Product - Element Of Marketing Mix Flashcards
Why do businesses develop new products?
Businesses develop new products- increase sales, improve market share, increased profits.
Factors to consider when launching new products
Product design - should satisfy customers and should be differentiated
Business image - should match
Target market - meet precise needs of target customers
Benefits of developing new products
New products can take over from products that are less popular with customers
A business with good image may be able to build on this by launching different and enhance image
Aiming them at different groups can spread businesses risk. Unlikely that all will suffer falling sales
Drawbacks of developing new products
Unsuccessful for reasons. Business can invest a lot in product with little return
A poor new product may damage business reputation - lower sales of existing products
Competitors may copy. Receiving benefits without investing in developing new product
Product differentiation
Creating strong brand image by distinguishing businesses products from competitors products
Creating a usp, developing strong brand image
What is creating a USP and how does it help a business?
Aspect of products which is different from competitors. Some retailers guarantee to match prices charged by competitors
Allows business to charge higher prices
Provided basis for promoting products- differences are highlighted
Brand image developing
Can distinguish themselves and products from competitors. Design of product with logo, sign can communicate to customer that products are desirable
Product life cycle stages
Research and development
Introduction
Growth
Maturity
Decline
Research and development
Business carries out research to develop product with hope it sells well. MAny don’t make it past this stage. Can be costly if unsuccessful
Introduction
Product appears on market. High spending on promotion. Ensures retailers and customers know about product. Risk but if good sales will rise
What is the growth section of the life cycle?
Sales rise rapidly, increasing revenue and high profit if use price skimming. Can be problem of can’t supply enough quantities or don’t have outlet to sell products
Maturity
Product sales reach maximum. Intense competition rivals may have launched. Competitors process may be superior business has to develop and promote improved versions
Decline
Sales may fall rapidly or steadily over time. Can delay by redesigning products or spending more on promoting. Some point business will cease production
Extension strategies
Updating packaging - attracts customers, reduce costs, may allow lower prices
Adding new features - altering appearance to make more attractive and sustain sales.
Changing target market
Advertising - remind customer of product and its benefits
Price reduction - improve value for money, increase/stabalise sales.
