Products and Brands

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Products and Brands
GCSE Business Studies
tutor2u
Revision Presentations 2004
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What is a Product?

• A product is anything that is capable of
  satisfying customer needs. This definition
  therefore includes both
• Physical products
• Cars
• Washing machines
• DVD players
• Services
• Dental treatment
• Accountancy
• Travel agents
• Products are at the heart of marketing. The
  product needs to exist for the other elements of
  the mix to happen.

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Parts of a Product

• For someone doing marketing, the product has
  various parts that need to be considered
• Product specifications and materials
• Product design or styling
• Product functions and benefits
• Product packaging
• Product range

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Product Differentiation

• Products that are the same tend to get the same
  price
• Challenges for a business
• To make products different from competitors
• 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

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Launching a New Product

• Marketing research find out what customers
  want, who they are, and where the gaps are in the
  marketplace
• Product development and testing make
  prototypes experiment by allowing a sample of
  potential customers to trial the product before
  it is launched
• Distribution of product to outlets the product
  cannot be sold unless it is in a position for
  customers to buy it books will need to be in
  the bookshops and hammers in the hardware stores
• Promotional launch to inform customers features
  of new product this might be done locally,
  nationally or internationally the customers
  need to know that the product is ready, available
  and that it might be the sort of thing they want
  to buy
• At the first two stages (marketing research and
  product development/testing) many products are
  rejected because the findings of research shows
  that it will not be successful, or they cannot
  make a satisfactory prototype. Product testing
  might show that customers react badly to the
  product.
• The new product launch needs all the elements of
  the mix to be in place to be successful.

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Product Range

• Product range a collection of similar products
  offered by the same business
• Helps spread risk a decline in one product may
  be offset by sales of other products
• 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)

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Marketing Services

• Services are mainly marketed through product
  differentiation
• Similar products are adjusted to target audience
• Businesses then use heavy promotion to highlight
  these differences.
• Differs from goods marketing, because goods have
  greater opportunity to use packaging and physical
  product design

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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 manufacturers
• Examples Tesco tea or Sainsbury Cola

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Examples of Global Brands

• Microsoft
• Coca Cola
• Disney
• Mercedes
• Hewlett Packard

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Brand Extension Stretching

• Brand extension
• When a business uses a brand name on a new
  product that has some of brands 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

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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)

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Product Life Cycle (1)
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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 o 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

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Product Life Cycle - Stages

• 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
• Decline
• Final stage of cycle, when sales are falling
• Product may be withdrawn if it is loss-making

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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

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Managing Portfolios of Products

• What is a product portfolio?
• All the product lines and product ranges that a
  company offers for sale
• What is involved in managing the product
  portfolio
• Decisions about how to allocate the promotional
  budget
• Decisions about pricing strategy
• Decisions about whether to invest in new /
  improved products
• Decisions about whether to withdraw or close a
  product

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BCG Matrix (1)

• A method of classifying products (or businesses)
  based on
• Market share
• Rate of growth in the market

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BCG Matrix (2)

• 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 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.

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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.