Product Flashcards
What is a product
A product is any good or service offered for sale to customers, A product can say about its consumer too.
What is a product portfolio
A product portfolio is the mix of products the business produces and sells.
What are the advantages of having a product portfolio
Spreads fixed costs
Allows for greater economies of scale
Allows the targeting of wider markets
Reduces risk
Definition of branding
It is a name, term, sign, symbol or design that identifies a seller’s products and differentiates them from competitors’ products. also a brand is a product which consumers can rely on for quality, value and service.
What is the objective of branding
The objective of a brand is to establish a product with a separate identity in consumers minds, making the product desirable, wanted and needed.
What are the pros and cons of branding
Creates increased consumer loyalty, Separate product from the herd, Increase price inelasticity this gives more control to pricing strategy.
High cost of advertising, Loss of brand value for one product can affect a whole range of similarly branded products, brands invite competition.
What is meant by unique selling point (USP)
Means that the product or service has a feature or features that can be used to separate it from the competition, this can be a technological advantage. USP can also result from some feature of the product and design.
Why is product differentiation important
This separates your brand from competitor brands
Helps create customer loyalty & gives the firm more control over prices
How can products be differentiated
Methods of promotion – creates personality for your product, packaging – eco packaging, Form – making your products look different from the competition and quality and reliability.
What are the impacts of having the right product to a business and stakeholders
If right
higher profits
reliable and affordable for customers
Increase in investment
record share prices
grants
Explain the product life cycle
A product life cycle represents the different stages in the life of a product and the sales that are achieved at each stage, some products have a short life cycles and some products have a long life cycle as they do not get replaced or never go out of fashion.
What are the stages of product life cycle
Development - During the development stage the product is being researched and designed, costs will be high.
Introduction – The product is new to the market and few potential customers know of its existence; sales are limited to early adopters.
Growth - The product is becoming more widely know n and consumed, advertising is used to strengthen the brand and develop the product image, profits may start to be earned.
Maturity – The product range maybe extended, competition will increase, sales are at there peak so profits should be high
Decline – Sales can now fall fast and the product range may be reduced, with the business focused on core products, advertising will be reduced, profits will fall so will prices.
What is an extension strategy
An extension strategy is used to extend the life cycle of the product they are necessary as there might not be a new product to replace the ageing product
What is the impact of extension strategies
On a good product - Jobs creation, Huge growth, bigger brand image
Bad product – Reduction in market share, Jobs lost around the business, reduction in output of product.
What is the changes in cash flow when in the product life cycle
The cash flow from a product as it moves through its life cycle will change. Initially high development costs and high promotional costs will mean a negative cash flow, but as the products moves through the growth phase and into maturity, the cash flow should start to become positive.
