Marketing Mix - Product Flashcards
What is a product
A product is the item offered for sale. A product can be a service or an item
Every product is made at a cost and each is sold at a price
Advantages of developing new products
Give customers something fresh and new Take advantage of new technology Add smart competitors Fill a gap in the market Even out peaks and troughs in demand Gain new customers Develop the businesses reputation as an innovator
Risks of developing new products
Many products fail
New products require investment
It may be a long time between development and return on investment
Product design-image
This is how a product presents or appease to customers
A positive and up-to-date product image will increase sales, increase revenue and increase profits
Businesses will need to keep investing in research and development to keep producing products that customers want
Product design-meeting needs of target market
A business will need to research the market, find out what the wants and needs of their customers are and then satisfy them
This is a customer driven market strategy
What is product differentiation
When a business makes their product or service different from the competition
Ways to differentiate products/services
- Branding
- USP
- location
- design
- customer service
- quality
- product mix
Branding
A brand is a name, logo, slogan, and/or design scheme associated with a product or service
Advertising and marketing builds a brand
Customers will buy a product just because it is their favourite brand
USP
Unique selling point
This is a secret ingredient that makes one business different from all the others that are similar
Location
Differentiation can be achieved by having the best location
Design
Differentiated products based on packaging designs
Quality
Some products aim to set themselves apart through their quality
Product life-cycle stages
- Development
- introduction
- growth
- Maturity
- extension strategies
- decline
Extension strategies
- Updating packages
- adding more or different features
- changing target market
- advertising
- price reduction
What is a product portfolio
A product portfolio is the collection of all products and services offered by a company
What is the Boston matrix
The Boston matrix is a marketing planning tool which helps managers to plan for a balanced product portfolio
It looks at two dimensions: market share and market growth, in order to assess new and existing products in terms of their market potential
Boston matrix - star
Star products:
-Have high market share
-Are in a high growth market
Star products need to maintain the current marketing spend to keep sales high
Boston matrix - cash cow
Cashcow products:
-have high market share
-are in a low-growth market
Cashcow products are good sellers and need little or no new investment
Boston matrix - dog
Dog products:
-have a low market share
-are in a low growth market
Dog products require no investment as they are in the decline phase of the life-cycle
Product may have become obsolete or replaced
Product should be discontinued
Uses of the Boston matrix
The Boston matrix is a good starting point when reviewing an existing product line to decide future strategies and budgets
Limitations of Boston matrix
Products may not be low or high market share they could be medium
High market share does not always lead to high profit, there are high costs also involved with high market share
Many people argue this matrix is too simple
