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What’s the product life cycle?
INTRODUCTION - design & development of the product
GROWTH - sales continue to grow as product gains more popularity & more people purchase
MATURITY - product is at its most popular it’s ever been - eg. McDonald’s and Coca Cola have not left this stage
DECLINE PHASE - sales of product fall - could lead to product being discontinued
What’s an extension strategy?
A strategy which prolongs the life cycle of a product.
How should you price a product/service?
Should be dependent on:
→ Raw materials
→ How much consumers are willing to pay
→ Competition (how much they’re pricing it)
→ Availability of the product/service (SCARCITY)
What is ‘pricing low’ (pricing penetration)??
Initially setting the starting price as something low to attract more customers away from the competition
eg. Netflix, that taxi company in China
What is cost-based pricing?
price is determined by adding a profit element on top of the cost to make the product
What is ‘pricing high’ (price skimming)?
setting high price initially & reducing it overtime
→product is initially high in demand then drops (as soon as new models drop out)
—→ eg. iphone, PS5
What is promotion?
~the main aim is for customers to be aware of the existence of the product
—>If a random person has heard of the business before, walking past one of their shops means they are more likely to be persuaded to buy something from that business
TYPES OF PROMOTION
SALES PROMOTION
→ special offers, product trials, loyalty points, coupons etc.
SPONSORSHIP
→ influencers promoting their product
ADVERTISING
→ social media, newsletters etc. (wide coverage but expensive and impersonal)
→ advantages: effective at achieving cheap boost in sales
→ disadvantages: sales effect is short term + customers may anticipate further promotions
What is the design mix?
AESTHETICS
how product looks, feels and appeals to a customer
FUNCTION
the way the product works
COST
design allows to be made & sold profitably
What’s branding?
branding - a product with a unique character
—> eg, logo/design (NOT USP)
advantages
→ retailers wanting to stock top brands, inspiring customer loyalty
disadvantages
→ hard to change the perception of the br
What’s a distribution channel?
moves a product through the stages of production to final consumer
eg. producer → wholesaler → retailer → consumer
supplies goods & services sells to retailer (eg. costco) shop sells to goods & services to consumer
or
producer → consumer ( etc. )
What are some ADVANTAGES and DISADVANTAGES to distribution channels?
Advantages:
→ Have more access to a larger number of customers for producer if their products are sold through intermediaries
→ Saves costs (£) from distributing to different areas
Disadvantages:
→ Producer could lose control of product and how/where it’s sold (eg. christian cross sold in a sex toy shop )
→ Intermediary could display them in a bad image, which affects the producer’s reputation.
Note
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