BCG Martix
Is a tool that uses market share and market growth to assess new and existing products in terms of market potential
Shows how a diverse portfolio is important for a business
But it assumes that higher profits come from higher market share or higher sales + it doesn't explain the reasons for the position of products in the grid
BCG Matrix: Dogs
low growth market
BCG Matrix: Question Marks
Low Market Share In a High Growth
Can be a concern to management - suggests inferior product quality or inferior marketing
Dont generate cash for the business and are the main users of cash in a business
Businesses should try and increase market share
BCG Matrix: Stars
High market share High market growth
generate profits for the business businesses focus of development and promotion of this product
BCG Matrix: Cash Cows
High market share Low growth
Since the markets are well established there is low growth Best profit and net cash flow
However there is a risk of cash cow becoming a dog - so extension strategies are used
SWOT analysis + and what it can be used for + disadv of using SWOT
Tool that is used to assess internal strengths and weaknesses and external opportunities and threats of a business
Can be used for - risk assessment
SWOT analysis: strengths
Internal factors that are favourable compared with competitors - help achieve organisational objectives - need to be developed and protected
USP
SWOT Analysis: Weaknesses
Internal factors that are unfavourable when compared with competitors prevent businesses from achieving goals need to be reduced or removed
Poor cash flow
SWOT Analysis: Opportunities
External possibilities for future development - create favourable conditions
Can help businesses formulate a strategy
Econ growth
SWOT Analysis: Threats
External factors that hinder growth for an organisation - cause probs for business
Pandemics
Ansoff Matrix
An analytical tool to devise various product and market growth strategies
Ansoff Matrix: Market Penetration - adv and disadv
existing product
Ansoff Matrix: Product Development
new products in existing markets - done in saturation or decline stage of PLC Medium risk
Can be done by- product extension strategies - reliant on brand development - if brand is well established then risk of a new product in that market is lower
Ansoff Matrix: Market Development - adv and disadv
existing product
Ansoff Matrix: Diversification - adv and disadv + 2 categories
new product
STEEPLE analysis - adv and disadv
social
Market size
Total sales of all organisation in an industry as a whole
Market Share
a company's sales as a percentage of total sales for that industry
Market Growth
The percentage change in the total size of a market - change in market size/old market size X 100
Market orientation + Adv and disadv
Relies on market research - tries to give people what they want by identifying wants and needs
OUTWARD LOOKING
adv- can quickly respond to market change lower risk - they know product wont fully fail disadv- expensive and time consuming
Product Orientation + adv and disadv
Relies on innovation - tries to produce something so innovative that people will want to purchase it
INWARD LOOKING
adv- If product is successful there is no competition disadv- expensive and time consuming - R&D costs
How to choose between product and market orientation
three factors
nature of the product
barriers to entry
organisational culture
Primary research advantages
up to date
exactly whats needed by the business
confidential - gives competitive adv
Primary research disadvantages
costly
time consuming
requires more training and experience to design study and collect data
Subject to bias
Primary research methods
Observation
Interviews
Surveys
Focus group - small discussion group to test the product
Secondary Research Advantages
Lesser time needed
Cheaper
Can provide insight to market patterns or trends
Easily accessible
Statistically valid - large sample size
Secondary research disadvantages
info may be outdated
may not relevant to the specific needs of the business
only partial info
info already available to competitors
Secondary research methods
Market analysis - market research firms
What is market research
Market research is the process of gathering and analysing information about the market - find needs and wants of customer - to make a marketing strategy
2 types of market research
Ad hoc - takes place only when necessary
Systematic - continuous - takes place at regular time intervals
Purpose of market research
Reduces risk
Provides up to date information
Helps build and improve market strategy
Helps predict the future
Gives business an understanding of what competitors are doing
Assesses customer reactions - so gets to know their wants and needs
What is market planning
The process of setting obj and determining strategies to achieve them
includes - 4Ps
what is in a market plan
strengths and weaknesses
methods of market research
outline of the marketing mix
marketing budget
Advantages of market planning
