Market and Marketing Analysis2

8/6/2019 Market and Marketing Analysis2

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Market and Marketing Analysis

(part 2)Nur Aini Masruroh

http://aini.staff.ugm.ac.id/ ; Email:[email protected]; [email protected]


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O utline` P roduct life cycle` The Boston matrix` Marketing strategy


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P roduct Life Cycles` Product Life Cycle shows the stages that products go

through from development to withdrawal from themarket

` Product Portfolio the range of products a companyhas in development or available for consumers at any onetime` Managing product portfolio is important for cash flow


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P roduct life cycle


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P roduct life cycle ( P LC)` Each product may have a different life cycle` PLC determines revenue earned` C ontributes to strategic marketing planning` May help the firm to identify when

a product needs support, redesign, reinvigorating,withdrawal, etc.` May help in new product development planning` May help in forecasting and managing cash flow


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P LC: development stage` May come from any of the following

` Market research identifies gaps in the market` Monitoring competitors` P lanned research and development (R&D)` Luck or intuition stumble across ideas?` C reative thinking inventions, hunches?` Futures thinking what will people be using/wanting/needing

5,10,20 years hence?


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P roduct development: stages` N ew ideas/possible inventions` Market analysis is it wanted? C an it be produced at a

profit? Who is it likely to be aimed at?` P roduct Development and refinement` Test Marketing possibly local/regional` Analysis of test marketing results and amendment of product/production process` P reparations for launch publicity, marketing campaign


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P LC: introduction/launch` Advertising and promotion campaigns` Target campaign at specific audience?` Monitor initial sales` Maximise publicity` High cost/low sales` Length of time type of product


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P LC: Growth` Increased consumer awareness` Sales rise` Revenues increase

` C osts - fixed costs/variable costs, profits may bemade` Monitor market competitors reaction?


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P LC: maturity ` Sales reach peak ` C ost of supporting the product declines` Ratio of revenue to cost high` Sales growth likely to be low` Market share may be high` C ompetition likely to be greater` P rice elasticity of demand?`

Monitor market

changes/amendments/newstrategies?


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P LC: Saturation` N ew entrants likely to mean market is flooded` N ecessity to develop new strategies becomes more

pressing:` Searching out new markets:

` Linking to changing fashions` Seeking new or exploiting market segments

` Linking to joint ventures media/music, etc.` Developing new uses` Focus on adapting the product` Re-packaging or format` Improving the standard or quality` Developing the product range


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D ecline and withdrawal` P roduct outlives/outgrows its usefulness/value` Fashions change` Technology changes` Sales decline` C ost of supporting starts to rise too far` Decision to withdraw may be dependent on

availability of new products and whetherfashions/trends will come around again?


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P roduct Life CycleSales

Time

Effects of Extension

Strategies


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P roduct Life CycleSales/Profits

Time

PLC and Profits

PLC

Losses

Break Even

Profits


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The Boston Matrix

` the Boston Matrix is a well known tool for the marketing manager

` A means of analysing the product portfolio and informing decisionmaking about possible marketing strategies

`

Developed by the BostonC

onsulting Group

a business strategy andmarketing consultancy in 1968

` Links growth rate, market share and cash flow

` You would look at each individual product in your range (or portfolio)and place it onto the matrix. You would do this for every product inthe range. You can then plot the products of your rivals to give relativemarket share.


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The Boston Matrix

C ash C owsDogs

StarsP roblem C hildren

M arket Growth

M arket Share

High

Low High


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The Boston Matrix

` C lassifies P roducts into four simple categories:` S tars products in markets experiencing high growth

rates with a high or increasing share of the market- Potential for high revenue growth


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The Boston Matrix

` Cash Cows:` High market share` Low growth markets

maturity stage of PLC` Low cost support` High cash revenue

positive cash flows


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The Boston Matrix

` D ogs:` P roducts in a low growth

market` Have low or declining market

share (decline stage of PLC )` Associated with negative cash

flow` May require large sums of

money to supportI s your product starting toembarrass your company?


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The Boston Matrix

` Problem Child:- P roducts having a low

market share in a highgrowth market

- N eed money spent todevelop them

- May produce negative cash

flow- Potential for the future? Problem children worth spending

good money on?


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The Boston Matrix

` Implications:` D ogs:

` Are they worth persevering with?` How much are they costing?` C ould they be revived in some way?` How much would it cost to continue

to support such products?` How much would it cost to remove

from the market?


