Marketing Strategy 1.3.5 Lesson Objective: To understand the project life cycle To be able to explain the Boston Matrix

Starter Cadbury recently changed the packaging for their Dairy Milk chocolate bar – why do you think this was? It was because the Glass and a Half campaign was old – it was also no longer factually accurate. The new campaign they created is an example of an extension strategy

Marketing Is the management process of identifying, anticipating and satisfying consumer demands for profit We have already looked at the Product Life Cycle and the stages that a product goes through throughout its life

Length of the life cycle Remember some products have long product life cycles. This means that they are on the market for many years (Bisto Gravy for example) Other products have shorter life cycles, they are introduced, marketed for a while and then withdrawn (such as the Sony Walkman)

Product life cycle Using the internet, I want you to find; 3 examples of products that have had short product life cycles 3 examples of products that have had longer product life cycles What factors contributed to the length of the products life cycle - what marketing activities did they use to keep the product ‘alive’ Did they change the product at any point to keep it in the public eye? If so what did they do?

Extension Strategies Extension strategies are ways to prolong the life of a product before it starts to decline. Businesses want to extend the life of their products as it equals more revenue – extension strategies help a product to generate more cash and cover the cost of product development (very expensive) Extension strategies can include; Product adjustments Promotion

Product adjustment Many companies try to prolong the life of the product by ‘freshening it up’. This can involve making improvements, updating the product, repackaging or extending the product range Updating is a common approach for technical products They could add value by making improvements – e.g. making them faster, have more memory, look better etc… In the service industry it could be added extras (e.g. breakdown cover with your bank account) They could extend the range – e.g. Walkers are constantly launching new flavours of crisps Some just change the packaging to give the impression that the product has changed – e.g. selling the same fizzy drink in a can, plastic bottle and a glass bottle

Promotion Some businesses prefer to leave the product the same but give a boost to sales by launching new promotional campaigns One way is to find new uses – e.g. WD40 now removes dirt, grease and loosens screws! Some businesses try to find new markets for their products – this can involve exporting to a new country or just by selling in a new region/area Investment in a sizeable advertising campaign can help to get people reinterested in a product and increase sales Businesses can also encourage more frequent use of a product – e.g. cereal manufacturers sometimes encourage people to eat cereal for supper as well as breakfast (Special K)

Task Look at the following products – how have they extended the life of their product? What strategies did they use – explain your answers OXO Shake & Flavour Land Rover Drayton Manor Theme Park Marathon chocolate bar (Snickers) iPhone 6+

Product Portfolios Product life cycle analysis shows businesses that sales of products usually always end up in decline. A well-organised business with one or more products will attempt to phase out old products and introduce new ones – this is known as managing the product portfolio We already know that the product portfolio is the complete range of products on offer by a company, whereas a product line is the variety of a similar product

Managing a portfolio By organising their launch at regular intervals businesses can ensure that there is never a gap in the market. As one product starts to decline, another is launched.

Boston Matrix One problem for firms when planning their product portfolios is that it is very difficult in practice to determine what stage of the cycle a product is at A useful tool for allowing firms to analyse their product portfolios is the Boston Matrix (sometimes called the Product Portfolio Matrix) This matrix categorises products according to Market growth – how fast the market for the product is growing Relative market share – how strong is the product within its market, compared to others? Is it the market leader?

Boston Matrix – an introduction

Boston Matrix

Boston Matrix explained High market share % Low market share % Rising Star Product will have high market share and high market growth May be in the growth phase of the life cycle – production will need to be constant Often need constant advertising Question Marks (or problem child) High market growth but low market share Product may have just been launched and not have much customer loyalty Big investment to develop and advertise to start with big sales potential for the future Cash Cow Products in this stage are reaching maturity Still likely to have customer loyalty and will be produced until sales start to decline Profits from cash cows help fund new products. Sales made with little investment Dog These products are facing decline Sales are falling and it may be taking profit to keep the dog alive – such as video tapes/top hats High market growth % Low market growth %

Task Using the internet I want you to create a Boston Matrix diagram for either – Cadbury, Mars or Nestle These companies sell many brands of chocolates, in the UK and abroad. Individually, using the internet produce a list of all the chocolate brands/products for one of the 3 companies, you then need to create a Boston Matrix diagram for the company of your choosing Which are their cash cows? Which are their question marks?

Marketing strategies A marketing strategy is a set of plans that aim to achieve a specific marketing objective. These strategies will vary according to whether you are targeting a mass or a niche market

Mass market strategies Product Price Many products vying for customer attention Developing a USP will help a product to stand out Larger quantities produced Prices charged are likely to be similar All businesses will fear a price war Price leadership is common Price can be lowered due to EoS Place Promotion Multiple channels will be used for distribution Businesses may pay supermarkets to display their goods in prominent positions Internet will be used increasingly Absence of price competition Non-price competition more important Heavy investment in advertising and promotion Media will include TV, radio, newspapers etc…

Niche market strategies Product Price Product likely to be different from rivals Carefully designed products to meet specific needs Product is the most important element More flexibility in pricing Less competition – due to speciality – keeps large firms out Inelastic demand means higher prices can be charged Place Promotion More selective over distribution channels More likely to use exclusive outlets Will use the internet, if practical More targeted advertising Will use specialist magazines, trade fairs etc… Less need to use national media

Strategies for B2B Outbound marketing strategies Involves direct marketing material at potential customers whether they are expecting it or not (through email, telemarketing, trade fairs etc…). However they are often ignored Inbound marketing strategies This involves attracting potential customers to websites when they are looking for suppliers or solutions to problems. Methods include; blogging, social media, search engine optimisation, video marketing. This requires a great deal of effort and resources Hybrid strategies This involves a combination of both outbound and inbound methods, it is estimated that inbound methods take approximately 6 months to generate results. Outbound methods are often used initially to bridge this gap

Strategies for B2C Developing customer loyalty through; Communication In a mass market, this might include national advertising campaigns. Regular communication helps to build a relationship and encourages repeat custom Customer service Customers are more likely to return if the service is good Customer incentives A lot of businesses now use loyalty cards. Again this keeps them returning Personalisation Some businesses try to deal with customers on a personal level. This could be by dealing with them by name to build relationships Preferential treatment VIP areas in nightclubs. VIP lounges at airports, free Wi-Fi etc…