Reduces risks and improves the chances of success - can help managers identify and deal with problems
Motivates - because there are targets|
managers have better control
Disadvantages of market planning
time consuming and costly
Doesnt guarantee any success
Can also demotivate employees - over formalising communication
What is segmentation
the process of dividing potential customer groups into groups with similar characteristics
Why businesses segment markets
better understanding of customers - lower risk - less waste high sales rev- diverse range of customers growth opp - can identiy new dempographics
Types of segmentation
Demographic - age
What is positioning
process of presenting a brand in a certain way to create the desired customer perception
Product positioning map
Premium - high price and high qual Cowboy - high price and low qual Bargain - low price and high qual Economy - low price and low qual
USP + adv + disadv
A special feature that helps the product stand out amongst its competitors adv-
attracts sales - helps customers understand why they should buy the product and how its diff
Can help build brand image
disadv-
doesn't guarantee sales
Define differentiation
differentiation is the act of distinguishing a business or its products from competitors in the market. Product differentiation tries to create the perception among customers that the organization's goods and services are different (unique
Advantages of niche marketing
1.Less competition 2. Which allows them to charge higher price in comparison to cost- so high profits margin 3. Higher customer loyalty - since product/service is highly specialised 4. Specific segment is targeted - so easy to choose strategies
Disadvantages of niche marketing
Limits the number of customers
No economies of scale
Attracts more competition
Advantages of mass marketing
economics of scale 2.Simplified marketing plan - no need to modify for each segment - saves time and money
larger customer base
Disadvantages of mass marketing
High barriers to entry for new businesses
High competition
Mass marketing can be wasteful cause specific segments arent targeted
first-mover advantage
Occurs when an organisation can significantly impact its market share by being first to market with a competitive advantage
first mover disadvantage
the first mover makes major investments
What is a product - and what are the 2 types of products
A product is a good or service that satisfies the needs and wants of customers
2 types - consumer and producer products
product life cycle
R&D
PLC: Research and Development
R&D department develops ideas for the product - marketing team does market research
There are no sales
PLC: Introduction
Introduced into the market
High amount of promotion - persuasive and informative ads used
Different pricing methods used to give a competitive advantage
Slowly increasing sales
QUESTION MARK
PLC: Growth
Maximum increase in sales High competition - so prices may be lower Product breaks even and profits are made want to maximise market share
STAR
PLC: Maturity
Slowdown in sales growth Lot of ads to remind customers about the product High market share Profits are highest CASH COW
PLC: Saturation
Stable profits No new competition Competitive pricing sales begin to decrease a little - so profits also begin to fall CASH COW
PLC: Decline
sales fall off profits drop businesses start to cut cost - make workers redundant sell equipment No promotion and ads Extension strategies used to elongate PLC - if this doesnt work the product is withdrawn from the market
businesses start to add new products to generate profits
DOG
Product portfolio
all the products a company has available for customers at any one time
Extension strategies
Methods used to prolong the PLC and delaying the decline of a product
8 extension strategies
reducing prices - increases demand + gets rid of excess stock before they become obsolete
ads - promotion to remind customers and attract new customers
Redesigning - adding value - new features
PLC: Investment for all 5 stages
R&D - very high - research Intro - very high - marketing Growth - high - promotion to persuade Maturity - low - promotion to remind customers Decline - very low/zero - extension strategy
PLC: Profit for all 5 stages
R&D - no profits Intro - very little Growth - rising profits - break even Maturity - high - but lower growth Decline - yes - but falling
PLC: Cash flow for all 5 stages
R&D - highly negative Intro - negative Growth - positive - break even Maturity - highly positive Decline - positive - but falling
Trademark
Legal protection to the owner to have exclusive use of the brand name
Brand awareness + its adv
The extent to which people recognise a particular brand (usually as a percentage) - very imp in the launch stage
Higher sales revenue
Competitive edge - so greater market share
Encourages repeat purchases
Brand Development + adv and disadv
the ongoing and long-term marketing process of improving and enlarging the brand name in order to boost sales revenue and market share.