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The Boston Matrix

` Implications:` Problem Children:

` What are the chances of these products securing a holdin the market?

` How much will it cost to promote them to a strongerposition?

` Is it worth it?


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The Boston Matrix

` Implications:` S tars:

` Huge potential` May have been expensive to develop` Worth spending money to promote` C onsider the extent of their product life cycle in decision

making


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The Boston Matrix

` Implications:` Cash Cows:

` C heap to promote` Generate large amounts of cash use for further R&D?` C osts of developing and promoting have largely gone` N eed to monitor their performance the long term?` At the maturity stage of the PLC ?


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T he P roduct Life Cycle and the BostonMatrix

Sales

Time

AB C

D

The productportfolio fourproducts in theportfolio

(1)

(1) A is at maturitystage cash cow.Generates funds for

the development of D

(2)

(2) Cash from B used to support

C through growth

stage and tolaunch D. A nowpossibly a dog?

(3)

(3) Cash from C used to supportgrowth of D and

possibly to financeextension strategyfor B?

I mportance of maintaining abalance of productsin the portfolio at

different stages of the PLC BostonM atrix helps with theanalysis


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Marketing strategies` Market penetration` Market expansion` P roduct development` Diversification` Marketing mix


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Marketing Mix

PeopleP hysical evidence

process


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P roduct` Marketing tools to evaluate product

` Three levels of a product` P roduct life cycle` C ustomer life cycle


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P lace, distribution, channel, or intermediary

` Six basic channel consideration:` Do we use direct or indirect channels? (e.g. 'direct' to a

consumer, 'indirect' via a wholesaler).` Single or multiple channels.` C umulative length of the multiple channels.` Types of intermediary (see later).` N umber of intermediaries at each level (e.g. how many

retailers in Southern Spain).` Which companies as intermediaries to avoid 'intrachannel

conflict' (i.e. infighting between local distributors)


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T ypes of Channel Intermediaries`

Wholesalers` break down 'bulk' into smaller packages for resale by a retailer` buy from producers and resell to retailers

` Agents` Agents are mainly used in international markets` An agent will typically secure an order for a producer and will take a

commission` Agents can be very expensive to train. They are difficult to keep control

of due to the physical distances involved. They are difficult to motivate` Retailers

` Retailers will have a much stronger personal relationship with theconsumer.

` The retailer will hold several other brands and products. A consumerwill expect to be exposed to many products

` Internet


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P ricing strategies


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O ther pricing strategies` Psychological Pricing.

` This approach is used when the marketer wants the consumer to respond on anemotional, rather than rational basis. For example 'price point perspective' 99 cents notone dollar.

` Product Line Pricing.` Where there is a range of product or services the pricing reflect the benefits of parts of

the range. For example car washes. Basic wash could be $2, wash and wax $4, and thewhole package $6.

` O ptional Product Pricing.` C ompanies will attempt to increase the amount customer spend once they start to buy.

Optional 'extras' increase the overall price of the product or service. For example airlineswill charge for optional extras such as guaranteeing a window seat or reserving a row of

seats next to each other.` V alue Pricing.

` This approach is used where external factors such as recession or increased competitionforce companies to provide 'value' products and services to retain sales e.g. value meals atMcDonalds.


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O ther pricing strategies`

Captive Product Pricing` Where products have complements, companies will charge a premium pricewhere the consumer is captured. For example a razor manufacturer willcharge a low price and recoup its margin (and more) from the sale of theonly design of blades which fit the razor

` Product Bundle Pricing.`

Here sellers combine several products in the same package. This also servesto move old stock. Videos and C Ds are often sold using the bundleapproach.

` Promotional Pricing.` P ricing to promote a product is a very common application. There are many

examples of promotional pricing including approaches such as BOGOF (BuyOne Get One Free).

` G eographical Pricing.` Geographical pricing is evident where there are variations in price in

different parts of the world. For example rarity value, or where shippingcosts increase price.


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P romotion mix` Personal Selling.` Sales P romotion.` P ublic Relations.` Direct Mail.` Trade Fairs and Exhibitions.` Advertising.` Sponsorship


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P hysical evidence` P ackaging.` Internet/web pages.` P aperwork (such as invoices, tickets and dispatch notes).` Brochures.` Furnishings.` Signage (such as those on aircraft and vehicles).` Uniforms.` Business cards.` The building itself (such as prestigious offices or scenic

headquarters).` Mailboxes and many others . . . . . .

Documents

Market and Marketing Analysis2