Maximise potential profits and sales, Financial Management

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a) A product portfolio is the range of products that a business owns or the strategic business units owned by a firm. In bigger firms, like as Virgin, a broad product portfolio might be considered desirable for numerous reasons, including:

• Having an extensive product portfolio allows firms such as Virgin to access a wider range of markets, e.g. beverages, mobile phones and transportation

• By offering a broad range of products, the business can increase sales revenue as the products can appeal to larger and wider markets

• A broad product portfolio gives customers choice and therefore this can improve the returns and competitiveness of the organisation

• It can also improve cash flow and spreads risks - profits made by cash cows (e.g. Virgin Atlantic) and stars in the portfolio can be used to offset losses made by dogs and any unprofitable product lines

• Hence a broad product portfolio can be considered critical since the conditions within businesses are ever changing

Award maximum marks for any two reasons fully described.

b) Businesses like as Virgin need a different marketing mix for each of their distinct products as each product is also likely to be in a different stage of the product life cycle and each product is aimed at a different target market. For instance, Virgin Atlantic might be marketed at high to middle income earners who can afford to travel. It would therefore have to be promoted in the right places so that the right people are targeted and the advertising is efficient. This kind of promotion would be extremely different from the promotion of Virgin Cola which could be promoted as a mass market product aimed at people of any income bracket.

There are numerous justifications for using such an approach:

• Virgin is an immensely large organisation which has an very large product portfolio, so a uniform marketing mix will not be appropriate, e.g. the promotional strategy for a mobile and an airline phone would be entirely different

• The SBUs or products within the portfolio may share nothing in common except the parent name, Virgin, so a homogenous marketing mix is unlikely to succeed in marketing the firm's products

• Pricing will differ for the different categories of products within the Boston Matrix, e.g. premium prices can be charged for cash cows while penetration pricing might be used for wild cards

• The distribution channels for the products in the portfolio may be vastly different, e.g. cola and mobile phones could be sold in supermarkets but it is unlikely that train or airline tickets would be purchased in such outlets

• A different marketing mix is used for each of their products in order to distinguish them from each other. Virgin needs to make sure that each product has its own identity so that if one of the products does not appeal or fails to a particular market segment it will not affect the person's perception of the other products in the portfolio

• The kind of promotion used for problem children products would also be more influential, whilst that used for cash cows might just be to remind the customer about the product in order to keep sales returns high

• It is with the differences in these marketing mixes that can optimize and highlight the special qualities of each product within the firm's portfolio, thereby helping it to maximise potential profits and sales.

There should be an examination of the 4 P's applied in the context of the case study in order to be grant maximum marks.


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