Product (Edexcel GCSE Business)

• The marketing mix (4Ps of marketing) provides a framework for businesses to create and implement successful marketing strategies
• The 4Ps represent the key elements of a marketing strategy: product, price, place, and promotion
• These four components work together to satisfy the needs and wants of a target market while achieving the company's objectives
   
• The product design mix refers to the combination of elements that make up a product's design
  • These elements include function, aesthetics, and cost
  • Products can be tangible goods (they can be held) or intangible services ( something the customer pays for but cannot necessarily touch e.g. web hosting service)
     
• Balancing the elements of function, aesthetics, and cost, helps the product design to be both functional and attractive, while also being cost-effective for both the manufacturer and the consumer
  • Some manufacturers aim to balance all three elements e.g. Fentimans ginger beer is relatively affordable and is packaged in eye catching bottles and the product itself is very good quality
  • Other manufacturers may focus on one aspect, more than the others e.g. Asda own brand ginger beer is produced at the lowest possible cost and sold to consumers at a very low price
     

Fentimans prioritises all three elements of the product design while Asda focuses on cost

 

Function

• The function of a product refers to its intended purpose and the specific tasks it is designed to perform
• A product's function is the most important aspect of its design because it determines how well the product will meet the needs of its intended users
  • E.g. A multi-plug adaptor which breaks after one months use will to be seen by customers to fulfil its function
    
    

Aesthetics

• Aesthetics refer to the product's visual and sensory appeal, including its form, shape, colour, and texture
• Aesthetics play an important role in attracting customers, creating brand loyalty, and generating word of mouth recommendations
  • E.g. Apple products are well known for their pleasing looks and use of quality materials
    
    

 Cost

• The cost of production must be considered when designing a product, as it directly affects the price point at which it can be sold
• A well-designed product should balance cost and value, ensuring that customers perceive the product as valuable enough to justify its cost while still maintaining profitability for the manufacturer
  • E.g. Asda own brand ginger beer is very cheap to produce and is sold at a very low price

• The product life cycle describes the different stages a product goes through from its conception to its eventual decline in sales
• There are typically five stages in the product life cycle: development, introduction, growth, maturity, and decline
    

The five stages a product goes through over its life span - from development to decline (and ultimately withdrawal from a market)

  

•  The implications for cash flow and marketing vary at each stage of the product life cycle
• Companies should tailor their marketing strategies and manage their cash flow to ensure long-term profitability and success
   

The Implications of the Product Life Cycle for the Business cash flow and Marketing Strategy

Stage	Explanation	Implication
Development	The focus is on designing and developing the product The business usually incurs high costs for research and development, market research, and product testing	Cash flow is usually negative during this stage, as the company is investing heavily in the product without generating any revenue The marketing strategy during this stage is focused on creating awareness and generating interest in the product
Introduction	The stage begins when the product is launched   Characterised by slow sales growth as the product is still new and unknown to most consumers	Cash flow is usually negative as the business usually incurs high costs for promotion, advertising and distribution   Marketing efforts are focused on creating awareness and generating interest in the product
Growth	The product enters this stage when sales begin to increase rapidly   The business focus shifts to building market share and increasing production to meet the growing demand	Cash flow usually turns positive during this stage as sales revenue increases and costs are spread out over a larger volume of production   The marketing strategy is to differentiate the product from its competitors and build brand loyalty
Maturity	Characterised by slowing sales growth as the product reaches its peak in terms of market penetration	Cash flow is usually positive during this stage as sales revenue continues to come in and costs are reduced through economies of scale and efficient production processes   The marketing strategy aims to maintain market share and increase profitability by cutting costs and finding new markets
Decline	Starts when sales begin to decline as the product becomes obsolete or is replaced by newer products   The business focus shifts to managing the product's decline and reducing costs	Cash flow usually turns negative as sales revenue declines and costs associated with the product's decline increase   The marketing strategy may involve discontinuing the product, reducing its price to clear inventory, or finding new uses for the product

• Extension strategies refer to the techniques used by businesses to extend the life of a product beyond its natural life cycle
• These strategies are designed to boost sales and maintain profitability for a product that has reached the decline stage of its life cycle
• There are two types of extension strategies:
  • Product-related extension strategies
  • Promotion-related extension strategies
     

Product-related extension strategies

• Involves changing or modifying the product to make it more appealing to customers and extend its life cycle and cone be achieved in one of three ways:
  • Product improvements e.g. Samsung releases new versions of its Galaxy Smartphone every year with upgraded features and improvements to the previous model
  • Line extensions e.g. Coca-Cola introduced Diet Coke and Coke Zero as line extensions of its original Coca-Cola
  • Repositioning e.g. when IBM's personal computer division started losing market share to other brands, it repositioned its products as high-end business machines and focused on the enterprise market
     

Promotion-related extension strategies

• Involves changing the marketing and promotion of the product to extend its life cycle and could include one or more of the following changes:
  • Changes to advertising e.g Kellogg's continues to recreate adverts for its Corn Flakes cereal which has been around since 1906
  • Price promotions e.g. Cyber Monday occurs on the first Monday after Thanksgiving in the USA and electronic firms discount prices significantly in order to boost sales of their products
  • Sales promotions e.g. many coffee shops offer a loyalty program where customers can earn a free drink for every six consumed

• Product differentiation is an attempt by a business to distinguish its products from those of competitors
  • This involves creating functions or features of the product (or firm) which help it to stand out from its competitors
    
  • Strong product differentiation helps the firm to develop its competitive advantage
  • The development of product differentiation often helps a firm to create a unique selling point for its product which can be used in marketing
  • Product differentiation may be tangible (clearly visible) or it may be a perception that is created about the product in the consumer's mind
     
• Successful product differentiation helps the business to increase demand for its products, increase brand loyalty, and allow the business to charge higher prices
   

• Examples of successful product differentiation include:
  •  In 2014 Hyundai Cars in Singapore introduced a three year warranty on all new cars when the industry standard was one year
  • Green & Black use Fairtrade cocoa AND sugar in the production of their chocolate