Product Flashcards
Whats a product?
A product is goods or a service that is sold to customers or other businesses. Customers buy a product to meet a need. This means the firm must concentrate on making products that best meet customer requirements.
Whats product differentiation?
A business needs to choose the function, appearance and cost most likely to make a product appeal to the target market and stand out from the competition. This is called product differentiation.
How is product differentiation is created?
Establishing a strong brand image (personality) for goods or a service.
Making clear the unique selling point (USP) of goods or a service, for example, by using the tag line ‘quality items for less than a pound’ for a chain of discount shops.
Offering a better location, features, functions, design, appearance or selling price than rival products.
Whats the problem with launching a premium brand?
Firms face a dilemma if they choose to launch a premium brand. Improving the quality or appearance of a product adds to the cost of making it. In turn, this means that the business must charge higher prices if they are to make a profit.
Whats a budget brand?
An alternative marketing strategy is to produce a budget brand. If a mobile phone has limited functions and a standard design then it can be manufactured cheaply. The low production costs allow for discount pricing.
Whats a products life cycle?
The four stages a product goes through in a market - launch, growth, maturity and decline.
What does a product life cycle diagram show?
The product life cycle diagram shows that four stages exist in the ‘working life’ of most products.
What are the stages in a product life cycle?
launch
growth
maturity
decline
What happens in the stages of a product life cycle?
In the launch and growth stages, sales rise. In the maturity stage, revenues flatten out.
Getting a product known beyond the launch stage usually requires costly promotion activity.
At some point, sales begin to decline and the business has to decide whether to withdraw the item or use an extension strategy to bolster sales. Extension strategies include updating packaging, adding extra features or lowering price.
Whats a product portfolio?
A product portfolio is the range of items sold by a business. It can be analysed using the Boston Matrix.
What do the symbols represent in a boston matrix?
Star products have a high market share in a fast growing market.
Cash cows have a high market share in a slow growing market.
Question marks or Problem children products have a low market share in fast growing markets.
Dogs are products with a low market share in slow growing markets.
Whats a problem with firms having few items in their portfolio?
Firms with just a few items in their product portfolio – or who have all their products at the same stage in the product life cycle – are in the dangerous position of having ‘all their eggs in one basket’. Such firms may prioritise broadening their product range.
