Mark 1

Question 1

Define a Product

Answer 1

A product is anything that is capable of satisfying customers needs

Question 2

What are the four main reasons for the introduction of new products

Answer 2

• Product replacements
• Additions to existing lines
• New product lines
• New-To-The-World products

Question 3

Identify and describe the three levels of a product

Answer 3

The CORE product is NOT the tangible physical product. You can’t touch it. That’s because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.

The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car, it is the vehicle that you test drive, buy and then collect. You can touch it. The actual product is what the average person would think of under the generic banner of product.

The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car’s manufacturer and any after-sales service. The augmented product is an important way to tailor the core or actual product to the needs of an individual customer. The features of augmented products can be converted in to benefits for individuals.

Question 4

Identify the stages within a products life cycle

Answer 4

1. Development/Introduction: During this stage sales will be low and losses are incurred as a result of initial development and advertising costs. Companies will monitor the growth speed of the product and terminate it if unsuccessful.
2. Growth: A period of faster sales and profit growth fueled and accelerated by market acceptance. Profits may begin to decline as new rivals enter the market.
3. Maturity: Sales will eventually peak and stabilize as saturation occurs, hastening competitive shake-out.
4. Decline: Consumer demand changes or new technology are introduced causing sales and profits to fall. Supplier is likely to cease production and promotional budgets will be slowly removed.

Question 5

What are the three levels of operations management

Answer 5

Question 6

What are the four different way in which new products are added to the market

Answer 6

1. Product replacement: covers 45% of new product launches focusing on revisions and improvements of existing products. Companys trying to reduce costs will typically use this method if a product is being redesigned or reformulated.
2. Additions to existing lines: Covers 25% of new products and consists of adding products to existing lines or brands. This uses a brand to help promote the product competing with a rival, whether it’s within a similar field or not.
3. New product lines: Covers 20% of new products and represents a move to a new market. An example includes Mars launching a line of ice cream.
4. New-to-the-world products: Covers 10% of new products and creates entirely new markets. Video game consoles, MP3 players and camcorders are examples of this method.