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