Products and Brands

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Products and Brands

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Physical products. Cars. Washing machines. DVD players. Services. Dental treatment. Accountancy. Travel ... Which ones should they allow to fail or shrink? ... – PowerPoint PPT presentation

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Title: Products and Brands


1
Products and Brands
GCSE Business Studies
tutor2u
Revision Presentations 2004
2
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.

3
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

4
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

5
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.

6
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)

7
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

8
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

9
Examples of Global Brands
  • Microsoft
  • Coca Cola
  • Disney
  • Mercedes
  • Hewlett Packard

10
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

11
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)

12
Product Life Cycle (1)
13
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

14
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

15
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

16
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

17
BCG Matrix (1)
  • A method of classifying products (or businesses)
    based on
  • Market share
  • Rate of growth in the market

18
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.

19
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.
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