Aims for today 1 To understand the principles

Aims for today 1. To understand the principles behind the PLC. 2. To appreciate what a product portfolio is. 3. To understand the role of the Boston matrix in analysing a product portfolio.

Speed learning Product trial & repeat purchase - Recap • All 10 questions must be answered. • Each student must answer at least 2 questions. • You must then get the other 8 answers from your peers. -10 minutes -

The product life cycle

Product life cycle of the mini 1. Read pages 18 & 19 2. Draw the product life cycle for the mini. 3. Annotate it to say what happens in terms of cash flow at each stage (page 19).

Task: Extending the PLC How could we extend the PLC of the mini?

Expanding the product life cycle

The Product Mix/portfolio

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?

Volkswagen AG… Its brand portfolio Slide 9

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

Aims for today 1. To appreciate what a product portfolio is. 2. To understand the role of the Boston matrix in analysing a product portfolio.

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?

Volkswagen AG… Its brand portfolio Slide 13

Volkswagen… Its product portfolio FOX BETTLE TOUAREG POLO GOLF PASSAT TOURAN 10 basic models in 123 variants sold in the UK alone as at June 2006! JETTA PHAETON SHARAN Slide 14

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

Why have a product mix/portfolio?

Boston Matrix – Product Portfolio Analysis This is a method of ANALYSING THE MARKET POSITION 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? ’ Slide 17

The Boston Matrix The matrix describes a product in 2 ways: 1. How fast the whole market for the product is growing; (High or low market growth) 2. How strong the product is within its market. (High market share or low market share)

Boston Matrix – Product Portfolio Analysis High market share % High market growth % Rising Star – Nike ID’s Problem Child – Ipad/3 D TV Excellent products with high growth and high market share; but need constant advertising. Need a lot of investment to turn them into cash cows Cash Cow – Dyson hoover Low market growth % Low market share % Profits from Cash Cows help fund new products. Sales made with little investment. These are a businesses most valuable products Big investment to develop and advertise to start with but it has big sales potential for the future. Dog – Records Sales are falling and it may be taking profit to keep the dog alive. These products are unprofitable and possibly loss making. Slide 19

Boston Matrix – Product Portfolio Analysis & Product Life Cycle High market share % High market growth % Rising Star – Nike ID’s Problem Child – Ipad/3 D TV Growth Cash Cow – Dyson hoover Low market growth % Low market share % Maturity Introduction Dog – Records Decline Slide 20

1975 -82 1982 -1990 -1998 Decline / Dog Maturity & Saturation / Cash Cow Growth / Rising Star Introduction / Problem Child Sales Combining the PLC & the Boston Matrix– BMW 3 Series 1998 -2006 Why do BMW keep releasing another 3 series? 2006 ->Slide 21

Task 1. Replicate the Boston Matrix in your book. 2. Summarise what each of the 4 categories represent. 3. Identify a product that is: • A star • A problem child • A cash cow • A dog

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? Slide 23

Ext. Chocolate!!! • Cadbury http: //www. cadbury. co. uk/EN/CTB 2003/about_chocolate/ brand_stories/ • Mars http: //www. mars. com/The_Mars_Directory/index. asp • Nestlé http: //www. nestle. co. uk/Product. News. And. Offers/About Our. Brands/Confectionery. And. Cakes/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. Slide 24

Cadbury, Mars & Nestlé Cadbury Mars Nestlé Cadbury's Dairy Milk Mars bar Kit. Kat Cadbury's Dairy Milk extensions (e. g. Caramel, mint, bubbly etc. ) M & Ms Yorkie Heroes Crème Egg Milk Tray Roses Flake Snickers Twix Rolo Walnut Whip Smarties Maltesers Toffee Crisp Milky Way Crunch Munchies Caramac Aero Double Decker Drifter Picnic Milky bar Boost Maveric Dream Lion bar Dream extensions (e. g. Dream with strawberries) All Stars After Eight Dairy Milk Slide 25

Plenary 1. What is a product portfolio or mix? 2. Why do we use the PLC? 3. What use is the Boston Matrix? • http: //www. businessstudiesonline. co. u k/Gcse. Business/Activities/Module 3/Pr oduct/Product. Life. Cycle. Profitv. Sales/fra me. htm

Solution

Homework • Bisto Gravy Case study