1.3.5-marketing strategy Flashcards
(18 cards)
What is the product lifecycle and how is it used?
A theoretical model that describes the stages a product goes through over its life
Can be used to:
-Forecast future sales trends
-Help with market targeting/positioning
-help analyse and manage product portfolio
What are the 5 stages of the product lifecycle?
-development
-introduction
-growth
-maturity
-decline
Key points of developement
-often complex/time consuming
-takes significant resources
-may not be successful
-can be a long time lead before sales
Key points of introduction
-new product launched on the market
-likely to be a low level if sales
-high unit costs
-usually negative cash flow
-heavy promotion to create awareness
key points of growth
-fast growing sales helped by broader distribution
-rise in capacity utilisation should lower unit costs
-product gains market acceptance
-profits rise but attracts new competitors
key points of maturity
-slower sales growth as rivals inter=intense competition
-higher profits
-cash flow should be positive
-weaker competitors leaving the market
-prices/profit fall
Key points of decline
-falling sales
-market saturation
-decline in profits
Strategies to extend product life cycle
-lowering prices
-changing promotion
-improving product
limitations to product life cycle
-decline isn’t inevitable
-length can’t be predicted reliably
-shape and duration varies from product to product
-hard to recognise exactly where a product is in their cycle
What are the 4 categories of the boston matrix?
Stars-High market share in high growth markets
•often need significant investment to sustain growth
•growth will eventually slow and they will become cash cows
Cash cows-High market share low growth markets
•Mature,successful and need relatively little investment
•Need to be managed for continued profit so they continue to generate strong cash flows
Question marks-low market share high growth market
•Have potential but need a lot of investment to grow market share
•Have to think carefully abt which to invest in and which to allow to fail
Dogs-low market share low growth markets
•may generate enough to breakeven but very rarely worth investing in
•Usually sold,discounted or withdrawn
How valuable is boston matrix?
-Useful for product portfolio decisions
-Helps to categorise products which helps make better investment and marketing decisions
-Only a snapshot of current position
-Ignores issues such as developing sustainable competitive advantage
-Assumes market share determines profitability
Mass market marketing strategies
Involve ensuring product is widely available to all potential customers at a price as competitive as possible
•Advertising-National/international TV advertisement
•Branding,packaging,design
•Wide variety of distribution channels
How businesses develop customer loyalty
The likelihood of previous customers returning, loyal customers makes them less likely to switch to competitors
-Excellent customer service
-High quality
-Customer rewards eg.loyalty cards
-Branding, often loyal to a particular brand
Loyalty can reduce PED
What is business to business marketing?
Businesses that promote the sale of products/services to other businesses for use in their operations
Features of business to business marketing
-Promotion will be more educational and informative as businesses will base purchasing decisions on factual info
-Purchases tend to be of higher value (can be million pound transactions)
-More complex and longer buying process
-more sophisticated buyers
What is business to consumer marketing?
Businesses selling to customers
Features of business to consumer marketing
-promotion often more persuasive
-brand strength more important
-shorter and simpler buying process
-lower value purchases (items bought regularly)
-less sophisticated buyers
What is an extension strategy?
Method used to lengthen the life of a product
