Unit 3 - 7Ps - Product

Question 1

What is the Product Portfolio

Answer 1

The range of goods/services that the firm provides.

• most firms are multi product and therefore have to he able to manage that range

Question 2

What is the Boston Matrix

Answer 2

The Boston Matrix considers each product portfolio in relation to its market share and rate of market growth.

Question 3

What is a Cash Cow

Answer 3

Cash cow has high market share and low market growth
(E.g. Established products - key brands (GUCCI)).

• Profits made through these products can be used to finance other products such as rising stars or help question marks.
• Firms will want to establish as many cash cows as possible.

Question 4

What is a Rising Star

Answer 4

Rising star has high market share and high market growth.

• increasing sales revenue, fierce competition from new firms so need lots of promotion (funded from cash cow).
• Normally a trendy product so therefore relies on how long the trend lasts for how long it grows (sustainability).

Question 5

What is a Question Mark

Answer 5

Question mark has low market share and high market growth

• With growth in the market a product can be very successful if there’s enough demand.
• Not sure whether to invest in product to potentially make it a cash cow OR to drop the product from the range.

Question 6

What is a Dog

Answer 6

A dog has low market share and low market growth.
(E.g. older products that have gone out of fashion).

• Likely to be dropped by the business as low/no profits.

Question 7

What is the product life cycle

Answer 7

A technique used to track the stages a product goes through during its life.

• Tracks sales over time from the development stage through to launch and then when the product leaves the market.

Stages:

1. R+D
2. Introduction
3. Growth
4. Maturity
5. Saturation
6. Decline
7. Extension Strategy

Question 8

R+D stage of product life cycle characteristics

Answer 8

• Negative cash flow due to market research and R+D

- No sales revenue before launch.

Question 9

Introduction Product Life Cycle Characteristics

Answer 9

• Production and promotion costs can be high

- Low sales volume

Question 10

Growth Product Life Cycle Characteristics

Answer 10

• Increasing sales revenue

- Increasing production costs and increasing sales, but unit costs decreasing as experiencing EOS.

Question 11

Maturity Product Life Cycle Characteristics + How does the product act?

Answer 11

• Sales increasing but at a slower rate

- Product acts as cash cow

Question 12

Saturation Product Life Cycle Characteristics

Answer 12

Sales peaked, after saturation then a decline in sales

Question 13

Decline Product Life Cycle Characteristics

Answer 13

• Product is losing sales

Question 14

Extension Strategy Product Life Cycle + Examples of Strategies

Answer 14

Aims to increase the life cycle of a product and act as a relaunch to increase sales by changing the marketing mix

• Strategies include:
  1. Product development
  2. Market development
  3. Place (distribution channels)
  4. Price (pricing strategies)
  5. Promotion

Question 15

New Product Development + Risks

Answer 15

Process of bringing a new product/service into the market.

Risks:
Financial
Technical + Operational barriers to overcome
Changing consumer tastes and preferences.