marketing AS level-top 30 revision terms(1)

Adding value: The process by which firms add to the price consumers are prepared to pay for a product. This may take a very simple form: for example cleaning your car or motorbike before you sell it makes it seem worth more in the eyes of the purchaser. Therefore you have added value. Note that this has no effect on the actual performance of the car or motorbike, so the notion of 'value' is very subjective.

Boston Matrix: a method of analysing the current position of the products within a firm's portfolio, in terms of their market share and growth within their market-place. Devised in America by the Boston Consulting Group, this system of product portfolio analysis is far more sophisticated than the product life cycle.The Boston Matrix points out not only the importance of market share, but also that firms want products that can support each other's development. Product life cycle theory implies that declining brands have no future other than to die, whereas the Boston Matrix shows that an ageing bran can be a cash cow to be milked for the benefit of a rising star or to finance the changes needed to a problem child.

Design mix: how the firm combines three key design elements in order to fit the market gap that has been identified. The three are:

• Aesthetic appeal (appeal to the senses )

• Function (how well the product works and lasts)
  

• Economic manufacture.

Distribution channels: the stages of ownership that take place as a product moves from the manufacturer to the consumer (see diagram on facing page)

Extension strategy: a medium - to long term plan for lengthening the life cycle of a product or brand . Extensive strategies can be divided into two categories, defensive and offensive.

• Defensive: a plan designed to postpone the obsolescence of a product by a year or two, perhaps to keep sales going until a replacement can be launched. Examples include car manufactures 'special editions', which usually offer different paintwork, slightly different equipment and a bouncy name.
• Offensive: a plan to revitalise or reposition a product to give it a wholly new, long- term market. Horlicks becoming Instant Horlicks achieved this, as it shifted a bedtime drink to an anytime drink. Even more noteworthy was Johnson and Jonhson's repositioning of its baby powder and baby oil to appeal to women instead of just the babycare market.

Types of extension strategy:

• Redesigning or reformulating the product ('New improved!')
• Adding an extra feature (Now with...!')
• Repositioning its price and image (uasually downmarket)
• Changing the packaging and advertising imagery to appeal to a new or additional market sector.

Note that sales promotions or advertising spending alone would not be regarded as extension strategies. They are ways of boosting sales that could work equally well at any stage of the life cycles.