Session 19 - product life cycle and the boston matrix

Question 1

Define product life cycle

Answer 1

The stages that products go through in their life, from development to withdrawal from the market

Question 2

Give a description of the research and development stage of the product life cycle

Answer 2

New ideas/possible inventions/ market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at?/Product Development and refinement. Test Marketing – possibly local/regional

Question 3

Give a description of the launch/introduction stage of the product life cycle

Answer 3

Advertising and promotion campaigns. Target campaign at specific audience/ Monitor initial sales. Maximise publicity/High cost/low sales

Question 4

Give a description of the growth stage of the product life cycle

Answer 4

Increased consumer awareness. Sales rise. Revenues increase. Costs - fixed costs/variable costs, profits may be made

Question 5

Give a description of the maturity stage of the product life cycle

Answer 5

Sales reach peak. cost of supporting the product declines. Ratio of revenue to cost high. Sales growth likely to be low/Market share may be high

Question 6

Give a description of the decline stage of the product life cycle

Answer 6

Product outlives/outgrows its usefulness/value. Fashions change. Technology changes. Sales decline. Cost of supporting starts to rise too far

Question 7

Advantages of the product life cycle

Answer 7

Give managers the ability to plan what to do with the marketing strategy at each stage
Helps to create the marketing mix
Helps decide whether to withdraw certain products
Helps with planning the marketing budget

Question 8

Disadvantages of the product life cycle

Answer 8

Not always clear what stage the product is in, there are grey areas
Not all products go through every stage
Products may remain in one stage for a very long time
Only one product per diagram, so not efficient

Question 9

What are the 4 stages of the boston matrix

Answer 9

Dogs, question marks, stars, cash cows

Question 10

What two factors determine which stage a product falls into the boston matrix

Answer 10

Market share, market growth

Question 11

Which stage of the boston matrix has low market share and a low market growth

Answer 11

Dogs

Question 12

Which stage of the boston matrix has low market share and a high market growth

Answer 12

Question marks

Question 13

Which stage of the boston matrix has high market share and a high market growth

Answer 13

Stars

Question 14

Which stage of the boston matrix has high market share and a low market growth

Answer 14

Cash cows

Question 15

Define a product portfolio

Answer 15

A product portfolio refers to a range of products produced by a company or a brand

Question 16

What does a question mark refer to for product portfolio

Answer 16

Building - this involves investment in promotion and distribution to boost sales and is often used with problem children (question marks)

Question 17

What does a star refer to for product portfolio

Answer 17

Holding - this involves marketing spending to maintain sales and is used with rising star products.

Question 18

What does a cash cow refer to for product portfolio

Answer 18

Milking - this means taking whatever profits you can without much more new investment and is often used with cash cow products

Question 19

What does a dog refer to for product portfolio

Answer 19

Divesting - this involves selling off the product and is common with dogs or problem children

Question 20

Advantages of the Boston Matrix

Answer 20

A useful tool for analysing product portfolio decisions
Provides an easy visual snapshot of the current position
Allows you to develop 4P strategic decisions
Identify the potential for growth

Question 21

Disadvantages of the Boston Matrix

Answer 21

Market growth is not a good measure of a markets attractiveness
Market share is an inadequate measure of a product’s ability to generate cash
Ignores issues such as developing a sustainable competitive advantages
The product life cycle vary over time
Does not take account of environmental factors