Product

Question 1

How to design a product

Answer 1

Market driven approach responds to the needs and wants of the customers
Product differentiation, USPS

Question 2

Product life cycle

Answer 2

Definition - describes the stages of a product will pass through 
Research and development - where the prototype is made and market research is carried out
- no sales at this point
Introduction - launched to the market, sales are slow (not many people know about it) 
 - price skimming can be used as their is no competitors 
-  informative advertisement happens at this stage 
- no profits as developmental costs need to be covered  
Growth - sales grow rapidly price go down a little as new competitors enter the market 
- the advertisement may change to more of a persuasive tone (to encourage brand loyalty)
- profits are made
Maturity - sales now increase slowly, so is profit, as competition and advertisement is at its highest 
Decline - product is now lost appeal, may be withdrawn from the market price and sales are at the bottom 

Remember : pricing and promotion lowers over time and extension strategies can be used to prolong the product from going into the decline stage 

Question 3

Extension strategies

Answer 3

A strategies to try and prevent a product to go to the decline stage and keep it at the maturity stage to maximise profits

Question 4

Extension strategies examples

Answer 4

Update packaging
Advertisement
Adding more features
Lowering the price

Question 5

Advantages extensions strategies

Answer 5

Low cost of production
No need for advertisement
No need to set up a distribution channel

Question 6

Disadvantages extension strategies

Answer 6

Risky

High costs

Question 7

Brand image and brand loyalty

Answer 7

Brand loyalty - when consumers keep buying from the same brand again
Brand image - an image or identity given to a product to distinguish from its a competitors brand

Question 8

Why is packaging important?

Answer 8

• has to be suitable for the product to be put in
• has to give protection to the product
• has the allow the product to be used easily
• used for promotion, to appeal to the customer

Question 9

The benefits and drawbacks of developing new products

Answer 9

The business will be the first into the market with a new product (gives a USP)
Diversification for the business
Allows the business to expand into new or original markets

The costs of carrying out market research
They cost of trial products
Time consuming
May fail, may lead to bad brand image

Question 10

The importance of brand image

Answer 10

It is the assurance of a certain quality the business is known to have business like to have good brand image as consumers are more likely to buy from them as they know that the quality of the products is known to be good it may also encourage them to buy less/none from their competitors