PRODUCT

When businesses decide which product they want to sell, they need to choose the function, appearance and
cost most likely to make a product appeal to the target market and stand out from the competition. This is called
'product differentiation',
which is created by:

► establishing a strong brand image for goods or a service

► making clear the unique selling point (USP) of goods or a service
► offering a better location, features, functions, design, appearance or selling price than rival products

1. BRANDING:
This refers to the image or the impressions that a company creates for its products.
A brand is a product that the customers see as different from other, often similar products. Branded products are
usually sold as being of higher quality than unbranded products and are usually more expensive. Customers are
willing to pay more for branded goods because they are confident that the quality will always be the same and
because branded goods are usually heavily advertised. Businesses use brand names to build brand loyalty, that
is to encourage consumers to keep buying their products instead of trying other similar products.

Branding is still a very successful way of marketing products, but it has come under increasing challenge.
Customers are more educated and, following the difficult economic situation, they have learnt to be careful with
their money. Many brands are faced with strong competition from their own brands, products that carry the
brands of retailers and are usually cheaper than equivalent branded products.

▸ BRAND NAMES are very important. They tend to be short, descriptive and easy to pronounce. They should
also say something positive about the product. For example, Polo, the mint sweet, has two 'o's in the name which
link it to the hole in the product.

▸ LOGOS are another crucial aspect of business marketing. They are intended to be the 'face' of a company and
provide essential information that allows customers to identify with the company's brand.

▸BRAND IMAGE is also very important. It can be described as consumers' mind perception about a brand's total
personality, a set of beliefs held about a specific brand. Brand image is usually developed over time through
advertising campaigns with a consistent theme, which is authenticated through the consumers' direct experience.
A unique selling point is a factor that differentiates a product from its competitors, such as the lowest cost, the
highest quality or the first-ever product of its kind. A USP could be thought of as 'what a company has that
competitors don't'. A successful USP promises a clear benefit to consumers, offers them something that
competitive products can't or don't offer, and is powerful enough to attract new customers.

2. PACKAGING:
Packaging performs two functions. It has to
give protection to the product and allow it to be transported, used and stored easily. Packaging is also used for
promoting a product. It gives a product an image and as such it is essential that the right appearance is given.
The colour and shape of the container should attract the customer's attention. For example, some colours don't
work. Colour has the most potential to affect our perception of a product: it is by far the easiest way to make
packaging reach out to consumers. The metallics, greys and whites used to package digital goods and cleaning
products appeal to efficient and modern people. Imagine selling a washing powder in a dark brown box: this gives
the wrong message. Pastels are light-hearted and feminine. The neon shades of energy drinks can suggest
energy, youthfulness and vitality. When choosing the colour of packaging, it is important to remember that colours
have different meanings in different cultures, for example white is associated with purity and cleanliness in
western cultures, but with death and misfortune in China.

The shape of the packaging can also have a direct effect on how well an item sells. If consumers are compelled
by an attractive or unusual shape, it's more likely that they will choose that product.

Labels are an important part of packaging. They should provide information such as what ingredients the product
contains and how to store and use it.
 3. PRICE:
In a free market economy, price is decided, to a certain extent, by supply and demand: where there are few
buyers, prices will be low, but where there are many buyers, prices will increase. When deciding the price for a
product, a business has to take into consideration:
• whether the price will cover production costs
• what prices are charged by competitors
• how prices can be used to increase sales

A business can adopt various pricing strategies to increase sales of their products.

▸Penetration pricing New products are usually sold at lower prices during the first weeks of sale. This ensures
that the product is sold, but the sales revenue might be low.

▸Price skimming It is the opposite of penetration pricing. New products are sold at higher prices because of the
novelty factor. This can help to establish the product as being of good quality, but may put off some customers
because of its high price.

▸Competitive pricing Prices are set by looking at those charged by competitors for similar products. Sales are
likely to be high as the price is at a realistic level.

▸Captive product pricing Companies are able to charge high prices where the consumer is forced to use
complementary or captive products. For example, printers are relatively cheap, but cartridges are, by
comparison, very expensive. This can attract new customers to the product with the low price, but if the price of
the captive product is set too high, it could affect the sales of the core product itself.

▸Promotional pricing Products are sold at a low price for a set amount of time. This includes special offers ('Buy
one, get one free'), sales and discounts. This is a useful way to get rid of products that don't sell and can help
renew interest if sales are falling. However, the sales revenue will be lower.

▸Psychological pricing The price is set, for example, at €29.99 rather than €30. This relates to perceived price
barriers that customers may have - €30 may seem too expensive for the product in question.

4. PLACE:
Place is the point where products are made available to customers. A business has to decide on the most cost-effective way to
make their products easily available to customers. This involves choosing the right channel of distribution, choosing the right
method of distribution and choosing the right sales outlet.

DEPARTMENT STORES (Euromercato): Stores that offer a wide range of products to the end-users under one roof.

DISCOUNT STORES: Stores that offer a huge range of products to the end-users but at a discounted rate. They generally offer
a limited range and the quality might be a little lower compared to that of the department stores.

SUPERMARKET: Stores that generally sell food products and household items placed and arranged in specific departments.

FRANCHISES: Independently-owned shops licensed to trade under the same name

SPECIALITY STORES: Stores that specialise in a particular product and would not sell anything other than the specific range.
They sell only selected items of one particular brand to the consumers and focus primarily on high customer satisfaction.

SHOPPING CENTRE/MALL (Meraville): A place where many retail stores sell their own merchandise.

HIGH-STREET SHOPS: Shops located in the centre of a town.

FACTORY OUTLET: Manufacturer-owned stores that sell that company's stock directly to the public. The stock can either be
first-quality merchandise or discontinued lines, irregular items or cancelled orders which are sold at a very low price.

ONLINE STORES: Stores that sell goods through the Internet.

CHAIN STORES
Shops run by a single company with multiple locations around the country.