Analyse how product portfolio analysis can help a business to achieve its marketing objectives.

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [1] Clear understanding of product portfolio analysis
2. [1] Clear understanding of marketing objectives
3. [1] Reference to the use of product portfolio analysis
4. [1] Reference to the use of marketing objectives
5. [1] Product portfolio analysis – assesses the range of products/services offered by a business.
6. [1] This analysis is often integrated with the product life cycle.
7. [1] Marketing objectives should be in line with the overall business objectives and might be: to increase market share
8. [1] Marketing objectives might be: to become the market leader
9. [1] Marketing objectives might be: to increase sales volume
10. [1] Marketing objectives might be: to increase the product range
11. [1] Marketing objectives might be: to improve customer satisfaction
12. [1] Marketing objectives might be: to increase brand loyalty
13. [1] Marketing objectives might be: to enter new markets.
14. [1] An increase in market share might require the business to reassess the range or products or services being offered.
15. [1] Perhaps a competitor offers a wider range or a better quality.
16. [1] 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often needs a business to stand out and therefore the business might need to look at whether or not its products are outdated and perhaps there is a need to introduce extension strategies or to introduce new product(s).
17. [1] 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.
18. [1] New markets might require products to be adjusted/changed to meet the needs of the customers in that market.
19. [1] 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.
20. [1] 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.
21. [1] Accept any other valid response.
22. [1] Clear understanding of penetration pricing
23. [1] Clear understanding of market share
24. [1] Reference to manufacturing market
25. [1] Penetration pricing – entering a market with a low price in the hope of increasing prices later once customers have been gained.
26. [1] This is a manufacturing business so customers might also be retailers, or the manufacturer might sell direct to customers.
27. [1] Penetration pricing might succeed in drawing customers away from competitors with similar products or might encourage customers to try a new style of computer.
28. [1] Computer industry is fast moving with a high level of technological development.
29. [1] Competition is high regarding the level of technology/functions offered to customers.
30. [1] The success of penetration pricing might depend on the size of the competitor businesses and whether or not they react to this new entrant.
31. [1] Can the new entrant put a low enough price on the computers?
32. [1] Will a lower price make customers query the quality of the computers?
33. [1] Using penetration pricing is likely to delay the return of research and development costs.
34. [1] If the new entrant is smaller than its rivals it is unlikely to enjoy economies of scale and is therefore working with higher unit costs than other manufacturers. This is likely to make penetration pricing difficult to sustain over a longer period of time.
35. [1] A higher price might give a perception of a product that offers the latest technology and functions and might be more likely to encourage customers to buy. Does high price always mean high quality?
36. [1] A candidate should make a judgement as to the extent to which a new entrant in the computer manufacturing market will need to rely on penetration pricing to gain market share.
37. [1] These judgements may be made at any point as well as in a concluding section.
38. [1] The context is the computer manufacturing market.
39. [1] Penetration pricing can work if purchase decisions are based on price, but purchasers of computers frequently make their purchase decisions based on the functionality and features rather than on price alone.
40. [1] A key factor might be how the competitors react.
41. [1] Longer established businesses might react with lower price offers on their computers and due to their size, they are likely to be able to maintain the low prices longer than the new entrant.
42. [1] Established business might not react assume that the low price will indicate lower quality and therefore, most consumers will not be attracted.
43. [1] Product differentiation might be a more successful approach to gaining market share rather than low prices.
44. [1] Accept any other valid response.