4.4: Product

the marketing mix

product, place, price, promotion

what does a good marketing strategy do

meet customer needs

what must a business do to have a good marketing strategy

- design and product high quality products
- charge an acceptable price
- promote products to consumers
- make products available in the right place

stages of product development

- generating ideas
- analysis
- development
- test marketing
- commercialisation and launch

generating ideas

- ideas for new products come from business stakeholders and market research
- sometimes businesses try to improve features of a rival's product

analysis

product ideas are analysed and evaluated as marketable, possible and suitably fit legally

development

involves carrying out tests for change and modifications in products

test marketing

- this involves testing the product in a sample of the market which represents the whole market
- it's used to gather information about consumer opinion

commercialisation and launch

- businesses add the final touches to the product
- problems are resolved and changes are made
- marketing strategy is designed
- press conferences are launched

a risk of the development stage

a number of product ideas are likely to be rejected but tend to fall at each stage

products

goods and services sold by a business

two types of goods

- consumer goods
- producer goods

why is packaging important

customers link quality of products with the packaging

factors influencing choice of packaging

- protection
- environment
- cost-effectiveness
- information
- design
- convenience

product life cycle

shows level of sales at different stages of the product

stages of the product life cycle

- development
- introduction
- growth
- maturity and saturation
- decline

development

- zero sales
- product research, design and testing
- high costs and can damage cash flow as most products don't make it past this stage

introduction

- introduced through an official launch
- promotion strategies
- high costs and spending
- some businesses start with skimming and some with penetration pricing

growth

- sales grow if a product is successful
- increased revenue
- recovery of cost
- falling cost
- profit
- end of stage: products grow less quickly as competitors launch their own versions of the product

maturity and saturation

- improving cash flow
- profit
- saturated market
- falling price
- change in promotion methods

decline

- sales decline and products are taken off the market
- change in consumer taste and new product emergence
- businesses replace declining products with new ones
- different products have different life cycles

fads

short life cycle

long established products

long life cycle

extension strategies

- lengthen the life of a product before it starts to decline
- help businesses generate more cash

3 examples of extension strategies

- finding new markets
- finding new uses
- changing the appearance

benefits of extension strategies

- sales levels and revenues can recover and grow
- competitors will find it difficult to enter the market
- consumers will be loyal

product portfolio

range of products that a business currently has available on the market

boston matrix

used to help analyse products marketed by a business

benefits of a product portfolio

- products decline and are replaced
- products are modified and extendes

significance of a boston matrix

helps businesses enable a product into appropriate categories according to market share and position in the life cycle

positions in the boston matrix

question mark, dog, star, cash cow

question mark

- low market share
- growing market
- potential

dog

- end of life cycle
- low market share
- replaced

star

- valuable products
- high market share
- potential for growth
- profitable

cash cow

- mature
- high market share
- not likely to grow
- steady flow of income