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the marketing mix: product (the importance of brand image (needs…
the marketing mix: product
the 4 Ps
product
its design and quality
how does it compare with competitors' products?
what is the packaging like?
price
the price at which the product is sold
a comparison must be made with prices of competitors
the prices should cover costs (long run)
place
this refers to the channels of distribution that are selected
what method of getting the product to the market is to be used?
will the manufacturer sell their product to shops who sell to public, or to wholesalers, or direct to the customers?
promotion
this is how the product is advertised and promoted
what types of advertising media will be used?
includes discounts that may be offered or any other types of sales promotion, such as money-off vouchers or free gifts
the role of product decisions in the marketing mix
types of product
consumer goods
these are goods which are consumed by people
can be goods that don't last long, (food and cleaning materials)
some goods last a relatively long time and give enjoyment over a long time (furniture and computers)
consumer services
these are services that are produced for people
e..g. repairing cars, hairdressing and education
producer goods
these are goods that are produced for other businesses to use
they are bought to help with the production process
e.g. lorries, machinery and components
producer services
these are services that produced to help other businesses
e.g. accounting, insurance and advertising agencies
successful product
the product needs to satisfy consumer wants and needs. if it does not then it will not sell
the product also needs to be of the right quality so the price is what consumers are willing to pay
the costs of production must be enable a price to be set that will produce a reasonable profit
design of the product is very important. not only does the quality need to be appropriate for brand image but it also has to last a reasonable length of time
product development
1) generate ideas
employees
customers' suggestions
competitors' products
research and development department
sales department
2) select best ideas for
further research
need to decide which ideas to abandon and which to research further. some products might be too expensive to manufacture, other products would probably not sell well
3) decide if the company will be able to sell enough
for the product to be a success
the marketing department now looks in detail at the remaining ideas. they assess how large they think the sales would be and the likely size of the market share. a
break-even
analysis is carried out to see how many sales would be needed to cover costs. development cost should also be included
4) develop a prototype
a prototype allows the Operations department to see how a product could be manufactured. it also allows them to foresee any problems with the manufacturing process. many large companies use computer simulations for part of this process
5) launch the product in one part of the country
to test the market
the product is launched on to one small part of the market. this allows the company to see how well the product sells without committing large amounts of money for a national launch. if the product does not sell well, it can be altered or scrapped without too much harm to the company.
6) go to a
full launch
of the product to the whole market
the product is launched on to the main market. this will probably be the national market to begin with. later it could be expanded
the costs and benefits of developing new products
benefits for business
USP (unique selling point) will mean the business will be first into the market with a new product
diversification for the business, therefore giving it a broader range of products to sell
it allows the business to expand into new markets
it may allow business to expand into existing markets
costs for the business
the costs of carrying out market research and analysing the findings
the costs of producing trial products including the costs of wasted materials
lack of sales if the target market is wrong
loss of company image if the new product fails to meet customer needs
the importance of brand image
needs advertising to reinforce the brand's qualities
higher quality than unbranded products
always of the same standard (assured quality)
unique packaging
unique brand name
higher price than unbranded products
creates a brand image (an image associated with consuming the product)
encourages customers to keep buying it (brand loyalty)
packaging
protects the product
easy to transport the product
easy to open the container and use the product
suitable for the product to fit in
eye-catching
carries information about the product
promotes the brand image
the product life cycle
1) first a product will be
developed
. the prototype will be tested and market research carried out before the product is launched on to the market
2) it is then
introduced
or launched on to the market. sales will grow slowly at first because most consumers will not be aware of its existence. informative advertising is used until the product becomes known.
price skimming
may be used if the product is a new development and there are no competitors. no profits are made at this point as development costs have not yet been covered
3) sales start to grow rapidly. the advertising is changed to persuasive advertising to encourage brand loyalty. prices are reduced a little as new competitors enter the market and try to take some of your customers. profits start to be made as the development costs are covered
4)
maturity
. sales now increase only slowly.. competition becomes intense and pricing strategies are now competitive or promotional pricing. a lot of advertising is used to maintain sales growth. profits are at their highest
5) sales have reached a
saturation
point and stabilise at their highest point. competition is high but there are no new competitors. competitive pricing is used. a high and stable level of advertising is used, but profits start to fall as sales are static and prices have to be reduced to be competitive
6) sales of the product will
decline
as new products come along or because the product has lost its appeal. the product will usually be withdrawn from the market when sales become so low and prices have been reduced so far that it becomes unprofitable to produce the product. advertising is reduced then stopped
extending the life cycle of a product
introduce new variations of the original product (e.g. a children's version)
sell into new markets (e.g. export the product to another country)
make small changes to the product's design, colour or packaging
use a new advertising campaign
introduce a new, improves version of the old product
sell through additional different retail outlets