Marketing strategy

Question 1

Define the term marketing.

Answer 1

Marketing is the management process of identifying, anticipating and satisfying consumer demands for profit.

Question 2

Define the term marketing strategy.

Answer 2

Marketing strategy is the methods used by a business to achieve their marketing objectives.

Question 3

What is a product lifecycle?

Answer 3

Products go through a lifecycle from research and development at the start to launch and through to decline. Some products take longer to go through the lifecycle. The marketing mix will change depending on the stage of the lifecycle the product is at.

Question 4

Explain the first stage of the product lifecycle.

Answer 4

The product development stage is the first one. In this stage a product is designed and market research is analysed to produce a product that will satisfy customer needs.

Cash flow is tight and this is an expensive phase as the product is not making any revenue.

All capital will just be an investment at this point.

Question 5

Explain the second stage of the product lifecycle.

Answer 5

The introduction phase will involve high costs is R&D and the product may have been test marketed before launching so profits may be negative.

Sales will be low as customers are yet to be aware of the products and advertising will be informative to let customers know about the product.

Question 6

Explain the third stage of the product lifecycle.

Answer 6

This is the growth phase. Products are enjoying a rapid growth in sales and profits, customers are aware of products and demand is high. A business may advertise to take advantage of the high demand.

Question 7

Explain the fourth stage of the product lifecycle.

Answer 7

This is the maturity phase. Products face intense competition now that all producers have joined the market, sales are high but profits are starting to fall as products need to be discounted to keep sales high.

Question 8

Explain the fifth stage of the product lifecycle.

Answer 8

This is the decline phase. Products may be limited in production, profits and sales have fallen and products may be withdrawn from sale. The business may decide to heavily discount to get any last sales before the product becomes obsolete.

Question 9

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

Answer 9

Updating packaging
Adding more or different features
Changing target market
Advertising 
Price reduction

Question 10

What are 2 different product lifecycle extension strategies?

Answer 10

Changing the product

Changing the promotion

eg. rebranding, relaunching, promotion

Question 11

What is a product portfolio?

Answer 11

A collection of all the products and services offered by a company.

Question 12

What is the Boston Matrix?

Answer 12

A marketing planning tool which helps managers plan for a balanced product portfolio

Looks at 2 dimensions- market share and market growth, in order to assess new and existing products in terms of their market potential. Helps marketing managers work out how much to spend on each product.

Question 13

What does the star symbolise in the Boston Matrix?

Answer 13

Products that have high market share and are in a high growth market. Star products need to maintain their current marketing to keep sales high and should become cash cows if managed correctly.

Question 14

What does the question mark symbolise in the Boston Matrix?

Answer 14

Products that have low market share but are in a high growth market. These products have lots of potential to become a star if they are managed correctly and need lots of investment in marketing and promotion if they are to succeed.

Question 15

What does the cash cow symbolise in the Boston Matrix?

Answer 15

Products have have high market share and are in a low growth market. They are good sellers and need little or no new investment- they just need to be ‘milked’ for cash and monitored in case they become dogs.

Question 16

What does the dog symbolise in the Boston Matrix?

Answer 16

Dog products have a low market share and low market growth. They require no investment and are in the decline phase of their lifecycle. Products may have become obsolete or replaced and should be discontinued.

Question 17

What are the uses of using the Boston Matrix?

Answer 17

The Boston Matrix is a good starting point when reviewing an existing product line to decide future strategy and budgets.

The conclusions drawn help transfer surplus cash from cash cows tot he stars and question marks and close down or sell off dogs.

Question marks become either dogs or stars and cash cows become so drained of finance they turn into dogs.

Question 18

What are the limitations of the Boston Matrix?

Answer 18

Products may be medium market share rather than low or high

High market share does not always lead to high profits as high costs are also associated with high market share

The Matrix is oversimplified.

Question 19

What media would be used in the marketing of mass market products.

Answer 19

TV, radio, newspapers, mass media

Question 20

What media would be used in the marketing of niche market products.

Answer 20

Specialist magazines, trade fairs, websites, word of mouth, leaflets

Question 21

What is B2B marketing?

Answer 21

Business to business marketing. Many businesses just deal with other businesses rather than consumers.
Advertising needs to be informative rather than persuasive or clever and this will typically involve larger transactions than with consumers. Supplier needs to build up closer relationship with customers and focus will be on offering a quality product and service.

Question 22

What is B2C marketing?

Answer 22

Business to consumer marketing. They are not looking to build up long term relationships with the supplier and consumers want a variety of distribution channels for convenience eg. online, delivery
Short advertising which clearly points out the benefits needed. Emotional connection with the product or supplier might occur eg touching ads.

Question 23

What is consumer loyalty and how do businesses develop it?

Answer 23

Businesses have discovered that it is cheaper to keep loyal customers than gain new ones through marketing. Customer loyalty is creating a product or service that ensures repeat purchases.

Businesses often do this through:
Loyalty Cards
Saver Schemes
Effective Customer Service

Question 24

Explain how loyalty cards are used to develop customer loyalty.

Answer 24

Loyalty cards work in a number of ways:
They can improve customer retention
They can collect important data on buyer behaviour and purchase directions

Question 25

Explain how effective customer service is used to develop customer loyalty.

Answer 25

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: answering questions on the phone or by email.

During the purchase: Answering questions, providing information and advice

After the purchase: Repairs, warranties, guarantees and service plans.

Question 26

Explain how saver schemes are used to develop customer loyalty.

Answer 26

Each week consumers carry out their shopping and pay into a saver card. They are rewarded by the supermarket for paying in when they reach certain amounts of saved money. This can help save up to a special occasion eg christmas.