CMD Product Marketing and Portfolio Management 1 — Questions and Answers
Question 1: A company is evaluating its product portfolio using the BCG Matrix. A product with high market share in a low-growth market is classified as:
- Question Mark
- Star
- Cash Cow (Correct answer)
- Dog
Correct answer: Cash Cow
A Cash Cow has high market share in a low-growth market and generates steady cash flow with minimal investment needed.
Question 2: Which product launch strategy involves setting a high initial price to maximize revenue from early adopters before lowering the price over time?
- Penetration pricing
- Price skimming (Correct answer)
- Value-based pricing
- Competitive pricing
Correct answer: Price skimming
Price skimming starts with a high price targeting early adopters willing to pay a premium, then gradually lowers it to reach broader market segments.
Question 3: In a product portfolio review, the term 'cannibalization' refers to:
- Eliminating underperforming products from the line
- A new product taking sales from an existing product in the same company (Correct answer)
- Aggressively pricing against a competitor's product
- Acquiring a competitor's brand portfolio
Correct answer: A new product taking sales from an existing product in the same company
Cannibalization occurs when a new product erodes the sales of an existing product within the same company's portfolio.
Question 4: A Marketing Director wants to identify the stage of the product life cycle where marketing costs are highest relative to revenue. Which stage is this?
- Growth
- Maturity
- Introduction (Correct answer)
- Decline
Correct answer: Introduction
During the Introduction stage, heavy investment in awareness and distribution is required while sales volume is still low, making marketing costs highest relative to revenue.
Question 5: Which framework helps a marketing director prioritize which products to develop by evaluating market attractiveness and business strength?
- SWOT Analysis
- GE-McKinsey Matrix (Correct answer)
- Porter's Five Forces
- Ansoff Matrix
Correct answer: GE-McKinsey Matrix
The GE-McKinsey Matrix evaluates products or business units along two dimensions—industry attractiveness and competitive strength—to guide portfolio investment decisions.
Question 6: What is the primary purpose of a product positioning statement in product marketing?
- To define the pricing tier for a new product
- To clearly articulate how a product fills a specific need for a target segment better than competitors (Correct answer)
- To outline the manufacturing specifications for the product team
- To establish the sales quota targets for the product launch
Correct answer: To clearly articulate how a product fills a specific need for a target segment better than competitors
A positioning statement defines the target audience, product category, key benefit, and competitive differentiator to guide all marketing communications.
Question 7: A CMD is reviewing the product mix width, depth, and length for a consumer goods company. 'Width' refers to:
- The number of variants within a single product line
- The number of different product lines the company offers (Correct answer)
- The total number of items across all product lines
- The consistency between product lines in terms of end use
Correct answer: The number of different product lines the company offers
Product mix width (also called breadth) is the number of distinct product lines a company carries, such as having separate lines for beverages, snacks, and personal care.
CMD Product Marketing and Portfolio Management 1
A company is evaluating its product portfolio using the BCG Matrix.
A product with high market share in a low-growth market is classified as: