The Product Life Cycle

Unit 3 Topic 3.1.3

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.

The product life cycle

Expanding the product life cycle

The Product Mix/portfolio

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.

Product Portfolio Analysis

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?

Slide 7

Volkswagen AG… Its brand portfolio

Slide 8

Volkswagen… Its product portfolio

FOX POLO GOLF

BETTLE PASSAT PHAETON

JETTA

TOUAREG TOURAN SHARAN

10 basic models in 123 variants sold in the UK alone as at June 2006!

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.

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.

Product Portfolio Analysis

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?

Slide 11

Volkswagen AG… Its brand portfolio

Slide 12

Volkswagen… Its product portfolio

FOX POLO GOLF

BETTLE PASSAT PHAETON

JETTA

TOUAREG TOURAN SHARAN

10 basic models in 123 variants sold in the UK alone as at June 2006!

Task 1: Product Mix/portfolio Working in pairs, create a product mix

for two of the following companies:

Virgin

Amazon

Sony

Tesco

Why have a product mix/portfolio?

Slide 15

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?’

Boston Matrix – Product Portfolio Analysis

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)

Slide 17

Boston Matrix – Product Portfolio Analysis

Rising Star – Nike ID’s Problem Child – Ipad/3D TV

Cash Cow – Dyson hoover Dog – Records

High market growth

%

Low market growth

%

High market share %

Low market share %

Profits from Cash Cows help fund new products.

Sales made with little investment. These are a

businesses most valuable products

Sales are falling and it may be taking profit to

keep the dog alive.These products are

unprofitable and possibly loss making.

Big investment to develop and advertise to start with but it has big sales potential for

the future.

Excellent products with high growth and high

market share; but need constant advertising.

Need a lot of investment to turn them into cash

cows

Slide 18

Boston Matrix –Product Portfolio Analysis & Product Life Cycle

Rising Star – Nike ID’s Problem Child – Ipad/3D TV

Cash Cow – Dyson hoover Dog – Records

High market growth

%

Low market growth

%

High market share %

Low market share %

Maturity Decline

Introduction Growth

Combining the PLC & the Boston Matrix– BMW 3 Series

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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

Slide 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?

Slide 22

Ext. Chocolate!!!

•Cadbury

•Mars

•Nestlé

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.

http://www.cadbury.co.uk/EN/CTB2003/about_chocolate/brand_stories/

http://www.mars.com/The_Mars_Directory/index.asp

http://www.nestle.co.uk/ProductNewsAndOffers/AboutOurBrands/ConfectioneryAndCakes/Conf+Products+-+home.htm

Slide 23

Cadbury, Mars & Nestlé

CadburyCadbury's Dairy Milk

Cadbury's Dairy Milk extensions (e.g. Caramel, mint, bubbly etc.)

Heroes

Crème Egg

Milk Tray

Roses

Flake

Double Decker

Picnic

Boost

Dream

Dream extensions (e.g. Dream with strawberries)

MarsMars bar

M & Ms

Snickers

Twix

Maltesers

Milky Way

NestléKitKat

Yorkie

Rolo

Walnut Whip

Smarties

Toffee Crisp

Crunch

Munchies

Caramac

Aero

Drifter

Milky bar

Maveric

Lion bar

All Stars

After Eight

Dairy Milk

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.uk/GcseBusiness/Activities/Module3/Product/ProductLifeCycleProfitvSales/frame.htm

Solution

Homework

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