BUS602: Marketing Management

5a. Explain the stages of the product life cycle 

• How does the product life cycle contribute to the marketing process?
• What are the characteristics of each stage of the product life cycle?
• What are the elements in the Boston Consulting Group matrix?
  

The product life cycle helps marketers manage the acceptance of a product in the marketplace throughout the life of that product. Each phase requires a different marketing strategy, and understanding the market dynamics at each phase is essential.

The first stage of the product life cycle is the introductory phase when a product first comes out of product development and is made available to the public. The length of this phase can vary from product to product, and profits are generally low.

The second stage of the product life cycle is the growth phase. Competition is likely to be high, but sales and profits will increase. Promotional activities are also increased to generate greater awareness and encourage purchase.

The third stage of the product life cycle is the maturity phase, where most customers are repeat purchasers. Prices may be reduced, and promotional messaging focuses on value and benefits.

The final stage of the product life cycle is the decline phase. This is when technology has likely advanced and consumer preferences have changed. Sales decline, and companies will take steps to "harvest" their products to earn as much profit as possible from products whose demand has diminished.

The Boston Consulting Group analysis is a tool that enables companies to look at their business units in terms of market share and growth. Products placed in the "star" quadrant have high market share and growth. Companies tend to spend a high percentage of their promotional budgets on these products. "Cash cows" have a high market share but low growth. There is less competition, and companies spend less on promoting these products. "Question marks" have a low market share but the potential for high growth. Large amounts of research and promotional efforts are needed to facilitate success. A product that has been categorized as a "dog" has a low market share and low growth. Often, these products are dropped from a company's offerings.

To review, see The Product Life Cycle, Product Life Cycle Management, and Analysis of Product Life Cycle.

5b. Explain the importance and types of marketing research 

• What is a marketing information system?
• What are the steps in the market research process?
• What is the difference between quantitative research and qualitative research?
• What is the difference between primary research and secondary research?
  

Marketing information systems enable companies to gather and manage information about their internal and external environments. These systems help companies to analyze their data for better decision-making. Analytics software, data mining, and business intelligence all play a role in how companies collect, record, and use the information available to them.

Conducting market research is essential for companies to make the right business decisions. The market research process enables companies to determine the kinds of research that should be conducted, how to best collect that data, and how to analyze it properly. The steps in the research process are:

• Define the problem
• Design the research
• Design the collection format
• Specify the sample
• Collect the data
• Analyze the data
• Write the research report
  

Quantitative research is data that can be quantified and easily measured. Examples include online and paper surveys, face-to-face interviews, telephone surveys, longitudinal studies, and systematic observations.

Qualitative research provides information about emotions, attitudes, and other non-numerical data. This information provides a more in-depth look at the problem and can enable marketers to better understand how consumers feel about their products. Examples of qualitative research include focus groups, interviews, and record keeping. Observational research, in particular, can enable a marketer to directly see how a consumer or target market behaves in their natural environment. This can lead to new product innovations, new marketing strategies, and a greater understanding of consumer behavior.

Primary research is original and is being done for the first time. It is research that an organization designs and implements. The benefits of this kind of research are that it can be designed with the company's specific needs and problems in mind; it is as current as possible; it is relevant, and the company has control over the process. However, it can be time-consuming and expensive.

Secondary research includes information that is already published. It is easily accessible through newspapers, magazines, and other print media; government reports, annual reports, archived information, and other documents. In addition to being readily available, this data is often free of charge. However, the information might be out-of-date and not relevant to the question being researched.

To review, see Marketing Information Systems, Steps in the Marketing Research Process, Qualitative and Quantitative Research, Primary and Secondary Research, and Observational Research Introduction.

5c. Describe the importance and process of product development 

• What are the components that comprise an offering?
• What are the four categories of consumer offerings?
  

Offerings are products or services that provide value to a customer to satisfy a need or a want. The first component is the actual tangible product, including features and benefits. The price of a product is not only what a consumer pays for their purchase, but also includes the cost of ownership. Finally, service includes all intangible purchases. They cannot be stored and are only of value when the consumer uses them.

Convenience offerings are products that consumers purchase with minimal effort. Consumers generally do not see a great deal of difference between brands. Bread, milk, and candy are considered convenience offerings.

Consumers will take more time to compare and select a brand when buying shopping offerings. Consumers will typically do research, visit different retail locations, and read product reviews before deciding. Toothpaste and laundry detergent are shopping offerings.

Specialty offerings vary greatly from their competition and seek to distinguish themselves in ways that will appeal to their target markets. Cars and designer clothing are specialty offerings.

Unsought offerings are purchases made when they are needed and unexpected. Towing and locksmith services are unsought purchases.

To review, see Creating Offerings, New Product Development, Bringing Products to Market: Crocs, and Product Redevelopment and Adaptation.

Unit 5 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• Boston Consulting Group (BCG)
• convenience offerings
• decline phase
• focus groups
• growth phase
• interviews
• introductory phase
• marketing information systems
• market research process
• maturity phase
• observational research
• offerings
• primary research
• product life cycle
• qualitative research
• quantitative research
• secondary research
• shopping offerings
• specialty offerings
• surveys
• unsought offerings