Unit 2 KA3.1- Marketing Mix - Product Flashcards
Compare core product to augmented products
Core products are made to satisfy consumers’ needs only whereas augmented products have added features to increase the level of satisfaction.
For example,
Core product - Own brand shampoo
Augmented product - Branded shampoo for dyed hair
What are the stages of the product life cycle
Development
Introduction
Growth
Maturity
Saturation
Decline
Explain the development stage of the product life cycle (Define, sales and profit)
Definition - this is where a product is researched, designed and a prototype will be made. A large percentage of products will never progress beyond this stage.
Sales - Zero. Remember: consumers don’t know about products that are at this stage - it’s impossible to buy something you don’t know exists!
Profits - Zero. There are very high costs associated with the development of any new product - some of which may never be recouped.
Explain the introduction stage of the product life cycle (Define, sales and profit)
Definition - This is the launch stage of a new product.
Sales - Initially low, as few consumers know about the product at this stage. However, some products will have little or no competition at this stage so high prices can be charged.
Profit - Zero. There will be high advertising costs associated with this stage, as well as the development costs which need to be recouped.
Explain the growth stage of the product life cycle (Define, sales and profit)
Definition - Where consumers are becoming more aware of the product and competitors may start to enter the market.
Sales - Sales begin to increase due to increased consumer awareness.
Profit - Low. The outstanding development costs will be reducing, however there will still be high advertising costs against still modest sales levels.
Explain the maturity stage of the product life cycle (Define, sales and profit)
Definition - The product has become commonplace on the market and competition will be increasing and established.
Sales - Sales of the product will be high.
Profit - Good levels of profit can be made at this point in the life cycle, as there will be little advertising required.
Explain the saturation stage of the product life cycle (Define, sales and profit)
Definition - There will be a large number of competitors and not all products will survive. Consumer tastes may change and demand falls.
Sales - Sales will level out. Prices may need to be revised and lowered to ensure survival in a highly competitive market place.
Profit - Profits will remain high, however the company will need to invest in additional advertising to remind consumers that the product exists.
Explain the decline stage of the product life cycle (Define, sales and profit)
Definition - The product is no longer desirable and is likely to have been replaced by a newer version or technology.
Sales - Sales will fall until the product is withdrawn.
Profits - Profits will decrease rapidly until the product is withdrawn.
How do you extend the product life cycle
Change product – new and improved versions of the product can be released e.g. version 2.0 and then version 3.0.
Change price – price can be lowered to allow new customers to buy it.
Change place – products can be sold in different countries or territories to gain more sales.
Change promotion – different advertising or sales promotion techniques can prolong the life of the product, giving it a new image.
Change packaging – the style of the packaging may be changed to give the appearance of a new and improved product.
Change usage – existing customers can be encouraged to buy more of the product or to use it in a different way. For example breakfast cereals have used advertising to show consumers eating cereal at different times of the day.
Change name – if a product has suffered from bad publicity and sales are falling, a tried and tested technique is to simply change the name of the product.
What is a product portfolio
A product portfolio is the range of items sold by a business.
A company like Sony has a product portfolio that includes computers, cameras, televisions and games.
What are the benefits of having a varied product portfolio
having different products can spread risk between markets. This mean there is less chance of a company making losses
having a range of products can lead to greater brand awareness
can encourage customer loyalty as customers are more likely to buy multiple products from the same brand
easier to launch new products due to greater brand awareness
can meet the needs to different market segments
can allow for seasonal fluctuations
allows for new products to replace products at the end of the product life cycle
can increase profits from selling a range of different products
What are the costs of having a varied product portfolio
increased research and development costs due to multiple products being produced
marketing and advertising costs may be high due to the promotion of a large range of products
bad publicity incurred by one product may affect sales of all products within the portfolio
resources may be spread too thin and this could affect the performance of existing cash cow products
What are the four factors of the Boston matrix
Star - High market growth, high market share
Question Mark - High market growth, low market share
Cashcow - Low market growth, high market share
Dog - Low market share, low market growth
