Product Flashcards
Product
The product is any good or service offered for sale to customers.
Product Portfolio
Product portfolio is the mix of products the business produces and sells.
A product portfolio:
- Spreads fixed costs
- Allows for greater economies of scale
- Allows the targeting of wider markets
- Reduces risk
- Creates opportunities for growth
- Smooths out overall sales
Product Breath and Depth
Product Breath is the number of product lines a business produces or retails. Its product depth is the number of product varieties within each product line.
Having depth increases the number of repeat buyers looking for variations of the product and also allows targeting of different markets.
Branding
A Brand can be defined in several ways
- A brand is the name given to a product to help differentiate it from other similar products.
- A brand is a name, term, sign, symbol or design which identifies a seller’s products and differentiates them from competitors.
Why use Branding
Advantages
- To create increased customer loyalty
- To separate the product from the herd
- To increase price inelasticity of demand
- To increase value of the business
- To ease customer choice
Disadvantages
- High cost of advertising
- Loss of brand value from one product can affect the whole brand
- Brands invites competition
- High cost of research and development
Unique Selling Point (USP)
By unique selling point, it means that the product or service has a feature or features that can be used to separate it from the competition.
Product Differentiation
Making your products different from the competition is important. This separates your brand from competitor brands. Products can be differentiated from the competition by:
- Methods of promotion
- Packaging
- Form - making your products look different from the competition
- The provision of add-ons
- Quality and Reliability
Product differentiation helps creates customer loyalty and gives a business more control over the pricing strategies used.
The Product Life Cycle
This represents the different stages in the life of a product and the sales that are achieved at each stage.
The Stages of the product life cycle
- Introduction
- Growth
- Maturity
- Saturation
- Decline
Introduction
The Product is new to the market and few potential customers know of its existence. Price can be high and sales mat be restricted to early adopters (those that must have new technology first).
Profits are often low as development costs have to be repaid and advertising expenditure can often be high.
Growth
The product is becoming more widely known and consumed. Advertising tries to establish or strengthen the brand and develop an image for the product.
Profits may start to be earned but advertising is still high. Prices may fall.
Maturity
The product range may be extended. Competition will increase and this has to be responded to. Advertising should be used to firm-up the image of the product in the consumers mind.
Sales are at there peak, Profits should be high
Saturation
Very few new customers are gained, replacement purchases are the trend. Businesses should try to reduce their costs, so that prices can be more flexible. The battle to survive is beginning and the market for the product is full. Profits may start to decline.
Decline
Sales can now fall fast and the product range may be reduced, with businesses focusing on the core products. Advertising costs will be reduced. Overall, Profits will fall and prices are likely to fall.
Extension Strategies
These are often used to extend the life cycle of the product. Extension Strategies include:
- Repositioning the product in the market
- Relaunching the product, aiming at a different segment
- Using the ‘now with’ policy
