Theme 1 - Marketing Strategy - 1.3.5

Question 1

What is the difference between marketing and marketing strategy ?

Answer 1

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

Question 2

What are the steps of a product life cycle ?

Answer 2

Development, introduction, growth, maturity and decline

Question 3

What is the product development part of the product life cycle ?

Answer 3

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

Question 4

What is the introduction phase of the product life cycle ?

Answer 4

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

Question 5

What is test marketing ?

Answer 5

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

Question 6

What is the growth phase of the product life cycle ?

Answer 6

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

Question 7

What is the maturity phase of the product life cycle ?

Answer 7

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

Question 8

What is the decline phase in the product life cycle ?

Answer 8

• 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

Question 9

Why is there a trend towards more disposable items rather than products that can be fixed or repaired?

Answer 9

Because people prefer just to replace the old with the new and so repairable goods are in the decline phase

Question 10

How does product modification extend the product life cycle ?

Answer 10

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

Question 11

What are the different ways that a business can extend the product lifecycle ?

Answer 11

• Product modification
• Rebranding
• Relaunch product
• Promotion
• Lowering price

Question 12

What is a product portfolio ?

Answer 12

A product portfolio i the collection of all the products and services offered by a company

Question 13

What is Boston Matrix ?

Answer 13

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

Question 14

What are the star products in Boston matrix ?

Answer 14

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

Question 15

What is the question mark in Boston Matrix ?

Answer 15

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

Question 16

What is the Cash Cow in the Boston matrix ?

Answer 16

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

Question 17

What are dogs in the Boston matrix ?

Answer 17

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

Question 18

What are the uses and limitations of the Boston matrix ?

Answer 18

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

Question 19

What conclusions are drawn from the Boston matrix ?

Answer 19

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

Question 20

What marketing strategy is suitable for the mass market ?

Answer 20

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

Question 21

What are some marketing strategies for the niche market ?

Answer 21

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

Question 22

What is B2B marketing ?

Answer 22

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

Question 23

What marketing strategies are suitable for B2B marketing ?

Answer 23

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

Question 24

What does B2C mean ?

Answer 24

Business to consumer

Question 25

What marketing strategies are used for B2C marketing ?

Answer 25

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

Question 26

What is customer loyalty ?

Answer 26

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

Question 27

What is customer service defined as ?

Answer 27

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

Question 28

How do loyalty cards work ?

Answer 28

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

Question 29

What are Saver schemes ?

Answer 29

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