Theme 1 - Marketing Strategy - 1.3.5 Flashcards
What is the difference between marketing and marketing strategy ?
Marketing - The management process of identifying, anticipating and satisfying consumer demands for profit
Marketing strategy - The methods used by a business to achieve their marketing objectives
What are the steps of a product life cycle ?
Development, introduction, growth, maturity and decline
What is the product development part of the product life cycle ?
This is the first stage of the product lifecycle where a product is designed and market research is analysed to produce a product which will satisfy a customers needs
Cash flow at this first stage is very tight as this is a very expensive stage and at this point the product is making no revenue and therefore no profit so therefore all capital at this point is just an investment as there is always the risk of the product not being a success and generating in profit
What is the introduction phase of the product life cycle ?
The introduction phase will involve high costs in R&D and the product may have been test marketed before launching so profits may be negative
Sales will be low as customers may not be aware of the products
Advertising will be informative to let customers know that the product has been launched
What is test marketing ?
It is when you ‘dip your foot’ in the market and test the market and get responses and then use those responses to imprisoned your product making it ready for the launch
Usually low value goods are test marketed - in like supermarkets where they would hand out free samples
What is the growth phase of the product life cycle ?
Growth phase products are enjoying rapid growth in sales and profits
At this stage the customers are aware of this product and the demand for the product is high
A business may advertise this product to to take advantage of the high demand
What is the maturity phase of the product life cycle ?
Maturity phase products face intense competition now all the producers have joined the market
Market is starting to be saturated - everyone who was likely to buy the product has
Sales are high but the profit is starting to fall - as products have been discounted to keep sales high - prices lowered or product may be put on sale
What is the decline phase in the product life cycle ?
- Decline phase products may be limited in production
- At this stage profits and sales have fallen and the product may be withdrawn from sale
- The business may decide to heavily discount to get any last sale before the product becomes obsolete
Why is there a trend towards more disposable items rather than products that can be fixed or repaired?
Because people prefer just to replace the old with the new and so repairable goods are in the decline phase
How does product modification extend the product life cycle ?
This strategy will either sell to a new market or remind the old market that its time to change the products to a new version
One good example of this is cars - they retain the same engine but just change the styling
What are the different ways that a business can extend the product lifecycle ?
- Product modification
- Rebranding
- Relaunch product
- Promotion
- Lowering price
What is a product portfolio ?
A product portfolio i the collection of all the products and services offered by a company
What is Boston Matrix ?
The Boston Matrix is a marketing planning tool which helps managers to plan for a balanced product portfolio
It looks into 2 dimensions - market share and market growth - this helps to analyse a product in terms of their market potential
It helps managers work out how much to spend on each product
What are the star products in Boston matrix ?
Star products have high market share and are high in the growth market
Star products need to maintain their current marketing spend to keep sales high
Stars should become cash cows in time - if managed correctly
What is the question mark in Boston Matrix ?
Question mark products have:
- low market share
- high growth market
Question mark products have a lot of potential to becomes stars if they are managed correctly
Question marks will need lots of investment in marketing and promotion - if they are to succeed
What is the Cash Cow in the Boston matrix ?
Cash cow products have :
- high market share
- low growth market
Cash cows are good sellers and need little or no new investment
The products just need to be milked for cash
For e.g. Hellman’s mayonnaise is a cash cow because Hellman’s is a well established brand and already has high sale volumes so they don’t need to invest money into the mayo for advertising etc because people still buy it - this is also because they have a good brand image
Cash Cows need monitoring in case they become dogs
What are dogs in the Boston matrix ?
Dog products have :
- a low market share
- a low growth market
Dog products require no investment as they are in the decline phase of their lifecycle
The product may have become obsolete or replaced
The business may consider discontinuing or withdrawing the product
What are the uses and limitations of the Boston matrix ?
Uses:
- it is a good starting point when reviewing a existing product to decide future strategy and budgets
Limitations:
- products may not be low or high in market share they could be medium
- high market share does not always lead to high profits, there are high costs also involved with high market share
- many people argue that the matrix is too simple
What conclusions are drawn from the Boston matrix ?
The conclusions drawn from this analysis are to transfer the surplus cash from the cash cows to the stars and the question marks and then to close down or sell off the dogs
In the end, question marks reveal themselves as either dogs or stars and cash cows become so drained of finance that they turned into dogs
What marketing strategy is suitable for the mass market ?
These products can be marketed to consumers all over the world in the same way as mass market is one that caters for everyone and mass marketing is the process of selling products to all consumers regardless of age, gender etc
Large quantities produced means lower average costs means EOS ( economies of scale ) which means high profits
Media used will be: TV, radio, newspapers etc
Examples : perfume, Coca Cola, computers
What are some marketing strategies for the niche market ?
A niche market is one that caters to a small subset of a segment and will target consumers in a very specific way - a market segment is consumers who can be grouped in different ways - income, gender, lifestyle etc
Products are designed for a specific purpose
Small turnover ( small profit ) keeps larger firms from entering market
Inelastic demand means higher prices can be charged
Media used will be - specialist magazines, trade fairs, websites, word of mouth etc
Examples: Harry Potter school bags, camel milk, Ferraris
What is B2B marketing ?
B2B stands for business to business marketing. Many businesses just deal with other businesses rather than consumers. For e.g. a school will have a paper supplier so they can keep giving you handouts a d you can print your work out
What marketing strategies are suitable for B2B marketing ?
Advertising needs to be informative rather than persuasive or “clever”
This will typically involve larger transactions than with consumers
Suppliers need to build up closer relationships with customers
Focus will be on offering a quality product and a quality service
What does B2C mean ?
Business to consumer
What marketing strategies are used for B2C marketing ?
In B2C marketing they are not looking to build up a long term relationship with the supplier, maybe a one-off purchase like a sofa
Consumers want a variety of distribution channels for convenience e.g. online, click and collect, delivery etc
Short advertising messages which clearly point out the benefits e.g. Olay face cream will make you look 10 years younger
Emotional connection with the product or supplier
What is customer loyalty ?
Businesses have discovered that it is much cheaper to keep a loyal customer than to gain new customers through marketing
So businesses should focus on keeping their existing customers with loyalty schemes, discounts and extras rather than trying to attract new customers
Customer loyalty is creating a product or service that ensures repeat purchases
What is customer service defined as ?
Customer service can be defined as - the assistance and advice provided by a company to those people who buy or use its products or services - This can be:
- before the purchase e.g. answering questions on the phone or by email
- during the purchase e.g. on a car test drive, the sales person can answer questions on fuel economy, reliability and features of the car
- after the purchase e.g. repairs, warranties, guarantees and service plans
How do loyalty cards work ?
Loyalty cards can work in a number of ways:
- they can improve customer retention e.g. a coffee shop making sure customers return by offering a stamp
- they can also collect important data on buyer behaviour and purchase decisions e.g. boots advantage card, Tesco club card
What are Saver schemes ?
Each week consumers can carry out their shopping and pay into a saver card - ready for Christmas
They are rewarded by the supermarket for paying in - for e.g. this is the ASDA scheme - Save $49 and get a $1 bonus, Save $97 and get a $3 bonus
