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Product

In P2 you will need to “ describe the role of promotion within the marketing mix ” . Product. PRODUCT. “Product” refers to the goods or services provided It is the fundamental part of the marketing mix – it is the part that customers will use!

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Product

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  1. In P2 you will need to “describe the role of promotion within the marketing mix” Product

  2. PRODUCT • “Product” refers to the goods or services provided • It is the fundamental part of the marketing mix – it is the part that customers will use! • Developing new products is important to businesses… • To counter competitor actions • To keep up with changes in the market • To smooth out seasonal fluctuations • To spread risk into new markets (diversification) • To increase or maintain market share • To replace old, unpopular or discontinued products coming to the end of their life cycle

  3. Product design depends on many factors Businesses must make sure that their product meets the needs of the customers. In order to do this, they will need to pay attention to a number of factors:- • How will customers use the product? • The appearance of the product   • Financial factors  • The product’s life cycle   • A products USP (unique selling point) • The desired market position

  4. Product Life Cycle • 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

  5. Product Life Cycle Extension strategies Sales Time 1 2 3 4 5 Develop- Introd- Growth Maturity Decline ment uction

  6. Product Life Cycle - Stages • Development • Researching, developing and then launching product • Note – many new products fail to get past this stage • Introduction • 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 • Decline • Final stage of cycle, when sales are falling • Product may be withdrawn if it is loss-making

  7. Different types of life cycle • Not every product follows the classic life cycle pattern • Consider the life cycle of the following products: • Cadburys Cream Eggs • Kit Kat • Apple Ipad • Fashion items

  8. Implications

  9. QUESTION: Underlow PLC is a leading producer of washing powders and household detergents. Sales of one of its oldest and most successful products “Maq Auto” have begun to decline. Discuss the actions that Underlow might take

  10. Extending the Life of a Product • Promotion • Advertising – try to gain a new audience or remind current audience • Product placement – reaffirming brand • Special offers – bundling, competitions, etc • Product variations – add value through new features, new flavours, etc • Price reduction– more attractive to customers • Explore new markets– try selling abroad • Re packaging– brightening up old packaging, or subtle changes (e.g. putting crisps in foil packets)

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