likely to be in the maturity stage of the product life-cycle

Provide high profits in cash for company (milk them)

Cash generating

Question 8

What should managers do with the cash cow?

Answer 8

Promotional cost relatively low as cash cows are well known

Question 9

Describe the dog in the product life-cycle

Answer 9

Low share of a stable or declining market

Likely to be in the declined stage of the product life-cycle

little appeal

Question 10

What are the strategies for the dog in the pro life cycle?

Answer 10

Either invest to revitalise these products or let them decline and eventually remove them/sell them

May remove if profitable due to opportunity cost

Products will be killed off if sales fall to meet the breakeven point

Keep dog if it’s profitable taking sales from competition or if it introduces the customers to the brand or if it’s complimentary product so one that goes with another one of your products

Question 11

What does the size of the circle on the Boston matrix mean ?

Answer 11

The size of the circle drawn t o illustrate each product highlights t h e size o f its revenue

Question 12

What are the criticisms of the Boston matrix model?

Answer 12

Criticisms / limitations of the model
* It is only a snapshot of the current position, it does not predict the future.
It assumes that market share can be gained by investing in marketing.
It assumes that cash surpluses will be generated when the product is in the maturity stage of the product life cycle.
Market share may not be a good measure of a product’s ability to generate cash.
Relative market share and market growth are not the only factors that determine whether a firm has competitive strength

Question 13

Case study examples of the Boston matrix

Answer 13

Case studies:
Nokia: Nokia smartphone are doing well - ony a small market share in a fast-growing market - Nokias smart phone considered to be queston marks. novas feature phones-falling marnet share in low growth market - “dog” product

Shell ; says it needs the positive cash flows from oil production (cash cow) to finance investment in future stars the company plans for greener energy can only be funded by oil and gas

Question 14

Why might new products need development ?

Answer 14

New Product Development
Investment to modify existing products or develop new ones.

• products at the end of the life cycle
• to ensure a balanced product portfolio
• to tave advantage of new opportunites that are occunng eg newtech or changing taste
• bulld the brand
• to keep up with competitions
• to spread risk across products

Question 15

How does the product life cycle link to the Boston matrix ?

Answer 15

The products life cycle is concerned with individual products and focuses on sales.
The Boston matrix is concerned about a portfolio products. There’s a greater focus on cash flow and the need for cash cows to provide the finance to support the question marks .
It isn’t trying to predict sales is simply trying to assess where the product sitting in relation to each other
however there is a link between the two for example cash cows likely to be in the maturity stage of the product life-cycle.

Question 16

Define promotion

Answer 16

Promotion: The ways in which the business communicates about the product

Question 17

What are the main types of promotion ?

Answer 17

The main types of promotion are:
Advertising
Personal (direct) selling
Sales promotions
Social Media & Viral Marketing
Public Relations
Direct Marketing
Sponsorship (part of PR) Branding

Question 18

What are the aims of promotions ?

Answer 18

The main aim of promotion is to ensure that customers are aware of the existence and positioning of products.
Promotion is also used to persuade customers that the product is better than competing products and to remind customers about why they may want to buy.

Question 19

Define the promotional mix

Answer 19

Businesses utilise a combination of promotional methods. This is known as the ‘promotional mix’.

Question 20

Define advertising

Answer 20

Paid for communication in the media eg TV & radio, newspapers & magazines, online, social media, cinema, billboards. Its aim is to inform and persuade.

Question 21

Define sales promotion

Answer 21

Sales Promotions:
Providing incentives to stimulate demand eg BOGOF, loyalty cards, free gift, mone

Question 22

Pros and cons of advertising

Answer 22

Pros
Reaches wide audience
build awareness and brand image
can be targeted to viewing groups
business can control the message

Cons
Consumers switch off from adverts
Mass marketing advertising is expensive
May not reach target customer
Can’t answer customer questions

Question 23

Pros and cons of sales promotion

Answer 23

Pros
Increase the sales immediately and possibly dramatically encourages customers to try product or switch brands

Cons
can damage brand image
customers may have bought anyway
if used long-term customers get used to it

Question 24

Pros and cons PR

Answer 24

Pros
Can be seen as more credible if coming via a third-party
cheap way of reaching customers
Cons
Hard to measure effectiveness
risk of losing control if it’s via a third-party

Question 25

Pros and cons of sponsorship

Answer 25

Pros
Possible wide coverage of brand name
Can target audience a little

Cons
Costly
not informing about product

Question 26

Pros and cons of personal selling

Answer 26

Pros
With good reason research the firm can target customers
can explain questions and thus close the sale
potential to develop a relationship with the customer

Cons
Costly to employee sales force
can get reputation of being a nuisance
difficult to target unless research properly conducted (costly) limited number of customers can be met

Question 27

Pros and cons of personal selling

Answer 27

Pros
Low costs and ability to target customers

Cons
Time consuming -managing multiple social media accounts and creating engaging content can be also very time-consuming
negative feedback or comments from customers can harm brand reputation and require careful handling

Question 28

Pros and cons of direct marketing

Answer 28

Pros
Can reestablished lapse customer relationship
builds customer loyalty
generates new business
can personalise the message

Cons
Response rates may vary
Negative image of junk mail
Can be expensive to keep an accurate customer database

Question 29

Pros and cons of branding

Answer 29

Pros
Once established the business can reduce it spending on other promotions With a recognise brand it’s more likely consumers will buy the product for the first time
Can create loyalty repeat purchase and word-of-mouth advertising
Easier to persuade retailers to stock the products PED will become more inelastic for established brands allowing price rise
Makes launch of future products easier

Cons
Takes time to establish
Costly

Question 30

What are the factors affecting promotional mix?

Answer 30

The target audience – what is the best method to reach them?

Finance available – some methods are more expensive

The message the firm wants to convey/positioning – it must fit with the promotion chosen for example sales promotion may not be suitable for luxury goods

Technology available – is social media appropriate?

Stage in the product life-cycle – different stages will require different promotional methods

Competitors – how are they promoting?

Question 31

Define above the line promotion

Answer 31

Paid – for communication in the independent media for example advertising on TV or in the newspapers. It can be targeted it could be seen by anyone outside the target audience. Advertising is the main methods of above the line promotions.

Question 32

Define below the line promotion

Answer 32

Promotional activities where the business has direct control, for example direct mailing a money of coupons. It is aimed directly at the target audience.