Product Strategy & Lifecycle

Question 1

3 LEVELS OF A PRODUCT

Answer 1

1. Core Product
2. Actual Product
3. Augmented Product

Question 2

CORE PRODUCT

Answer 2

Core need that the product intends to satisfy and that defines the category.

Question 3

ACTUAL PRODUCT

Answer 3

Overall product design and product features (shape, taste, size, ingredients, name, brand, color, etc.)

Question 4

AUGMENTED PRODUCT

Answer 4

Set of benefits, with no actual product modifications, increase the offering to consumers (donating % to charity, free replacements, free trial period, etc.)

Question 5

4 ISSUES TO ADDRESS WHEN DEVELOPING PRODUCT POLICY

Answer 5

1. Product Mix Breadth
2. Product Line Depth
3. Product Item Design
4. Product Lifecycle

Question 6

PRODUCT MIX BREADTH

Answer 6

The variety and number of product or service lines offered.

Question 7

PRODUCT LINE DEPTH

Answer 7

Refers to the number of products offered under a product line.

Question 8

PRODUCT ITEM DESIGN

Answer 8

Process of imagining, creating, and iterating products that solve users’ problems or address specific needs in a given market. (Product’s specifications)

Question 9

PRODUCT LINE CONSIDERATIONS?

Answer 9

1. Customer heterogeneity
2. Competitive Impact
3. Legitimization
4. Brand Equity
5. Cost of variety vs scale opp.
6. Collaborator reaction

Question 10

PRODUCT/MARKET

EXPANSION GRID

Answer 10

Identifies company growth opportunities.

1. Products: Existing/New
2. Markets: Existing/New

Question 11

MARKET PENETRATION STRATEGY

Answer 11

When a company works towards a higher market share by tapping into existing products in existing markets.

Question 12

MARKET DEVELOPMENT STRATEGY

Answer 12

Business growth strategy that focuses on introducing existing products into new markets.

Question 13

PRODUCT DEVELOPMENT STRATEGY

Answer 13

Enables product organizations to create a stream of innovative offerings that disrupt the competition and delight customers of existing markets.

Question 14

DIVERSIFICATION STRATEGY

Answer 14

Business development strategy in which a company develops new products and services, and/or enters new market, beyond its existing ones.

Question 15

TYPES OF NEW PRODUCTS

Answer 15

1. New product based on existing product.
2. Company entry into a product category that already exists.
3. Addition to existing product line.

Question 16

NEW PRODUCT SPECTRUM

Answer 16

1. Incremental Improvements of existing product.
2. Expansion of existing product line.
3. New product to firm but not to the world.
4. New to the world/radical innovation.

Question 17

RADICAL INNOVATION

Answer 17

Strong impact on two dimensions:

1. Market (destroys existing organizational competencies)
2. Company (enhances existing organizational competencies)

Question 18

THE BCG MATRIX

Answer 18

Analysis of market growth rate (cash usage) vs relative market share (cash generation). Designed to help a business consider growth opportunities in investing, discontinuing, or developing products.

Question 19

MARKET GROWTH RATE

Answer 19

Provides a measure of market attractiveness; high/low cash usage.

Question 20

RELATIVE MARKET SHARE

Answer 20

Measure (ratio) of company strength in the market with respect to its main competitor(s); high/low cash generation.
(High when ratio > 1)

Question 21

STARS

BCG MATRIX

Answer 21

High-growth businesses, high-share products. Heavy investments needed to finance rapid growth, eventually turning into cash cows when growth slows.

Question 22

CASH COWS

BCG MATRIX

Answer 22

Low-growth businesses, high-share products. Need less investment to hold their market share. Produce cash.

Question 23

QUESTION MARKS

BCG MATRIX

Answer 23

High-growth businesses, low-share products. Require a lot of cash to hold their share.

Question 24

DOGS

BCG MATRIX

Answer 24

Low-growth businesses, low-share products. May generate enough cash to support themselves but not large sources of cash.

Question 25

MARKETING STRATEGY

BCG MATRIX

Answer 25

1. Move products/businesses towards left quadrants (high/low market growth rate & high market share)
2. Competitors’ strategy may cause products/businesses to move to the right quadrants (high/low market growth & low market share)
3. Product/business lifecycle causes fall towards the low part of the matrix (low market growth)

Question 26

LIMITATIONS TO BCG APPROACH

Answer 26

1. Implementation can be difficult/timely/costly
2. Measurement of market share/growth is difficult
3. Not useful for future planning

Question 27

PRODUCT LIFECYCLE

Answer 27

The length of time a product is introduced to consumers into the market until it’s removed from the market. 4 market phases:

1. Introduction
2. Growth
3. Maturity
4. Sales Decline

Question 28

MARKET INTRODUCTION

PRODUCT LIFECYCLE

Answer 28

Phase in which a new product has low industry sales and negative profit. Marketing objective is to create product awareness.

Question 29

MARKET GROWTH

PRODUCT LIFECYCLE

Answer 29

Phase in a which a product’s industry sales are rapidly rising and is becoming profitable. Marketing objective is to maximize market share & differentiation.

Question 30

MARKET MATURITY

PRODUCT LIFECYCLE

Answer 30

Phase in which a product reaches maximum industry sales and profit is high. Marketing objective is to maximize profits and keep market share.

Question 31

SALES DECLINE

PRODUCT LIFECYCLE

Answer 31

Phase in which a product’s sales and profits are declining. Marketing objective is to reduce expenditures and “milk” brand.