4.5 - 7Ps of Marketing Mix: Product Flashcards
(26 cards)
Product
Any good or service that serves to satisfy the needs and wants of customers
* intangible (softwares)
* tangible (smartphones(
Consumer products (+ 4 types)
Purchased by private individuals for their personal use
* consumer perishables
* consumer durables
* specialty consumer goods
* fast moving consuming goods
Producer products
(Industrial goods) Purchased by businesses to use in the production process
Product life cycle
Shows different stages that a product is likely to go through from its initial design and launcg to its decline
Product portfolio
The collection of all the products owned by a business at a point in time
Features of R&D and development stage of PLC (4)
- companies invest a lot of money developing a new idea into a product
- no sales revenue as the product is not available for sale
- high R&D costs
- prototypes and test markets are used
Features of the launch stage of PLC (name 4)
- products are introduced to the market
- sales increase slowly
- extensive promotion takes place
- not profitable at this stage (low sales and high expenses)
- objective is to move to the growth stage as quickly as possible
- buyers here are known as Innovators
- products here are question marks due to low market share in a market with high growth
Features of the growth stage of PLC (name 4)
- rapid increase in sales due to greater consumer awareness
- more channels of distribution (place)
- strong profits
- more competitors
- product differentiation strategies used
- buyers are called Early adopters
- products are stars due to high market share in a rapidly growing market
Features of maturity stage in PLC (name 4)
- sales increasing (but a slower rate) and peak
- economies of scale are possible
- heavy promotion takes place to differentiate brands
- product lines extended (with more product versions and variations)
- unsuccessful competitors drop from the market
- buyers known as the majority
- products in this stage are cash cows due to high market share in a market that is expecting slower rates of growth
Features of the decline stage in PLC (name 4)
- sales and profit fall
- demand is slow due to changing fashion and tastes new replacement models or obsolete technology
- promotional spending falls or stops
- buyers are called Laggards
- products in this stage are dogs due to low market share in a market experiencing slow rates of growth
Example of PLC for the automobile industry
- R&D: typically unknown to the market
- Launch: self-driving cars
- Growth: electric cars
- Maturity: petrol cars
- Decline: diesel cars
Investment expenditure in the PLC (each stage)
- R&D: basic and applied research
- Launch: promotion, capital investment
- Growth: promotion, product improvement, capacity expansion
- Maturity: extension strategies
- Decline: divestment
Profit in the PLC (each stage)
- R&D: no profit
- Launch: little profit, if any
- Growth: profit achieved, once R&D and launch costs recovered
- Maturity: maximum profit (depending on costs to defent market share)
- Decline: profit disappears as prices are reduced and sales decrease, product termination costs
Cash flows in the PLC (each stage)
- R&D: highly negative
- Launch: negative
- Growth: turns positive
- Maturity: positive
- Decline: positive but falling
Reason for extending the maturity stage of PLC
To keep the greatest amount of sales and profit
Extension strategies in PLC (5)
- price reductions
- redesigning
- repackaging
- new markets
- new promotional activities
Brand (+ 2 examples)
Refers to a name or trademark that is identifiable with a business or product - a key product differentiatior and an intangible asset:
* sign
* symbol
* colour scheme
* font
* design
Aspects of branding
- brand awareness
- brand development
- brand loyalty
- brand value
Brand awareness
Measures the extent to which potential customers recognise a brand
Advantages of brand awareness (name 2)
- higher sales revenues
- competitive advantage
- repeat purchases
Brand development
The marketing process of improving and enlarging the brand name - can help extend PLC
Brand loyalty
When customers buy the same brand time and time again through devotion due to preferences over other brands
* opposite: brand switching
Benefits of brand loyalty (name 2)
- maintains/improves market share
- ability to set premium pricing
- acts as barrier to entry in highly competitive markets
- prolongs the product and brand’s life cycle
Brand value
The premium that customers are willing to pay for a brand name over and above the value of the product itself
