6. Creating value: Product Flashcards
What is a product?
A product is a market offering created to bring value and satisfy a customer need or want.
How does a product work?
Companies have an idea of their product but a product is anything the customer deems it to be.
What is an example of the distinction of a product?
- Product categories (e.g video game consoles)
- Product forms (e.g home video game consoles)
- Brands (e.g Nintendo Switch)
What are the 3 levels of product?
The core layer
- The benefits that the product brings to a customer
The actual/expected layer
- Tangible attributes
- Quantifiable and measurable
- Performance characteristic - the comfort level of a sneaker
- Intangible attributes
- Subjective
- Opinion based
The augmented/extended
- The way the product differentiates itself after the core features have been met
- e.g warranty
What are the consumer goods classification?
Convenience products
- Cheap, convenient and available products that are frequently purchased - toilet paper
Shopping products
- Products that inspire buyer to research and compare - phones, computers
Specialty products
- High involvement purchases with extended customer journey
- limited product - wedding
Unsought products
- Buyers are unaware of product and its benefits such as charity donations
What is the definition of product life cycle?
It is the stages that a product goes through from the time it is created and taken off the market
What are the stages of the product life cycle?
- Product development
- Introduction
- Growth
- Maturity
- Decline
What determines the duration of product life cycle?
- The competition
- Consumer behaviour
What are the common features of the introduction stage?
- New innovative product
- Price - premium
- Distribution - selective outlets with full service available
- Promotion - building awareness and product trial
- Sales - low
- Costs - high cost per customer, and Negative profits
- Customers -innovators, few competitors
- Business aim - awareness
What are the common features of the growth stage?
- Product - improve quality, style, features
- maintain consumer appeal
- has extended products
- Price - stable price, lower to penetrate and increase market share
- Distribution - increased outlets (intensive)
- Promotion - shift from awareness to comparing and convincing consumer to make repeat purchases
- Sales - rapidly rising
- Costs - average, profits rising
- Customers - early adopters, competitors growing
- Business aims - market share
What are the common features of the maturity stage?
- Product - diversify product usage
- new models, colours, accessories
- find market niches
- Price - low prices, value bundles to beat competitors
- Distribution - increased intensive efforts to sell to as many people as possible
- Promotion - concentrate on product positioning and brand image
- convincing consumers to switch brands
- Sales - peak
- Costs - low per customer, Profits - High
- Customers - middle majority, competitors - stable
- Business aim - customer retention
What are the common features of the decline stage?
Product - maintain a basic product
- Cut unprofitable segments
- Possibly withdrawn
Price - maintain or lower to sell off stock
Distribution - selective location to phase out product
Promotion - decrease but still enough to retain most loyal customers
Sales - declining
Costs - low, Profits - declining
Customers - laggards, competitors - declining number
Business aim - transition
What is the definition of diffusion?
Diffusion is how an innovation spreads in the market
What is the definition of adoption?
- Adoption is the series of stages, a customer undergoes from first hearing about it to obtaining the product
- The rate of adoption is the relative speed which participants adopt an innovation
Describe the innovator type of adopters?
Innovators
- Willing to take risks
- Have the highest social status, financially liquid - High risk tolerance - Customers that are well versed in the industry (MKBHD)
