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  1. 1-1-the-nature-and-purpose-of-business
    3 主题
  2. 1-2-forms-of-business
    5 主题
  3. 1-3-the-external-environment
    5 主题
  4. 2-1-management-and-leadership
    3 主题
  5. 2-2-management-decision-making
    4 主题
  6. 2-3-the-role-and-importance-of-stakeholders
    3 主题
  7. 3-1-marketing-objectives
    1 主题
  8. 3-2-understanding-markets-and-customers
    5 主题
  9. 3-3-making-marketing-decisions
    2 主题
  10. 3-4-the-marketing-mix
    7 主题
  11. 4-1-operational-objectives
    2 主题
  12. 4-2-operational-performance
    1 主题
  13. 4-3-efficiency-and-productivity
    3 主题
  14. 4-4-quality
    1 主题
  15. 4-5-inventory-and-supply-chain-management
    3 主题
  16. 5-1-financial-objectives
    2 主题
  17. 5-2-financial-performance
    6 主题
  18. 5-3-sources-of-finance
    3 主题
  19. 5-4-cash-flow-and-profit
    1 主题
  20. 6-1-human-resource-objectives
    1 主题
  21. 6-2-human-resource-performance
    1 主题
  22. 6-3-organisational-design
    3 主题
  23. 6-4-human-resource-planning
    4 主题
  24. 6-5-motivation
    4 主题
  25. 6-6-improving-employer-employee-relations
    2 主题
  26. 7-1-mission-objectives-and-strategy
    4 主题
  27. 7-2-assessing-the-internal-position-of-a-business
    10 主题
  28. 7-3-changes-in-the-external-environment
    7 主题
  29. 7-4-the-competitive-environment
    1 主题
  30. 7-5-investment-appraisal
    2 主题
  31. 8-1-strategic-direction
    1 主题
  32. 8-2-strategic-positioning
    2 主题
  33. 9-1-changes-in-scale
    4 主题
  34. 9-2-innovation
    2 主题
  35. 9-3-globalisation-and-internationalisation
    4 主题
  36. 9-4-digital-technology
    1 主题
  37. 10-1-managing-change
    3 主题
  38. 10-2-organisational-culture
    2 主题
  39. 10-3-implementing-strategy
    2 主题
  40. 10-4-strategic-failure
    2 主题
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The product

  • The product is the good or service that a business offers to meet the needs and wants of customers

    • It is a central part of the marketing mix because:

      • without a product, there is nothing to promote, sell or price

      • a product must offer value, meet customer expectations and stand out from competitors

  • Products can be:

    • tangible (e.g. a mobile phone)

    • intangible (e.g. a music streaming subscription)

  • Products can be:

    • consumer products

    • industrial products

Consumer vs industrial products

Feature

Consumer products

Industrial products

Purpose

Bought for personal use

Bought for business use

Decision-maker

Individual or household

Business or purchasing department

Purchase volume

Usually small quantities

Often large-scale purchases

Price sensitivity

More sensitive to price and brand

Focused on value, reliability and total cost of ownership

Example

E.g. iPhone, shampoo, clothing

E.g. photocopier for an office, raw materials for a manufacturer

Marketing focus

Branding, emotional appeal, convenience

Functionality, efficiency, cost-effectiveness

Product portfolio analysis using the Boston Matrix

  • The Boston Matrix is a tool used by businesses to analyse their product portfolio and make strategic decisions about each product

  • The matrix classifies products into four categories based on their market share and the market growth rate

    • Cash Cow

    • Problem Child/Question Mark

    • Star

    • Dog

The Boston Matrix

A diagram showing the classification of products in the Boston Matrix according to their market share and the growth rate in the market as a whole. The categories are Stars, Question Marks, Cash Cows and Dogs.
The classification of products in the Boston Matrix according to their market share and the growth rate in the market as a whole 

  • By categorising products into these categories, businesses can allocate resources more effectively, optimising their cash flow and developing marketing strategies that align with the product’s potential

The Boston Matrix, cash flow and marketing strategy

Product type

Explanation

Implications

Cash cow

  • Cash cows are products with a high market share in a mature market (the entire market is no longer growing)

  • They generate significant positive cash flow but have low growth potential

  • The business invests minimal resources in cash cows, as they provide stable sources of income

