Product
Product refers to any physical or non-physical item (good or service) that is purchased by commercial or private customers.
Tangible products are physical goods, such as cars, computers and smartphones.
Intangible products are non-physical services, such as haircuts bus rides and visits to the cinema.
Products must add value in order
to stand any chance of success
Classification
Their classification is only different based on who buys the product and for what purpose, rather than the physical attributes of the product.
Consumer goods are products purchased by private individuals for personal consumption, such as furniture, computers and fresh flowers.
Producer goods are products purchased for commercial (business) use, rather than for private consumption.
They are used in the production process to help the running of a business
Product portfolio refers to the collection of products owned by an organization at any one point in time.
The product life cycle refers to the typical process that products go through from their initial design and launch to their eventual decline and withdrawal from the market.
Measured in terms of sales revenue
Allows managers to identify any necessary changes and to take appropriate action as part of an improved marketing strategy.
Five stages of the product life cycle
- Research and development
- Launch (introduction)
- Growth
- Maturity
- Decline
A prototype is a trial product, produced to assess the potential success of the product.
Extension strategies are attempts by marketers to lengthen the life cycle of a particular product, typically used during the maturity or early decline stages of the product's life cycle.
Price reductions
Redesigning
Repackaging
Advertising
New markets
Brand extension
Product differentiation
Change brand name
Reposition the product
The phase of a product in its life cycle will have a direct impact on the firm's investment, profit and cash flow.
Aspects of branding
A brand refers to a name that is identifiable with a product of a particular business.
Brand awareness
Brand awareness measures the extent to which people recognize a particular brand.
Key part of promoting a product or business.
Brand awareness plays a major part in the buying decision of consumers.
Gives the business a competitive edge over its rivals, resulting in greater market share.
It can also encourage repeat purchases if customers like and trust the brand.
Raising brand awareness is of particular importance during the launch stage of a product's life cycle.
Brand development
Brand development refers to the ongoing and long-term marketing process of improving and enlarging the brand name in order to boost sales revenue and market share.
Helps a business to stand out from other brands in the market.
It takes a lot longer to develop a brand and the desired image.
Can occur quite quickly, especially with an effective marketing strategy,
Test marketing is the trialling a new product with a sample of customers, perhaps in a limited geographical area, to determine the reactions of customers and to gather valuable feedback before a full launch.
Brand loyalty
Brand value
Brand loyalty occurs when customers buy the same brand of a product repeatedly over time.
It helps businesses to maintain or improve their market share.
It enables businesses to charge premium prices for its products, which improves their profit margins.
It acts as a barrier to entry in highly competitive market this is because brand loyalty reduces the likelihood of brand switching.
It plays a major role in the future success of a business, helping to prolong the product and brand's life cycles.
Brand switching occurs when consumers turn to alternative brands mainly because the original brand has lost some of its former appeal
Customer loyalty schemes are a form of sales promotion used to entice customers to stick to the brand by rewarding devoted customers.
Brand value refers to the premium that customers are willing to pay for a brand name over and above the value of the product itself
Advantages
Higher market share
Premium prices
Higher barriers to enter
Logos are a form of branding that uses a visual symbol to represent a business, its brands or its products.
Slogans are catchphrases used to represent the essence of a business or its products in a memorable way.
The importance of branding
Branding is a legal instrument
create a legal identity for a product by giving it a unique and recognisable name and image to differentiate it from other products.
Branding is a risk reducer
Branding is an image enhancer
Branding is a revenue earner
Why brand is more important than the product
Intangibility
Timeless
Uniqueness
Intangibility - Brands represent the intangible value that customers place on the actual physical product. Marketers argue that it is the brand that sells a product, not the other way round.
Brands are unique, whereas a product is quite easily copied.
Successful brands are timeless, whereas products can become obsolete (as they reach the end of their life cycle)
Genericized brands are so popular that they become synonymous with the name of the product itself.
Global brands are highly popular products sold with exactly the same (or very similar) marketing strategies in overseas markets, using the same brand name in different countries.
Innovators are consumers who strive to be the first to own a certain product, usually due to prestige or loyalty to a particular brand or product.
Marketing myopia exists when a business becomes complacent about its product strategy, thereby failing to keep up with market changes
A multi-brand strategy involves a business developing two or more brands in the same product category.
Product cannibalization occurs when brands from the same business directly compete with each other.
Product differentiation refers to any strategy used to make a product appear to be distinct from others, such as quality, branding and packaging.