1. 4.5 – The Four P’s
IB Business

2. Product Life Cycle Research and Development Launch (Introduction)
Generating Ideas; Screening Ideas; Creating a Prototype; Test Marketing; Commercialization
Launch (Introduction)
Growth
Maturity
Saturation
Decline

3. Product life Cycle

4. Extension Strategies Done at the maturity or saturation stages
New Markets
New uses for a product
Repackaging/Redesigning
Target different market segments
Promotion
These strategies are essential to long-term business success

5. Product Life cycle & marketing mix
Strategies
Introduction
Growth
Maturity
Saturation
Decline
Product
Basic product marketed
Product improvements or new product development
New product development; extension strategies
Extension strategies critical to maintain sales
Weak products withdrawn from market
Price
Cost-plus, skimming or penetration pricing used
Penetration prices slightly increase
Competitive or promotional pricing used
Competitive pricing used
Price cuts are made.
Promotion
Informative advertising used
Persuasive advertising used
Extensive advertising to remind customers of product
Aggressive advertising carried out to emphasize benefits
Advertising reduced to a minimum
Place
Selective or restricted distribution takes place
Intensive distribution or more distribution outlets are used
More intensive distribution or a wide range of distribution outlets
Widest range of geographical distribution outlets used
Selective distribution and unprofitable outlets are eliminated

6. Relationship between product lifecycle, investments, profit & cash flow
Product Life Cycle Stage
Development
Introduction
Growth
Maturity
Saturation
Decline
Investment Level
High R & D costs
High costs on promotion
Average to high costs on promotion
Lower costs on promotion
Cost focus is on extension strategies
Very low costs on promotion
Profit
None
None or negative
Some profit and rising
High profit; reaches its peak
High and mostly stable profit
Decreasing profit
Cash flow
Negative
Negative but improves with sales
Positive
Positive but decreasing cash flow

7. Product Portfolio Analysis – BCG matrix
Market Growth
Market Share
High
Low
High (Growing)
Stars
Problem Children or Question Marks
??????
Low (Mature)
Cash Cows
Dogs

8. BCG Matrix strategies Holding strategy – Building strategy –
focus here is on products with a high market share, to ensure they maintain current position
Building strategy –
turning problem children into stars
Harvesting strategy –
milking the benefits of products with a positive cash flow
Divesting strategy –
poor-performing dogs are phased out or sold off.

9. Limitations of Boston matrix
Focuses on current market position
May be a time consuming and complex exercises for businesses
High market share doesn’t necessarily equate to high profits.

10. Branding
Branding A name, symbol, sign or design that differentiates a firm’s product from its competitors
Can add value to a product, and can have a strong influence on how consumers view a product.
Brand Awares

11. Aspects of Branding Brand Awareness Brand Development Brand Loyalty
Ability of consumers to recognize a firm’s goods or services
Major step; very important when promoting a product.
Brand Development
Any plan to strengthen or improve the product image
Brand Loyalty
When consumers are committed to a firm’s brand; willing to make repeat purchases
A result of brand preference
Brand Ambassadors – consumers who are positive about a particular brand
Brand Value
How much a brand is worth – reputation, potential income, market value

12. Importance of branding
One of the most important tasks of marketers
Branding gives customers a clear image with which they can associate the business
A well-known brand can command a higher price
Customers make judgments about certain product and services based on the way they are presented
A firm’s brand can provide legal protection
Effective branding results in a sense of personal identification & emotional connection among consumers

13. Importance of packaging
Provides physical protection
Offers convenience
Provides information
Can help reduce security risks
Aids promotion
Should be eye-catching and appeal to the customer
Color and shape is key to reinforce and project a brand image

14. price
Plays a significant role in the marketing mix – only “P” that generates revenue for a business; businesses need to set an appropriate pricing strategy
Cost-plus pricing (Mark-up pricing)
Adding a mark-up to the average cost of producing a product – p. 303
Penetration pricing
Setting a low initial price to attract a large number of customers quickly – p
Price Skimming
Setting a high price when introducing a new product – usually for a limited period – p. 304
Psychological Pricing
When firms consider how pricing affects consumers’ perception of their product’s value – p. 305
Consumers may associate a higher price with high quality
Also reducing prices to make us believe we’re getting a deal – 9.95 instead of 10.00

