3.3.1 Product Flashcards
What is the marketing mix?
refers to the different elements involved in the marketing of a good or service- the 4 P’s- Product, Price, Promotion and Place.
What is product?
Product is the good or service being produced and sold in the market. This includes all the features of the product as well as its final packaging.
What are types of products?
- Consumer goods – consumed by people (final users of the product)
- Consumer services – services for people
- Producer goods – goods produced for other businesses to use (e.g. machines, raw materials)
- Producer services – Services for other businesses (e.g. Corporate lawyers, business consultants)
What makes a successful product?
- It satisfies existing needs and wants of the customers
- It is able to stimulate new wants from the consumers
- Its design – performance, reliability, quality etc. should all be consistent with the product’s brand image
- It is distinctive from its competitors and stands out
- It is not too expensive to produce, and the price will be able to cover the costs
What makes a product successful?
- Satisfies consumer needs and wants
- Low production cost to make profit
- Quality of the product that is kept consistent with the product image
- Introduced to the market before competitors
- Unique
What is the process of the development of a new product?
- Generate ideas: the firm brainstorms new product concepts, using customer suggestions, competitors’ products, employees’ ideas, sales department data and the information provided by the research and development department
- Select the best ideas for further research: the firm decides which ideas to abandon and which to research further. If the product is too costly or may not sell well, it will be abandoned
- Decide if the firm will be able to sell enough units for the product to be a success: this research includes looking into forecast sales, size of market share, cost-benefit analysis etc. for each product idea, undertaken by the marketing department
- Develop a prototype: by making a prototype of the new product, the operations department can see how the product can be manufactured, any problems arising from it and how to fix them. Computer simulations are usually used to produce 3D prototypes on screen
- Test launch: the developed product is sold to one section of the market to see how well it sells, before producing more, and to identify what changes need to be made to increase sales. Today a lot of digital products like apps and software run beta versions, which is basically a market test
- Full launch of the product: the product is launched to the entire market
What are the advantages of developing a new product?
- Can create a Unique Selling Point (USP) by developing a new innovative product for the first time in the market. This USP can be used to charge a high price for the product as well as be used in advertising.
- Charge higher prices for new products (price skimming as explained later)
- Increase potential sales, revenue and profit
- Helps spreads risks because having more products mean that even if one fails, the other will keep generating a profit for the company
What are the disadvantage of developing a new product?
- Market research is expensive and time consuming
- Investment can be very expensive
What is a brand name?
Unique name of a product that makes it different from other brands
What is brand image?
Brand image is an identity given to a product that differentiates it from competitors’ products.
What is brand loyalty?
Brand loyalty is the tendency of customers to keep buying the same brand continuously instead of switching over to competitors’ products.
Why is brand image important?
- Consumers recognise the firm’s product more easily when looking at similar products- helps differentiate the company’s product from another.
- Their product can be charged higher than less well-known brands – if there is an established high brand image, then it is easier to charge high prices because customers will buy it nonetheless.
- Easier to launch new products into the market if the brand image is already established. Apple is one such company- their brand image is so reputed that new products that they launch now become an immediate success.
Why is packaging important?
- It protects the product
- It provide information about the product (its ingredients, price, manufacturing and expiry dates etc.)
- To help consumers recognise the product (the brand name and logo on the packaging will help identify what product it is)
- It keeps the product fresh
- Easy for transportation
- Attractive and appealing to customers
- Consistent with the brand image of the product (e.g. High end product in a fancy packaging)
What is the product life cycle?
The product life cycle refers to the stages a product goes through from it’s introduction to it’s retirement in terms of sales.
At these different stages, the product will need different marketing decisions/strategies in terms of the 4Ps.
What is the development stage of the PLC?
Product is being developed, The business is spending money on research and development. There are no sales at this time.
