4.2 c Product

Product Portfolio Analysis

Product Life Cycle

SWOT Analysis

Boston Matrix

Definitions Product Mix Line Item Depth Width Goods Service Different goods and/or services a company sells Line A group of closely related products Item Specific brand, model, or size of product within the product line Depth Number of product items offered within each product line Width Number of product lines

Product Terminology Product portfolio Product Line Product Range the range of products a company has in development or available for consumers at any one time Managing product portfolio is important for cash flow Product Line The related products sold by a company For example, Proctor and Gamble produces these laundry products Tide, Cheer, Downy, Bounce, Ivory, Dreft, Era, Fabreze, Gain Product Range Complementary or supplementary products manufactured or sold by a company several similar products that appeal to different customers. Product Mix the complete list of all items made by the organization.  For example, Procter and Gamble produces Bold, Pampers, Hugo Boss, Wash & Go, Gillette Razors, Oil of Olay, Sunny Delight, Pringles, Braun, Crest, Oral B, Old Spice

Product Line A set of related products or services offered by a single firm. COCA-COLA 1886 COCA-COLA 1960 FANTA 1961 SPRITE 1963 TAB 1966 FRESCA 1972 MR. PIBB 1974 SUGAR-FREE SPRITE 1982 DIET COKE 1992 "NEW" COKE, RENAMED COKE, later dropped altogether Coca Cola renamed Coca Cola Classic 1994 FRUITOPIA 1995 BARQ'S Root Beer 1997 SURGE CITRA 2007 Coke Zero Not inclusive Source: Coca-Cola Web Site

Product design and development Importance of innovation Challenges facing R & D

Product Differentiation Efforts to distinguish a product from competitive products so that it is more desirable. This is an essential behavior by businesses in Monopolistic Competition Products are differentiated by: Unique design. Unique packaging. Unique branding.

Product Life cycle Shows the stages that products go through from development to withdrawal from the market Connection to marketing mix Contributes to strategic marketing planning Helps the firm to identify when product needs support, redesign, reinvigorating, withdrawal, etc. May help in new product development planning Relationship to profit, investment, cash flow May help in forecasting and managing cash flow See the last slide in the PLC which demonstrates the relationship between profit and stage in PLC

Product Life Cycle The Stages of the Product Life Cycle: Development Introduction/Launch Growth Maturity Saturation Decline Withdrawal

The Development Stage: Product Life Cycles The Development Stage: Initial Ideas possibly large number May come from any of the following – Market research identifies gaps in the market Monitoring competitors Planned research and development (R&D) Luck or intuition stumble across ideas? Creative thinking inventions, hunches? Looking ahead what will people be using/wanting/needing 5,10,20 years hence?

Steps to Create a New Product Develop product idea. Assess feasibility of idea. Design and test product. Distribute and promote product. Post-audit of product plan. Dcon’s Hurly Sticks Business Idea

Product Life Cycles Introduction/Launch: Advertising and promotion campaigns Target campaign at specific audience? Monitor initial sales Maximise publicity High cost/low sales Length of time – type of product

Product Life Cycles Growth: Increased consumer awareness Sales rise Revenues increase Costs - fixed costs/variable costs, profits may be made Monitor market – competitors reaction?

Maturity: Product Life Cycles Sales reach peak Cost of supporting the product declines Ratio of revenue to cost high Sales growth likely to be low Market share may be high Competition likely to be greater Price elasticity of demand? Monitor market changes/amendments/new strategies?

Product Life Cycles Saturation: New entrants likely to mean market is ‘flooded’ Necessity to develop new strategies becomes more pressing: Searching out new markets: Linking to changing fashions Seeking new or exploiting market segments Linking to joint ventures – media/music, etc. Developing new uses Focus on adapting the product Re-packaging or format Improving the standard or quality Developing the product range

Product Life Cycles Decline and Withdrawal: Product outlives/outgrows its usefulness/value Fashions change Technology changes Sales decline Cost of supporting starts to rise too far Decision to withdraw may be dependent on availability of new products whether fashions/trends will come around again

Product Life Cycles Sales Time Development Growth Maturity Saturation Introduction Growth Maturity Saturation Decline Time

Product Life Cycles PLC and Profits Sales/Profits PLC Profits Time Losses Break Even

Product portfolio analysis BCG Matrix Classifies Products into four simple categories: Stars Cash cows Dogs Question marks Also called ‘problem children’

The Boston Matrix Question Marks Stars Dogs Cash Cows Market Growth High Market Share Low High

The Boston Matrix A means of analysing the product portfolio and informing decision making about possible marketing strategies Developed by the Boston Consulting Group in 1968 Links growth rate, market share and cash flow

The Boston Matrix Stars - Potential for high revenue growth products in markets experiencing high growth rates with a high or increasing share of the market - Potential for high revenue growth

The Boston Matrix Cash Cows: High market share Low growth markets – maturity stage of PLC Low cost support High cash revenue – positive cash flows

The Boston Matrix 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 Is your product starting to embarrass your company?

The Boston Matrix Question Marks (problem children) Products having a low market share in a high growth market Need money spent to develop them May produce negative cash flow Potential for the future? 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? Question Marks (Problem children): Are they worth spending good money on?

Branding Strategy to differentiate products and companies, and to build economic value for both the consumer and the brand Brand is a name or trademark attached to a product or company is what has meaning to the customer Brand awareness Brand development Brand loyalty

Branding/Labeling Corporate symbol National Brands Private Brands Logo or trademark Brand Name National Brands Private Brands Generic Branding strategy Brand Image Enhancement

Classification of Brands Producer or National Brands: represent the manufacture of products. Store brand: represents the retail store where the product is being sold. Arizona Jean Co.® blue jeans sold only at JC Penney Generic: products are not branded and simply describe the product. Aspirin Originally a Bayer brand name for acetylsalicylic acid In some countries, including Germany, Bayer still controls the brand Aspirin

Brand Image Enhancement At the restaurant, you tell the waiter “I would like a Coke” The waiter is required to respond, “Would Pepsi be ok?”