Products and Brands

GCSE Business Studies
Adapted from tutor2u™
Revision Presentations 2006

Learning Objectives
At the end of this presentation you should understand the terms:Goods and services Product life cycle Product mix

Branding and Packaging

Adapted from tutor2u™

GCSE Business Studies

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

What makes a product successful?
Attractive design and packaging Efficiency or performance Reliability Quality After sales service Unique selling point (USP)

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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!

Ways of differentiating a product
 Distinctive design– e.g. Dyson; Apple iPod

 Branding - e.g. Nike, Reebok
 Performance - e.g. Mercedes, BMW

Adapted from tutor2u™

GCSE Business Studies

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

Adapted from tutor2u™

GCSE Business Studies

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

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GCSE Business Studies

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

Own label brands
 A retailer which uses their own name on product rather than manufacturer’s  Examples: Tesco tea or Sainsbury Cola

Adapted from tutor2u™

GCSE Business Studies

Examples of “Global” Brands
Microsoft Coca Cola Disney

Mercedes
Hewlett Packard

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GCSE Business Studies

Brand Extension & Stretching
Brand extension
 When a business uses a brand name on a new product that has some of brand’s characteristics  Examples include:
• Dove soap and Dove shampoo (both contain moisturiser) • Mars Bar and Mars Ice Cream

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

Adapted from tutor2u™

GCSE Business Studies

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

Important to understand the role that packaging plays in “selling”
 If a product cannot be differentiated by its features or designs, then packaging becomes really important  Help to advertise and promote brand image  Help maintain quality standards (important)  Designed to encourage impulse buying (e.g. crisps, snacks)  Packaging also needs to appeal to distributors (e.g. shops)
Adapted from tutor2u™ GCSE Business Studies

Product Life Cycle (1)

Adapted from tutor2u™

GCSE Business Studies

Product Life Cycle (2)
Overview
 Product Life Cycle is a “model” that tries to predict what will happen to products over time  Model asserts that products are introduced (born), grow to reach maturity and then enter old age and decline

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

Adapted from tutor2u™

GCSE Business Studies

Product Life Cycle - Stages
Development
• Research and testing

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

Extending the Life of a Product
Advertising – try to gain a new audience or remind current audience Price reduction – more attractive to customers Added value – add new features to current product Explore new markets – try selling abroad Re packaging – brightening up old packaging, or subtle changes such as putting crisps in foil packets

Adapted from tutor2u™

GCSE Business Studies

Boston Matrix (1)
A method of classifying products (or businesses) based on:
 Market share

 Rate of growth in the market

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GCSE Business Studies

Boston Matrix (2)
Rising Stars are high growth products competing in markets where they are strong compared with the competition. Often Stars need heavy investment to sustain growth. Eventually growth will slow and, assuming they keep their market share, Stars will become Cash Cows Cash cows are low-growth products with a high market share. These are mature, successful products with relatively little need for investment. They need to be managed for continued profit - so that they continue to generate the strong cash flows that the company needs for its Stars Question marks (Problem Children) are products with low market share operating in high growth markets. This suggests that they have potential, but may need substantial investment to grow market share at the expense of larger competitors. Management have to think hard about “Question Marks” - which ones should they invest in? Which ones should they allow to fail or shrink? Unsurprisingly, the term “dogs” refers to products that have a low market share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in. Dogs are usually sold or closed.
Adapted from tutor2u™ GCSE Business Studies

SWOT Analysis and Products
SWOT analysis stands for present Strengths and Weaknesses, future Opportunities and Threats By categorising business situation under these headings, managers can analyse clearly what strengths to build on and weaknesses to put right Then they can see which opportunities they might want to take and which threats they may want to react to.

Adapted from tutor2u™

GCSE Business Studies

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