Analyse how product portfolio analysis can help a business to achieve its marketing objectives.
CAMBRIDGE
A level and AS level
Year Examined
May/June 2021
Topic
Marketing
👑Complete Model Essay
Product Portfolio Analysis and Marketing Objectives
Product portfolio analysis is a crucial strategic tool that enables businesses to assess their range of products or services and align them with their overall marketing objectives. By understanding the strengths, weaknesses, and potential of different products, businesses can make informed decisions regarding resource allocation, product development, and marketing strategies to achieve desired outcomes. This essay will analyze how product portfolio analysis can effectively contribute to the achievement of a business's marketing objectives.
Understanding Product Portfolio Analysis
Product portfolio analysis involves evaluating the performance and position of each product or service offered by a business. This analysis is often integrated with the product life cycle, which outlines the different stages a product goes through from introduction to decline. By considering factors such as market share, growth rate, profitability, and competitive landscape, businesses can gain valuable insights into their product portfolio's overall health and identify areas for improvement.
Aligning with Marketing Objectives
Marketing objectives are specific, measurable, achievable, relevant, and time-bound goals that a business aims to achieve through its marketing efforts. These objectives should be closely aligned with the overall business objectives and may include:
- Increasing market share
- Becoming the market leader
- Increasing sales volume
- Expanding the product range
- Improving customer satisfaction
- Enhancing brand loyalty
- Entering new markets
How Product Portfolio Analysis Supports Marketing Objectives
Product portfolio analysis provides a framework for businesses to align their product offerings with their marketing objectives. By understanding the performance and potential of each product, businesses can make strategic decisions to drive growth and achieve their desired outcomes. For instance:
1. Increasing Market Share:
If a business aims to increase its market share, product portfolio analysis can help identify products that have the potential for growth. By investing in product development, marketing campaigns, or distribution channels for these high-potential products, businesses can capture a larger share of the market.
2. Entering New Markets:
When entering new markets, businesses can use product portfolio analysis to assess the suitability of their existing products for the target audience. Modifications or adaptations may be required to meet local preferences and regulations. Additionally, analysis can reveal opportunities for developing new products specifically tailored to the new market.
3. Managing the Product Life Cycle:
Product portfolio analysis helps businesses manage their products throughout their life cycles. By identifying products in the decline stage, businesses can decide whether to discontinue, reposition, or invest in extension strategies to prolong their lifespan. Conversely, products in the growth stage may require increased investment to capitalize on their potential.
Examples
Apple Inc. is a prime example of a company that effectively utilizes product portfolio analysis. The company has a diverse product portfolio spanning smartphones, laptops, tablets, and wearables. By consistently analyzing the performance of each product line, Apple can allocate resources accordingly. For instance, the continued success of the iPhone allows for investments in emerging markets and the development of new products like the Apple Watch.
Similarly, Coca-Cola, despite having a well-established core product, consistently analyzes its portfolio. The company's expansion into bottled water (Dasani), juices (Minute Maid), and energy drinks (Powerade) reflects their understanding of market trends and diversification in response to consumer demand. Their ability to balance a cash cow product with a range of offerings catering to different needs illustrates effective portfolio management.
Conclusion
Product portfolio analysis is an essential tool for businesses to achieve their marketing objectives. By understanding the performance and potential of their products, businesses can make informed decisions regarding resource allocation, product development, and marketing strategies. Successfully aligning product offerings with marketing objectives, as demonstrated by companies like Apple and Coca-Cola, is crucial for sustained growth, market leadership, and adapting to evolving consumer needs.
Source:
Cambridge International AS & A Level Business Studies, 9609/12, May/June 2021 Mark Scheme. Cambridge Assessment International Education.
Analyse how product portfolio analysis can help a business to achieve its marketing objectives.
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A-Level Business Studies Essay Guide: Product Portfolio Analysis and Marketing Objectives
This guide will help you write a strong A-Level Business Studies essay analyzing how product portfolio analysis can help a business achieve its marketing objectives. We will break down the key elements of the essay, provide relevant tips, and offer examples to illustrate the concepts.
Understanding the Requirements
Before you start writing, ensure you understand the essay question. In this case, you need to:
- Define product portfolio analysis and its relationship to the product life cycle.
- Identify common marketing objectives.
- Explain how product portfolio analysis can help a business achieve its marketing objectives, providing specific examples.
Key Concepts
Product Portfolio Analysis
Product portfolio analysis examines the range of products or services a business offers. This analysis helps businesses understand the performance of each product within their portfolio and identify areas for improvement. A common tool used for this analysis is the Boston Consulting Group (BCG) matrix, which categorizes products based on market share and market growth rate.
This analysis is often integrated with the product life cycle, which describes the stages a product goes through from its introduction to its decline:
- Introduction: Product is new to market and needs promotional efforts to gain market share.
- Growth: Product gains popularity, sales increase, and profits grow.
