1. Edexcel A-level Business Theme 1 1.3 Marketing Mix and Strategy
1.3.5 Marketing Strategy
The Product Life Cycle describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall.
The Boston Matrix is a model which helps businesses analyse their portfolio of businesses and brands. It categorises the products into one of four different areas, based on:
Market share – does the product being sold have a low or high market share?
Market growth – are the numbers of potential customers in the market growing or not
Stars are high growth products competing in markets where they are strong compared with the competition. Often Stars need heavy investment to sustain growth. Eventually growth will slow and, assuming they keep their market share, Stars will become Cash Cows
Question marks are products with low market share operating in high growth markets. This suggests that they have potential, but may need substantial investment to grow market share at the expense of larger competitors. Management have to think hard about “Question Marks" - which ones should they invest in? Which ones should they allow to fail or shrink?
The amount of revenue, cash-flow, breakeven and profits will depend on the nature of the product and market
Product development: Product researched , designed and tested. If its worth pursuing then it will be manufactured. No sales, cash flow or profits
Introduction: Researching, developing and then launching the product. Prices maybe set high to cover the cost of product development (skimming) or low (penetration) to gain a lot of customers quickly. A lot of cash spent on promotion, unlikely to break-even, revenue/cash flow hopefully increasing. Unit costs are high
Growth: sales increasing at their fastest rate. Customers make repeat purchases, sales increase. Product starts to become profitable, competitors may launch their own versions which may mean price and promotion may need to be reconsidered. Unit costs reduce.
Maturity and saturation: sales are near their highest, but the rate of growth is slowing down, e.g. new competitors in market or saturation. Some businesses will be forced out of the market. This is when a business decides to let a product die or extend. Unit costs often at lowest (EOS). Promotion still often required to enforce position e.g. Coca-Cola
Decline: sales begin to fall, possibly due to changing in consumer tastes, new technology or introduction of new products. Could still make a profit is prices were high enough and little is spent on promotion
Cash cows are low-growth products with a high market share. These are mature, successful products with relatively little need for investment. They need to be managed for continued profit - so that they continue to generate the strong cash flows that the company needs for its Stars
Unsurprisingly, the term “dogs" refers to products that have a low market share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in. Dogs are usually sold or closed
Ideally a business would prefer products in all categories (apart from Dogs!) to give it a balanced portfolio of products
What can businesses do to extend the product life cycle?
Extension strategies extend the life of the product before it goes into decline. Again businesses use marketing techniques to improve sales. Examples of the techniques are:
Advertising – try to gain a new audience or remind the current audience
Price reduction – more attractive to customers
Adding value – add new features to the current product, e.g. improving the specifications on a smartphone
Explore new markets – selling the product into new geographical areas or creating a version targeted at different segments
New packaging – brightening up old packaging or subtle changes
The main values of using the Boston Matrix include:
A useful tool for analysing product portfolio decisions
But it is only a snapshot of the current position
Has little or no predictive value
Does not take account of environmental factors
There are flaws which flow from the assumptions on which the matrix is based

2. Edexcel A-level Business Theme 1 1.3 Marketing Mix and Strategy
1.3.5 Marketing Strategy
Strategies for B2B market:
Outbound marketing strategies: Directing marketing material at potential customers whether they are expecting it or not e.g. direct mail, , trade shows. However firms are increasingly ignoring adverts and don’t like cols calls or ‘junk mail’. Often costs more than ay new business gained
Mass market strategies:
Are very competitive markets because the rewards for success can be significant e.g. Coca-Cola, Heinz and Kellogg's. Main strategies include:
Product: key to differentiate / USP
Price: prices likely to be similar, most charge the ‘going rate’
Promotion: invested in heavily as cannot differentiate by price
Place: use multiple channels, increasingly online in some markets
A marketing strategy is a set of plans that aim to achieve a specific marketing objective e.g. to raise the awareness of the new BMW 1 series to existing and potential customers in the Gloucestershire area
Developing customer loyalty:
Communication: keep customers informed
Customer service: more likely to return if their individual needs and wants are fulfilled
Customer incentive: rewards for customers who keep returning e.g. loyalty cards
Personalisation: deal with customers on a personal level
Preferential treatment: e.g. VIP area, free Wi-Fi – aim is to get customers to return
Strategies for B2B market:
Inbound marketing strategies: involved attracting potential customers to websites when they are looking for suppliers or solutions to problems. It can take effort and resources o build up enough useful content and firms will need specialist marketers to keep up to date with rapidly changing trends
Niche market strategies:
Customers will have very particular needs, which are often neglected by larger firms, hence a gap in the market for firms who are willing to tailor their products to meet these needs. Main strategies include:
Product: will have significant differences from rivals. Products will be carefully designed in order to meet the very specific needs. Product is a KEY element
Price: have more flexibility due to less competition. Often higher prices are charged because of this and customers are often prepared to pay more
Promotion: tends to be more targeted, less need to use national media when advertising. Need to identify their customer profiles very accurately to promotional money is not wasted. Adverts likely to be placed in specialist publications e.g. TES, Computer programming monthly
Place: often more selective when choosing channels and more likely to use exclusive distributors or handle directly