U3- Product Flashcards
What is market saturation?
At market saturation potential new markets or consumers have been exploited by the industry
Advertising will be high
Competition fierce
The risk of failure will drive continuous development of additional features
Give an example of a market that has been at saturation point for some time
The mobile phone market
Manufacturers have to keep on bringing out new models of their products to maintain sales and attract new customers
What is the Boston Matrix?
A method a business can use to analyse its product portfolio
It focuses on each products market share and market growth
What are the 4 types of products identified in a Boston Matrix?
Cash cows
Stars
Question marks
Dogs
Describe a cash cow (Boston Matrix)
They are at the maturity stage in the life cycle
Low growth
High market share
Need to be managed to maintain strong cash flows
Can generate cash for the business
Describe a star (Boston Matrix)
In the growth stage of the product lifecycle
Need heavy investment
High growth
High market share
Describe a question mark/ problem child (Boston Matrix)
At the introduction stage of the product lifecycle
Need investment to grow market share
Low market share
High growth rates
Describe a dog (Boston Matrix)
In the decline stage of the product lifecycle
No longer worth investing in
Low market share
Low growth markets
What are 2 advantages of the Boston Matrix?
Allows the business to evaluate the range of products it has available
Allows the business to focus resources where the business will gain the highest sales and profits
Give 5 problems associated with the Boston Matrix
Only provides a snapshot of the current position
Product lifecycle varies over time
Takes no account of internal factors
Market growth is an inadequate measure of a markets attractiveness
It ignores issues such as developing a sustainable competitive advantage
