1. The 4 P’s / The Marketing Mix Product

2. Learning Objectives
Be able to classify products by line, range and mix
To be able to describe the importance of new product design and development
To be analyse the stages of a typical product life cycle and the relationship between this and the marketing mix, profit and cash flow
To understand product portfolio analysis and the application of the Boston Consulting Group matrix
To be able to discuss the importance and role of branding
HL – Use the Boston Matrix to develop future strategic direction
HL – Distinguish between different types of branding and analyse the role of branding in a global market

3. The marketing mix The marketing mix is also known as the 4Ps: Product
Price
Place
Promotion
Key Terms
Product – The end result of the production process
Consumer durables – manufactured products that can be re-used and are expected to have a reasonably long life (cars, washing machines)
Product line – A set of related products sold by a business
Product mix – The variety of product lines that a business produces or a retailer stocks
Product range – All the types of products made by a business

4. Product
You can sell any product once, but to establish loyalty and good customer relationships, the product must be right
A business must meet customer expectations of
Quality
Durability
Performance
Appearance

5. Product
‘Product’ refers to the functions and features of a good or service
Should satisfy the needs of the customer
May have a Unique Selling Point (USP)
‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding
Products and brands may suggest certain images e.g. sporty, sophisticated, value

6. New Product Design / Development
Crucial to the success of some businesses operating in markets with constant changes
E.G. Technological change – video games
Other industries can sell the same products for years with only slight adjustments
E.G. Pepsi
Financing NPD can be a major problem as you do not see a return on your investment for years

7. http://www. telegraph. co

8. 1
Generating new ideas
E.G Market research, brain storming, adapting existing products 2
Idea screening
Eliminate those ideas that have the least chance of being successful
A very small proportion of new ideas ever reach the 7th stage
NPD process reduces the risk of failure by eliminating unsuitable and unprofitable products before they reach the final stage 3
Establishing consumers, possible costs, specific features of the product
Concept testing 4
Analysing the impact of new product on revenue, costs and profits
Business analysis 5
Developing prototypes to assess performance and to obtain feedback
Product testing 6
Launching developed product in a small but representative section of the market
Test marketing 7
Full scale launch of the product with appropriate promotion and distribution
Commercialisation

9. Product lifecycle
The product lifecycle looks at the sales of a product over time

10. Stages of the product lifecycle
Introduction – high costs but no sales Launch – high expenditure on promotion and product development, low sales Growth – sales increase and product should break-even Maturity – sales stabilise, less expenditure on promotion needed, revenue & profit should be high Decline – sales decline, extension strategies can be adopted or the product withdrawn

11. Extension strategies
Extension strategies should maintain or increase sales. They include:
Modifying the product
Reducing the price
Adding a feature
Promoting to a
different market
sector
Extension strategies

12. Uses of the product life cycle
Two main uses
Assisting with the planning of marketing mix decisions
Identifying how cash flow might depend on the product life cycle

13. 1. Assisting with the planning of marketing mix decisions
Product life cycle phase
Price
Promotion
Place (Distribution)
Product
Introduction
Maybe high compared to competitors (skimming) or low (penetration)
High levels of informative advertising to make consumers aware of the product
Restricted outlets
Basic model
Growth
If successful, an initial penetration strategy could now lead to rising prices
Consumers needs to be convinced to make repeat purchases - branding
Growing number of outlets in areas indicated by strength of consumer demand
Planning of product improvements and developments to maintain consumer appeal
Maturity
Competitors likely to be entering the market – need to keep prices competitive
Brand imaging continues
Highest geographical range of outlets as possible
New models, colours, accessories as part of extension strategies
Decline
Lower prices to sell off stock, or if a product has a following then maybe raise prices
Advertising likely to be limited
Eliminate unprofitable outlets for the product
Prepare to replace with other products, slowly withdraw from certain markets

14. 2. Identifying how cash flow might depend on the product life cycle
Cash flow closely linked with the product life cycle
Costs high nothing has been sold yet
Most positive cash flow, high sales
Promotional expenses, factory capacity

15. The Boston Matrix The Boston Matrix:
A means of analysing the product portfolio and informing decision making about possible marketing strategies
Developed by the Boston Consulting Group – a business strategy and marketing consultancy in 1968
Links growth rate, market share and cash flow
What do
these terms mean?

16. Devised by the BOSTON MARKETING GROUP
FOUR Basic Types of product
Each has different characteristics
NOT GOOD to have just one type of product

17. The Boston Matrix (questions marks = Problem children)|

18. The ‘Problem Child’ (Question Mark)
Exciting but unpredictable product
Could be the next big thing
Could be a flop
Requires careful investment
Must be monitored closely
Question Mark or Problem Child:
Products having a low market share in a high growth market
Need money spent to develop them
May produce negative cash flow
Is there potential for the future?
Introduction stage of the PLC

19. The ‘Rising Star’ Established and growing in the market
Starting to pay back on investment
Needs careful management
Needs a developed marketing strategy
Stars:
– Products in markets experiencing high growth rates with a high or increasing share of the market
Potential for high revenue growth
Growth stage of the PLC

20. The ‘Cash Cow’ Established Market Share Highly Profitable
Stable Cash flow
Cash Cows:
High market share
Low growth markets – maturity stage of PLC
Low cost support

21. The ’Dog’ Shrinking market share Falling profitability
Time for rethink/revival of fortunes?
Dogs:
Products in a low growth market
Have low or declining market share (decline stage of PLC)
Associated with negative cash flow
May require large sums of money to support

22. The Balanced Portfolio
Sales / Popularity
The Balanced Portfolio
Gr owt h
Development
Introduct ion
De c l
i ne
Maturi ty
Time

23. Your Task
Draw a Boston matrix and put 8 products of your own choice from the same company.
Your matrix should include a title, headings for each of the 4 areas and title along the sides of the matrix.
Using terminology from the Product Life Cycle and Boston Matrix, describe the stage of development at which each product is currently located and how this may affect the business.