15. Price - continued Loss Leader Price Discrimination Competitive Pricing
Charging a low price for a product, below average cost
Aim is to attract customers; usually associated with supermarkets p. 305
Price Discrimination
Charging different prices to different groups of consumers
Business has to have price-setting ability
Elastic v. inelastic demand
Example – concert tickets – different price points – p
Competitive Pricing
Takes into account what competitors are charging
Predatory pricing; Destroyer pricing – driving competitors out of the market – p. 306

16. Promotion Communicating about your product to consumers
Objectives of Promotion
Informing consumers of a new or improved product
Persuading consumers to purchase a product
Reminding consumers that your product exists
Enhancing the brand image of the product as well as the image of the business
Promotion categorized into two forms: above-the-line and below-the-line

17. Above the line
Paid form of communication – uses independent mass media to promote a product or business
Advertising – central global role – categories of advertising
Informative Advertising – providing information on features, price or other specifications
Persuasive Adverting – convincing customers to buy one product over another
Reassuring Advertising – Focus on existing customers; remind them they made the right decisio
Television Radio Cinema Newspaper Magazines Outdoor Advertising

18. Below the Line promotion
Focuses on promotional activities aimed at consumers or people interested in product
Direct Marketing – examples – direct mail sent to consumers
Has limitations – many consider it “junk mail”
Personal Selling – sale of a product through personal contact
Face to face or over the telephone – car sales as an example; personalized attention; salesperson = commission
Public Relations – promotional activities aimed to enhance the product image
Sales Promotions
Money off coupons
Point of sale displays
Free offers or free gifts
Competitions
BOGOF – Buy one get one free

19. Promotional mix
Involves a good balance of both above-the-line and below-the-line methods
Certain factors must be considered when putting together an appropriate mix:
Cost – does the marketing budget support the method you want to use?
Legal framework – must take into account any applicable laws
Target Market – what specific segment of the market is the produce aimed at?
Stage in the Product Life Cycle
Type of Product

20. Impact of new technology on promotional strategies
Over the last decade technology has changed rapidly, forcing marketers to incorporate the new technology into their marketing strategy.
Social Media Marketing – the way technology is used to build relationships, drive repeat business, and attract new customers through the sharing of information.
Promotion through word of mouth powered by technology
Viral Marketing – individuals pass on promotional messages within social networks
Use of banners, pop-ups, social media, YouTube videos.
Main goal to increase brand awareness through replicating a viral-like process

21. Benefits/limitations of technology
Benefits of Technology on Promotional Strategies
Limitations of New Technology
Wide Reach – large % of internet usage is Social Media
Accessibility problems – if a region has no computer of internet, opportunities may be missed
Engagement – most customers are participants
Distraction – use of pop-ups can be viewed as a waste of time
Market Information – provide useful feedback on trends, public opinion, brand activity, etc.
Lurkers – people who sit and absorb information.
Cost Savings – Less expensive than traditional methods
Brand Recognition – Repeat exposure can increase awareness of brands, leading to loyalty
Speed – ads can reach a wide audience in a short space of time

22. Guerrilla marketing
Marketing form using “untraditional” activities to help companies stay successful
Phrase coined from military and warfare-related terminology
Principles of Guerilla Marketing – remember with acronym of APENS
A = Activity
P = Presence
E = Energy
N = Networks
S = Smart

23. Methods used in guerrilla marketing
Peer Marketing; Product Give-aways; text- & video-messaging; “Roach Baiting” and Buzz Marketing; Intrigue; Liver commercials; Bill Stickers
Benefits:
Low Cost Flexibility Simplicity Identified target market
Communication Tool Interaction opportunity Accessibility
Negative Effects of Guerilla Marketing
Denting the brand image high negative attitudes
Negative impact on social life Ethical issues

24. Place – how does product get to consumer?
Refers to the location of the business and the customers
Helps businesses develop the best way to distribute their produce
Using intermediaries and wholesalers helps businesses store and market products
Growing use of internet makes reaching a wide range of customers possible

25. Channels of distribution
Path taken by a product from producer to consumer
Zero Intermediary – directly sold from producer to consumer
Example – vegetables at a Farmer’s Market
One Intermediary –
One person between producer & consumer
Two Intermediaries
Producer, Wholesaler, Retailer, Consumer
Look at illustrations and table, page 316

26. Revision checklist
Have information understood
Read!!!!