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Learning Objectives
At the end of this presentation you should understand the terms:Goods and services Product life cycle Product mix
What is a Product?
A product is anything that is capable of satisfying customer needs or wants. This definition therefore includes both: Physical products (Goods)
Consumer Goods
Cars Washing machines DVD players
Capital Goods
Machinery Equipment
Services
Dental treatment Accountancy Travel agents
Adapted from tutor2u GCSE Business Studies
Product Differentiation
Products that are the same tend to get the same price Challenges for a business
To make products different from competitors through a unique selling point (USP) Ensure that customers recognise that product is different!
Product Range
Product range a collection of similar products offered by the same business eg. Walkers Crisps Helps spread risk a decline in one product may be offset by sales of other products eg. Apple computers and the i-pod A range can be sold to different segments of market e.g. family holidays and activity holidays Selling a single product may not generate enough returns for business (e.g. market segment may be too small to earn a living) eg. Niche markets
Marketing Services
Services are mainly marketed through service quality Similar products are adjusted to target audience Businesses then use heavy promotion to highlight these differences. Eg. Nat West Differs from goods marketing, because goods have greater opportunity to use packaging and physical product design
Brands
A product with a unique character for instance in design or image It is consistent and well-recognised. Benefits
Inspires customer loyalty leading to repeat sales Can charge higher prices, especially if brand is market leader Retailers or service sellers want to stock brands
Mercedes
Hewlett Packard
Brand stretching
Where brand is used for a diverse range of products, not necessarily connected. E.g. Virgin Airlines and Virgin Cola; Marks and Spencer clothes and food
Packaging
Packaging has several functions:
Protection of contents Distribution getting product from manufacturer to customer
Selling design and labelling provides information and also conveys a certain image
Customer convenience e.g. multi-pack
Implications
If the model is right The sales and profitability of products change over time Different kinds of customer buy the product at various stages e.g. certain kinds of customer like to buy things when they are new (early adopters) whereas others only buy things when everyone else has already got one
Marketing decisions (e.g. price, promotion) change as the product goes through its life cycle
Introduction
Researching, developing and then launching product Note many new products fail to get past this stage Need to promote heavily
Growth
When sales are increasing at their fastest rate Likely to attract competitors into the market
Maturity
Sales are near their highest, but rate of growth is slowing down, e.g. new competitors in market or saturation Usually the best time to make profits from the product
Saturation
More competition and the market is flooded
Decline
Final stage of cycle, when sales are falling Product may be withdrawn if it is loss-making Adapted from tutor2u GCSE Business Studies