- Maturity: Sales plateau, competition intensifies, and prices may fall.
- Decline: Sales and profits decrease, and the product may be withdrawn from the market.
Marketing Objectives
Marketing objectives are specific, measurable, achievable, relevant, and time-bound goals that a business sets to achieve its marketing strategies. Common marketing objectives include:
- Increase market share
- Become the market leader
- Increase sales volume
- Expand product range
- Improve customer satisfaction
- Increase brand loyalty
- Enter new markets
Connecting the Dots: Product Portfolio Analysis & Marketing Objectives
Product portfolio analysis is crucial in achieving marketing objectives. By analyzing the product portfolio, businesses can:
1. Identify Growth Opportunities
- Market share: If a business wants to increase market share, it might need to develop new products to attract new customers or expand into new markets.
- Sales volume: Businesses can assess which products are generating the most sales and identify opportunities to increase sales volume for specific products through promotions or targeted marketing campaigns.
- Product range: Expanding the product range can attract new customers and increase sales. By analyzing the portfolio, businesses can identify gaps in the market and develop new products to fill them.
2. Manage Product Life Cycles
- Introduction: Businesses can invest in marketing and promotions to help new products gain traction in the marketplace.
- Growth: Businesses can optimize pricing and distribution strategies to capitalize on growing demand.
- Maturity: Businesses can consider extension strategies to revitalize mature products, such as product modifications, new features, or repackaging.
- Decline: Businesses can decide to phase out declining products or explore strategies for repositioning them in new markets.
3. Allocate Resources Effectively
Product portfolio analysis helps businesses understand which products are performing well and which are not. This information allows businesses to allocate resources strategically, directing investment towards promising products and potentially phasing out underperforming ones.
Writing Your Essay: Tips and Structure
Here's a suggested structure for your essay:
- Introduction: Define product portfolio analysis and marketing objectives. Briefly explain how they are interconnected.
- Body Paragraph 1: Discuss how product portfolio analysis can help achieve specific marketing objectives, such as increasing market share or sales volume. Use relevant examples of businesses that have successfully used product portfolio analysis to achieve their goals.
- Body Paragraph 2: Explain how product portfolio analysis can help businesses manage the product life cycle. Use examples to illustrate how businesses can use product portfolio analysis to decide on strategies for new products, mature products, and declining products.
- Body Paragraph 3: Discuss how product portfolio analysis helps businesses allocate resources effectively and make informed decisions about product development, marketing, and pricing. Use examples of businesses that have successfully used product portfolio analysis to make these decisions.
- Conclusion: Summarize the key points of your essay. Reiterate the importance of product portfolio analysis in helping businesses achieve their marketing objectives.
Tips for Success
* Use specific examples: Support your points with real-world examples from companies that have used product portfolio analysis effectively to achieve their marketing objectives. * Apply relevant business concepts: Refer to concepts like the BCG matrix, the product life cycle, and different marketing strategies. * Offer critical analysis: Go beyond simply explaining the concepts. Analyze the potential benefits and limitations of using product portfolio analysis. * Communicate clearly: Structure your essay logically, use clear language, and avoid jargon. * Proofread carefully: Before submitting your essay, make sure it is free of grammatical and spelling errors.By following these guidelines and incorporating relevant examples and analysis, you can write a well-structured and insightful essay that demonstrates your understanding of product portfolio analysis and its crucial role in achieving marketing objectives.
Extracts from Mark Schemes
Analyse how product portfolio analysis can help a business to achieve its marketing objectives.
Knowledge and understanding 2 marks
- Clear understanding of product portfolio analysis
- Clear understanding of marketing objectives
Application 2 marks
- Reference to the use of product portfolio analysis
- Reference to the use of marketing objectives
Analysis 4 marks
- Product portfolio analysis – assesses the range of products/services offered by a business. This analysis is often integrated with the product life cycle.
- Marketing objectives should be in line with the overall business objectives and might be:
- to increase market share
- to become the market leader
- to increase sales volume
- to increase the product range
- to improve customer satisfaction
- to increase brand loyalty
- to enter new markets.
• An increase in market share might require the business to reassess the range or products or services being offered. Perhaps a competitor offers a wider range or a better quality.
• An increase in market share often needs a business to stand out and therefore the business might need to look at whether or not its products are outdated and perhaps there is a need to introduce extension strategies or to introduce new product(s).
• Linking to the product life cycle, if the business has too many products in the maturity or decline stages this would indicate that new products are required if the marketing objectives are to be achieved.
• New markets might require products to be adjusted/changed to meet the needs of the customers in that market.
• Successful businesses often have products in all stages of the product life cycle; new products being developed to take the place of ones in decline or to meet the changing needs of the market.
• The range of products offered will have to be adjusted to meet the marketing objectives and if the objectives change the products might have to change too.
• Accept any other valid response.