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THEME 1:
MARKETI
NG AND
PEOPLE
Can products be designed to make you
happier?

1.3 MARKETING MIX AND STRATEGY

Edexcel Business 1.3.5 MARKETING STRATEGY
 1.3.5 MARKETING
STRATEGY
 In this topic you will learn about
 The product life cycle
 Extension strategies:
 product
 promotion
 Boston Matrix and the product portfolio
 Marketing strategies appropriate for different types of
market:
 mass markets
 niche markets
 business to business (B2B) and business to
 consumer (B2C) marketing
 Consumer behaviour – how businesses develop customer
loyalty
 THE MARKETING MIX - PRODUCT

 Product is the goods and services that the firm provides

 Product will be made up of core features and functions as
well as additional aspects that can sway consumer
behaviour e.g. brand or guarantees
 Goods are physical or tangible products e.g. a car or a
television
 Services are often non physical or intangible e.g.
financial consultancy or teaching
 Businesses will normally have a range of products in their
portfolio
 PRODUCT PORTFOLIO ANALYSIS

 Product portfolio analysis looks at the range of products

and brands that a firm has under its control
 A businesses product range is called its product portfolio
 This type of analysis can help a firm identify where every
single one of its products is positioned in the market

What are the advantages to a firm of having a broad product

portfolio?
Are there any disadvantages?
 PRODUCT LIFE CYCLE

 Product life cycle is a technique used to track the stages

a product goes through during its life
 It tracks sales over time from the development stage of
a product through launch and until it is removed from
the market
 Although a product life cycle relates to just one product
business will want to have products at different stages
 For example the revenue from a product that has
reached maturity could be used to help develop a new
product
 PRODUCT LIFE CYCLE

The stages that a product will go through in its lifetime are:

1. Development – negative cash flow due to market research and Research and
Development (R&D). No sales revenue before launch
2. Introduction – production and promotion costs can be high
3. Growth – sales revenue increases but as more units are sold production costs also
increase. However, there will be economies of scale
4. Maturity – sales stabilise and the product acts as a cash cow
5. Decline – at some point the product will start to lose sales.
6. Extension strategies - many products are adapted and given a new lease of life this
can be by:
• Changing the product e.g. new flavours or new features
• Increasing promotion or changing promotional methods e.g. re packaging, targeting a new
market, viral marketing
PRODUCT LIFE CYCLE
 IN PAIRS

Produce a product life cycle for a product of your choice. Use the
internet to see if you can find the timeline of the product. Complete
the time stages that the product went through during each stage of its
lifetime:

1. Development
2. Introduction
3. Growth
4. Maturity
5. Decline
6. Extension strategy

If you are stuck look at some of the following: video recorders or

cassettes, the Sony Walkman, vinyl singles or LPs, Playstation or any
other similar type of product.
 THE BOSTON MATRIX

Recap.
Define market
 One technique used to analyse a business’ product
share. portfolio is the Boston Matrix

Define market  This considers each product within the portfolio in relation
growth. to its market share and the rate of market growth
 The matrix consists of 4 quadrants:
 High market share + low market growth
 High market share + high market growth
 Low market share + high market growth
 Low market share + low market growth
 THE BOSTON MATRIX

 Each category or product is given a name:

 Cash cow
 Rising star
 Problem child
 Dog
 CASH COWS
 High market share in a low growth market
What do you
think is a  These are established products
cash cow at  The profits made through these products can be used to finance
Nestle?
other products such as rising stars
 Firms will want to establish as many cash cows as possible.
 With low market growth there is likely to be less competition from
new firms entering the market, therefore firms can spend less on
advertising
 A product is called a cash cow because a firm can ‘milk’ the
product to finance other areas of the business
 RISING STARS

 High market share in a high growth market

What do you
think is a
 These products enjoy increasing sales revenue
rising star at
Nestle?  However, because the market is growing other firms are entering
the market with similar products, therefore there will be fierce
competition between these firms
 There is usually heavy promotional spending and increased
capital investment in order to increase capacity
 Cash flow can often be negative at first
 Rising stars are often funded from cash cows
 It is hoped that a star can go on to become a cash cow but many
stars eventually become dogs
 PROBLEM CHILDREN

 Low market share in a high growth market

What do you
think is a
problem child at  With growth in the market a product can be very successful if there
Nestle? is enough demand
 However, some products are unsuccessful and the firm will have to
If it is difficult to decide whether to persevere with the product or discontinue it
think of an
example. Why
 A problem child, or question mark, will require a lot of attention,
might this be? particularly in the form of marketing
 Nurturing the problem child to help it achieve its potential will cost
the firm time and money
 If sales of the product can be increased there is the opportunity for
increased profits in the future and the product can be turned into a
cash cow
 DOGS

What do you  Low market share in a low growth market

think is a dog
at Nestle?  Dogs are unlikely to be kept on by a company
 With little growth in the market and little market share the company
might see little scope for future profits
 This does not always mean that the company will discontinue the
product, if there is a market, then some products can still be
profitable
 However, when a firm looks at its range of products it is more likely
to concentrate on cash cows and rising stars rather than dogs
 BOSTON MATRIX

Develops
Rising star Problem child

Becomes id i ses
su bs
established cros s Reinvents
£

Cash cow Dog

Exit
s
 PRODUCT ANALYSIS

Can you explain any links between these two models?

 DISCUSSION

 To what extent will simplifying its product range

help Tesco to slow the decline in its sales?
 TYPES OF MARKETS

 Niche and mass marketing

 Niche marketing is when a firm targets a small
subsection or previously unexploited gap in a larger
market
 Niche marketing may give a business first mover
Should chocolate advantage and allow them to charge a premium price
makers be
targeting a niche  Mass marketing is when a firm targets the whole of a
or a mass
market rather than a particular segment
market?
 Mass marketing can give a business a high volume of
sales but often at a low price
 TYPES OF MARKETS

 Industrial markets are where businesses are selling to other

businesses; business to business (B2B)
 The technical specification of the product and service provided
by as sales person or account manager is likely to be more
important than the brand

 Consumer markets are where businesses are selling to the public,

business to consumer (B2C)
 The product and the price may be seen as of equal importance
to the promotion but more important than place e.g. does it
matter what channels the product went through to reach the
consumer
 CONSUMER BEHAVIOUR

 Business will want to understand consumer behaviour and

build customer loyalty
 This can be achieved using a range of methods including:
 Customer service
 People are the employees involved in dealing with customers
before, during and after a sale
 Customer service is extremely important in today’s service
sector in the UK
 Staff must be appropriately trained, motivated and show good
communication skills when dealing with customers
 People are an important aspect of all business, they are the
ones interacting with the customer
 CONSUMER BEHAVIOUR

 Physical environment
 the design and features of the actual place where a transaction
takes place
 This can directly influence the customers’ shopping experience
and therefore their level of satisfaction as well as willingness to
return
Do loyalty  Aspects of the physical environment might include:
cards work?  Cleanliness
How many  Design e.g. ease of movement around the premises or ability
loyalty cards to find what you are looking for
do you have?
 Facilities
Are you loyal?  Ambience
 Loyalty schemes
 Reward cards e.g. collect points, collect stamps for a free product
 Saver schemes
 1.3.5 MARKETING STRATEGY

 In this topic you have learnt about

 The product life cycle
 Extension strategies:
 product
 promotion
 Boston Matrix and the product portfolio
 Marketing strategies appropriate for different types of
market:
 mass markets
 niche markets
 business to business (B2B) and business to
 consumer (B2C) marketing
 Consumer behaviour – how businesses develop customer
loyalty