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The Product Life Cycle

The Product Life Cycle. Unit 3 Topic 3.1.3. Aims for today. To understand the principles behind the PLC . To appreciate what a product portfolio is. To understand the role of the Boston matrix in analysing a product portfolio. The product life cycle. Expanding the product life cycle.

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The Product Life Cycle

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  1. The Product Life Cycle Unit 3 Topic 3.1.3

  2. Aims for today • To understand the principles behind the PLC . • To appreciate what a product portfoliois. • To understand the role of the Boston matrix in analysing a product portfolio.

  3. The product life cycle

  4. Expanding the product life cycle

  5. The Product Mix/portfolio

  6. Product Portfolio Analysis Left side: Have a think about the Volkswagen group…make a list of how many brands they have in their portfolio…Here is a starter for you. Golf….Can you get all of them? - list as many products from ONE brand you can think of. Right side…Can you think of a number of products that have been established for a long time that have a high market share but a low market growth?

  7. Volkswagen AG… Its brand portfolio

  8. Volkswagen… Its product portfolio FOX POLO GOLF JETTA BETTLE PASSAT PHAETON TOUAREG SHARAN TOURAN 10 basic models in 123 variants sold in the UK alone as at June 2006!

  9. Aims for today • To appreciate what a product portfoliois. • To understand the role of the Boston matrix in analysing a product portfolio.

  10. Product Portfolio Analysis Left side: Have a think about the Volkswagen group…make a list of how many brands they have in their portfolio…Here is a starter for you. Golf….Can you get all of them? - list as many products from ONE brand you can think of. Right side…Can you think of a number of products that have been established for a long time that have a high market share but a low market growth?

  11. Volkswagen AG… Its brand portfolio

  12. Volkswagen… Its product portfolio FOX POLO GOLF JETTA BETTLE PASSAT PHAETON TOUAREG SHARAN TOURAN 10 basic models in 123 variants sold in the UK alone as at June 2006!

  13. Task 1: Product Mix/portfolio • Working in pairs, create a product mix for two of the following companies: • Virgin • Amazon • Sony • Tesco

  14. Why have a product mix/portfolio?

  15. Boston Matrix – Product Portfolio Analysis This is a method of ANALYSING THE MARKETPOSITION of a firm's existing products. It can also help companies compare their products market size and grow in comparison to another company’s. It is used TOGETHER WITH the PRODUCT LIFE CYCLE as part of the marketing planning process and ‘What do we do next?’

  16. The Boston Matrix The matrix describes a product in 2 ways: • How fast the whole market for the product is growing;(High or low market growth) • How strong the product is within its market. (High market share or low market share)

  17. Boston Matrix – Product Portfolio Analysis Low market share % High market share % High market growth % Excellent products with high growth and high market share; but need constant advertising. Need a lot of investment to turn them into cash cows Big investment to develop and advertise to start with but it has big sales potential for the future. Sales are falling and it may be taking profit to keep the dog alive. These products are unprofitable and possibly loss making. Profits from Cash Cows help fund new products. Sales made with little investment. These are a businesses most valuable products Low market growth %

  18. Boston Matrix –Product Portfolio Analysis & Product Life Cycle Low market share % High market share % High market growth % Growth Introduction Decline Maturity Low market growth %

  19. Combining the PLC & the Boston Matrix– BMW 3 Series Sales Decline / Dog Growth / Rising Star Why do BMW keep releasing another 3 series? Maturity & Saturation / Cash Cow Introduction / Problem Child 1975-82 1982-1990 1990-1998 1998-2006 2006 ->

  20. Task • Replicate the Boston Matrix in your book. • Summarise what each of the 4 categories represent. • Identify a product that is: • A star • A problem child • A cash cow • A dog

  21. Cash Cows – an example Can you think of a number of products that have been established for a long time that have a high market share but a low market growth?

  22. Ext. Chocolate!!! http://www.cadbury.co.uk/EN/CTB2003/about_chocolate/brand_stories/ • Cadbury • Mars http://www.mars.com/The_Mars_Directory/index.asp • Nestlé http://www.nestle.co.uk/ProductNewsAndOffers/AboutOurBrands/ConfectioneryAndCakes/Conf+Products+-+home.htm These companies sell many brands of chocolates, in the UK and abroad. In pairs, using the internet sites produce a list of all the chocolate brands/products AND using the Boston Matrix place these brands/products in Dogs, Rising Stars, Cash Cows or problem children.

  23. Cadbury, Mars & Nestlé

  24. Plenary • What is a product portfolio or mix? • Why do we use the PLC? • What use is the Boston Matrix? • http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module3/Product/ProductLifeCycleProfitvSales/frame.htm

  25. Solution

  26. Homework • Coca Cola PLC – How have they maintained it for so long?

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