24. Using your examples we are going to discuss the following questions:

25. The Boston Matrix Implications for STARS: Huge potential – how?
May have been expensive to develop – why?
Is it worth spending money to promote?
What issues are there with the product life cycle?

26. The Boston Matrix Implications for CASH COWS:
Why are they cheap to promote?
Generate large amounts of cash – are these used for further R&D?
Do you think there are any costs of developing and promoting these products?
Is there a need to monitor their performance – in the long term?
What stage of the PLC are these at?

27. The Boston Matrix Implications for PROBLEM CHILDREN / QUESTION MARKS:
What are the chances of these products securing a hold in the market?
How much will it cost to promote them to a stronger position?
Is it worth it?

28. The Boston Matrix Implications for DOGS:
Are they worth persevering with?
How much do they cost?
Could they be revived in some way?
How much would it cost to continue to support such products?
How much would it cost to remove these products from the market?

29. The Product Life Cycle and the Boston Matrix
(3) Cash from ‘C’ used to support growth of ‘D’ and possibly to finance extension strategy for ‘B’?
Importance of maintaining a balance of products in the portfolio at different stages of the PLC – Boston Matrix helps with the analysis
(1) ‘A’ is at maturity stage – cash cow. Generates funds for the development of ‘D’
(2) Cash from ‘B’ used to support ‘C’ through growth stage and to launch ‘D’. ‘A’ now possibly a dog?
Sales
(1)
(2)
(3) D B C A
The product portfolio – four products in the portfolio
Time

30. HL Boston Matrix & Strategic Analysis Stars Problem Child / ?
Market Growth
Stars
Problem Child / ?
Cash Cows
Dogs
HOLDING – Continuing support for these products so they can maintain their good market position. May need to ‘freshen up’ the product so sales growth can be sustained
BUILDING – Supporting problem child products with additional advertising or further distribution outlets. Finance could be taken from established cash cow products
High
MILKING – Taking the positive cash flow from established products and investing elsewhere in the portfolio
DIVESTING – Identifying worst performing dogs and stopping production. Not a decision to be taken lightly
Low
Low
High
Market Share

31. Boston Matrix – An evaluation
This tool is relevant when:
Analysing the performance and current position of existing products
Planning action to be taken with existing products
Planning the introduction of new products
No technique can guarantee success – depends of the accuracy of the marketing managers

32. Boston Matrix – An evaluation
Helps to establish current situation, but is of little use in ‘predicting’ future success or failure
Detailed and continuous market research will help
It is only a planning tool

33. Branding One of the most powerful concepts a business can achieve
Brand – An identifying symbol, name, image or trademark that distinguishes a product from its competitors
Brand awareness – Extent to which a brand is recognised by potential customers and is correctly associated with a particular product
Brand development – Measures the infiltration of a products sales. If 100 people in 1000 buy a product, it has a brand development of 10
Brand loyalty – the faithfulness of consumers to a particular brand as shown by their repeat purchases irrespective of the marketing pressure from competing brands

34. Read NY Times article too
Read NY Times article too

35. HL
Types of branding
Different types of branding

36. HL Family branding Example – Heinz (Ketchup, soup, beans) Benefits
A marketing strategy that involves selling several related products under one brand name
Example – Heinz (Ketchup, soup, beans)
Benefits
Marketing EoS
Makes new product launches easier
Limitations
Poor quality of one product under the brand name may damage them all

37. HL Own label branding Example – Walmart has numerous brands Benefits
Often cheaper than name brand products
Each own label brand appeals to different groups
Often little spent on advertising – in store promotions
Limitations
Consumers often perceive products to have a lower quality image
Retailers create their own brand name and identity for a range of products

38. Individual / Product brandingHL
Each individual product in a portfolio is given its own unique identity and brand image (unrelated products)
Example – Proctor & Gamble
Benefits
Each product is perceived as its own unique and separate brand
Limitations
Loses the positive image of a strong company brand

39. Company / corporate / global brandingHL
Company name is applied to products and this becomes the brand name globally
Example – Disney Products
Benefits
Similar points to family branding but now applies to all products produced under the company’s brand name
Limitations
Could lose positive image of a strong company brand

40. HL Manufacturers' brands Example - Coca Cola Benefits Limitations
Successful branding establishes a unique personality which many consumers want to be associated with and will often pay a premium price for
Limitations
The brand has to be constantly promoted and defended
Producers establish the brand image of a product or a family of products, often under the company’s name

41. Role of branding in a global market
Globalised branding can have substantial benefits