adv-
helps the brand stand out - differentiates
higher sales rev and market share 3 extends the life cycle for a product
disadv-
takes a lot of time
costly
brand loyalty + its adv
customers buy the same brand of a product repeatedly over time
adv-
improves/maintains market share
Enables them to charge premium prices - so higher profit margins (brand value)
acts as a barrier to entry
prolongs the decline in the PLC - people keep coming back to the product and that brand
Brand value + its adv
Is the premium that customers are willing to pay over and above the price of the product itself
adv-
higher market share
high barriers to entry
Can charge premium prices - so high profit margins
Importance of branding
Create a legal identity - by giving a unique name and image - helps differentiate from other brands -- protects it from imitations
Risk reducer - new products have a better chance of survival when released by a big brand
Image enhancer - which allows them to charge a premium price - higher profit margins
Revenue earner - firstly - brand loyalty means customers will come back - secondly - this makes demand more inelastic because they will not buy from other substitutes
Cost-plus pricing + adv and disadv
Adding a predetermined percentage to the cost per unit to determine the selling price - the percentage is known as mark up
adv
simple to use - easy to calculate
less time taken
disadv
can lose sales if price if too high - compared with competitors
Penetration pricing + adv and disadv
Setting a price lower than competitors to enter a new market
adv Higher sales - attracts customers Can increase market share quickly can become established in the market
disadv Loss of revenue - due to lower prices Cant recover the R&D costs (since this is usually used in new products)
Loss leader pricing + adv and disadv
Setting a price below cost value used when business is entering or penetrating market
adv
can attract customers - even if they aren't going to buy the discounted product
establish a customer base
can sell off unwanted stock - if its in decline stage of PLC
short term sales increase + market share increases
Predatory pricing + adv and disadv
Temporarily reducing price to force competitors out of the industry usually happens during a price war
adv
eliminates the competition
more dominant position in the market - higher market share
so can raise their prices to recover losses
disadv
unethical - even illegal in some countries
losses - because they are selling below cost
Premium pricing + adv and disadv
When price of a commodity is set higher than competing products in very unique or luxury products usually
adv
higher profit margins - can recover from R&D costs
can establish a loyal customer base - so creates high barriers to entry
increases brand value and brand image
disadv
high profits will attract cheaper competitor products
limits the customer base
lose the mass market - have to operate in niche market
requires brand loyalty - expensive and takes time to build
Promotion
methods of communicating marketing messages to existing and potential customers
5 purposes of promotion
Attract Develop - brand image Persuade Inform Remind
Above the line promotion + adv and disadv
any form of paid for promotion method through independent mass media sources - to promote
adv - large number of customers + customers take notice of ATL promotion
disadv- expensive + might not even target the right audience
6 Types of ATL promotion + 1 adv disadv each
TV - reaches global audience but high costs
Radio - cheaper than tv and large audience but no visual impact only audio
Cinemas - audience can be directly targeted but limited audience size
Newspaper - reaches a wide audience + can be referred to later (but usually isnt) but high costs (especially for small businesses)
Magazines - specific target market - but there is advertisement clutter (too many so ppl start ignoring them)
Outdoor (billboards etc) - large audience + high rate of exposure but cant target specific market + cant monitor success
below the line promotion
Any promotion that does not involve using the mass media business has direct control
Adv no commision targets specific markets cheaper
10 types of BTL + adv and disadv each
Direct marketing (telephone calls or direct mail) - no intermediaries so all sales earned are kept + business has full control - but - cost of production is there
Personal selling- tailored to the needs of customer so builds customer engagement - but - sales agents are expensive
Sales promotion (short term promotional tactics like deals) - boost sales + steals customers from other brands - but - higher cost so lower profit margin
Point of sales promotion - encourages impulse buying
Publicity and PR- positive media coverage for free - but- longterm and continuous process
Trade shows- the event attracts large audiences -but- there is a lot of competition and there is a cost to join
Sponsorship - publicity - but expensive
Word of mouth - most effective + no cost - however - can also create a bad reputation so not that reliable
guerrilla (washroom or elevator) - inexpensive and good results - but takes creativity and time
Packaging - encourages impulse buying + brand image + protects product -but- expensive + not sustainable (usually)
TTL + adv and disadv
Through the line - combination of ATL and BTL
adv
Wide reach
Customer engagement
creates brand visibility - recognition
creates brand recall - reminds customers of the brand
disadv
more expensive than ATL or BTL
Social Media Marketing (SMM) + adv and disadv
gaining online traffic though social media
adv
fastest method - faster than WOM also
most potential reach
helps build trust in brand
cost effective
disadv
no control over whats written - negative publicity
hackers can spread false info