product

Question 1

Research and Development

impact on sales and profits

Answer 1

• There are no sales yet as the product is still being developed
• The product will actually be making a loss due to the costs of developmentand zero income from sales

Question 2

introduction

impact on sales and profits

Answer 2

• sales are slow to begin with as customers are unsure of the product. Customers may have to be persuaded to move from competitor products
• The product beings to cut into the losses from development, however high promotional costs still result in a loss being made overall

Question 3

growth

impact on sales and profits

Answer 3

**sales: **Sales are slow to begin with as customers are unsure of the product. Customers may have to be persuaded to move from competitor products
profits: The product beings to cut into the losses from development, however high promotional costs still result in a loss being made overall

Question 4

maturity

impact on sales and profits

Answer 4

sales: Sales growth peaks and levels out. Many sales can still be made for a long time at this stage
profits: Profits can still be healthy but start to fall. The competition will take sales away and thus profits will fall

Question 5

saturation

impact on sales and profits

Answer 5

**sales: **Sales being to fall as consumers go to competitors’ products
profits: Profits fall rapidly, especially if prices are slashed to encourage sales

Question 6

decline

impact on sales and profits

Answer 6

sales: Sales fall rapidly and eventually the product will be withdrawn from the market
**profits: **Profits continue to fall. Eventually products may be sold at unit cost just to break even

Question 7

Lowering the price of the product eg through a sale

Answer 7

Reducing prices will make the product more affordable and therefore appeal to more market segments

Question 8

Changing the place the product is sold eg selling online

Answer 8

Making the product available in more places will mean it is seen by more potential customers eg using e-commerce will mean a product can be sold worldwide

Question 9

Altering methods of promotion

Answer 9

Changing the way a product is promoted can increase sales simply by raising awareness of that product

Question 10

Developing variations of the product eg new flavours

Answer 10

Developing new varieties can mean the product appeals to the tastes and desires of different markets segments. Updating the product can utilise the latest technology so make customers want the product again eg annual launches of iPhone

Question 11

Rebranding the product

Answer 11

Changing the name of the product can create ‘hype’. A new name can appeal to different or wider market segments

Question 12

changing the packaging

Answer 12

Cadbury changed its Dairy Milk packaging to a shiny metallic purple wrapper. Customers will have their eye caught with the product; reminding them it exists

Question 13

Change channel of distribution

Answer 13

Superdry selling products via Next as well as through their own stores. Increases the awareness of customers and their opportunities to purchase also increase

Question 14

Expanding the product line

Answer 14

Mackies bringing out ice cubes. Introducing similar products can appeal to a different type of customer and thus improving sales

Question 15

benefits of product portfolios

Answer 15

• increased profits from selling a variety of different products
• increases brand awareness
• easier to launch new products
• allows the plc to spread the risk
• can cope with seasonal fluctuations easier
• the plc can meet the needs of different market
  segments
• newer products can replace those products at the end
  of the product life cycle

Question 16

costs of product portfolios

Answer 16

• Costs of promoting and advertising lots of different products could be high
• If one product receives bad publicity this could impact on all other products
• Research and development costs can be high to maintain a variety of new products
• Staff may require training on the features of different products which could be time-consuming and expensive

Question 17

boston matrix

Answer 17

• The boston matrix allows a business to analyse where the products currently in their portfolio sit in terms of market share and market growth
• Market share - the percentage of sales in the market a product makes
• Market growth – the overall potential of sales that the market has as a whole
• The Boston Matrix shows market share and growth of each product which a business can use to analyse which products need further development or ones it needs to stop producing
• The Boston Matrix is helpful to evaluate the balance in a businesses product portfolio so that decisions on marketing investments can be made

Question 18

use of boston matrix

Answer 18

• A useful tool for analysing product portfolio decisions. It can help to analyse which products should be pursued, how best company profits should be invested and which products should be removed from the range

Question 19

research and development

Answer 19

The product is being research and developed. Prototypes will be made and tested. Changes may have to be made after research feedback

Question 20

introduction

Answer 20

The product is launched. This usually coincides with introductory promotional activities to create ‘hype’ for the product

Question 21

growth

Answer 21

The product has been on the market for some time, customers are fully aware of the product and are purchasing it

Question 22

maturity

Answer 22

The product has been on the market for some time. Competition enters the market. As a result businesses will implement extension strategies to keep sales high

Question 23

saturation

Answer 23

The product suffers from too many competitors being in the market

Question 24

decline

Answer 24

The products life is nearing the end. The product will stop being produced