  • Marketing efforts focus on maintaining market share and profitability

  • Cash cows are valuable assets that can be used to fund the development of new products

Problem child/question mark

  • Problem child or question mark products have a low market share in a high-growth market

  • These products have the potential to become stars if the company invests in their development

  • There is often a negative cash flow, as businesses usually invest in problem child products to increase their market share and turn them into stars

  • If the investment does not result in growth, the product is usually discontinued

  • Marketing efforts focus on increasing market share and brand recognition

Star

  • Star products have a high market share in a high-growth market

  • The company typically invests in stars to maintain or increase their market share

  • These generate significant positive cash flow and have the potential for continued growth

  • Marketing efforts focus on building brand recognition and increasing market share

  • Stars are valuable assets, and the business should focus on maximising their potential

Dog

  • Dog products have a low market share in a low-growth market

  • They generate little revenue for the company and have no growth potential

  • Businesses often move away (divest) from these to focus on more profitable products

  • Marketing efforts for dog products are minimal or zero

  • While the Boston Matrix provides valuable insights for marketing managers and serves as a useful starting point for portfolio analysis, there are some limitations to its usefulness

Limitations of the Boston Matrix

Limitation

Explanation

Simplistic approach

  • The BCG matrix classifies products solely on market growth rate and relative market share

    • Other key factors, such as competition, technological advancements, customer preferences and other industry trends, are ignored

    • This may lead to poor strategic decisions

  • A high market share does not guarantee profitability when the market is highly competitive or if the company incurs significant costs to maintain its share

    • E.g. despite controlling a market share of around 50% between them, the three largest airlines in the USA achieve average annual profit margins of less than 5%

Lack of focus on the future

  • It is based on current market conditions and historical data and does not consider changes in the competitive environment

  • It may not identify emerging trends, which are crucial for long-term planning

Ignores interdependencies

  • It treats each product in isolation and does not account for potential synergies or interdependencies

  • In reality, some products may complement each other or benefit from shared resources, which can affect the marketing decisions that may be made

Time-consuming

  • Identifying market growth rates and market share for each product within a business’s portfolio is likely to take expertise and time

  • If market conditions are changing rapidly, regular changes must be made to the positioning of products within the matrix to ensure that appropriate marketing decisions are made

The product life cycle

  • The product life cycle describes the different stages a product goes through from its conception to its eventual decline in sales

  • There are typically five stages in the product life cycle: development, introduction, growth, maturity and decline

A typical product life cycle

The five stages a product goes through over its life span: development, introduction, growth, maturity and decline.
The five stages a product goes through over its life span — from development to decline (and ultimately withdrawal from a market)

  • Companies should tailor their marketing strategies and manage their cash flow to ensure long-term profitability and success

The implications for cash flow and marketing vary at each stage of the product life cycle

Stage

Explanation

Implications and marketing strategies

Development

  • Generating and screening product ideas, and then designing and developing the product

  • The business usually incurs high costs for research and development, marketing research and product testing

  • Cash flow is usually negative during this stage, as the company is investing heavily in the product without generating any revenue

  • Marketing strategy during this stage is focused on creating awareness and generating interest in the product

Introduction

  • The stage begins when the product is launched

  • Characterised by slow sales growth, as the product is still new and unknown to most consumers 

  • Cash flow is usually negative as the business usually incurs high costs for promotion, advertising and distribution

  • Promotional efforts are focused on creating awareness and generating interest in the product

  • Pricing strategies will depend on the nature of the product and the market

    • Price skimming may be used for innovative or high technology products where little competition exists

    • Penetration pricing may be more suited to products being introduced to competitive markets

Growth

  • The product enters this stage when sales begin to increase rapidly

  • The business focus shifts from building market share and increasing production to meeting the growing demand 

  • Cash flow usually turns positive during this stage as sales revenue increases and costs are spread out over a larger volume of production

  • Marketing strategies focus on differentiating the product from its competitors and building brand loyalty

    • Price skimming tactics may be dropped in favour of longer-term premium pricing for high-end products

    • Promotional activity is likely to increase as customers are encouraged to purchase repeatedly

    • Further distribution channels will be sought to meet increasing demand

Maturity

  • Characterised by slowing sales growth as the product reaches its peak in terms of market penetration

  • Cash flow is usually positive during this stage as sales revenue continues to co