Product development Flashcards
Why may businesses expand their porfolios?
In order to increase sales, target a different segment of the market or compete with other companies.
What are 2 ways businesses can broaden their portfolios?
Adding products to an existing range by developing new products based on their current ones.
Increasing their range of products by developing products that are different from their current ones.
What is diversification?
Designing and producing more products. It reduces the risk that a decline in sales oof one product will harm the business, meaning that there is less threat to the firm’s profits.
What are some benefits of developing new products?
Will increase overall sales for the business and may extend the life-cycle of existing products.
They may appeal to a new market segment.
Can charge higher prices at first as no other competitors.
Can be good for a firms reputation.
What are some Risks of developing new products?
Can be very costly and time consuming.
Can end up wasting resources by developing something customers don’t want.
Might not be able to produce the product on a large scale at a low enough cost.
Risk ruining reputation.
What do Market driven firms do?
Will use market research to find out what the target market wants, then make it. Usually means product is useful.
What do Product driven firms do?
Will design or invent a new product and then try to sell it. Oftens mean they make something nobody really wants.
Products with a strong brand image…
are easily recognised and liked by customers.
What is product differentiation?
Making your products distinctive in the market.
What has to be managed to build a positive brand image?
The brand has to be constantly managed. Products, pricing, methods of promotion and places where they’re sold all have to be right.
Without product differentiation…
customers will think your product is identical to others, giving them no reason to buy it unless it’s cheaper. Which means less profit.
What is one way to achieve product differentiation?
Give the product a unique selling point.
What are the 3 main design mix?
Function, Cost, Appearance.
How is function an ‘ingredient’ in the design mix?
Design must be fit for its purpose. Unique features can also help.
How is cost an ‘ingredient’ in the design mix?
A good design will lead to lower manufacturing costs. This means higher profits.
How is appearance an ‘ingredient’ in the design mix?
A good product should look attractive and distinctive. Packaging can also help a product stand out.
