The product must be:
- able to satisfy existing consumer wants and needs
- the right quality so that the consumers are willing to pay the price
- the right price so that producers make a reasonable profit
- designed to suit brand image
- durable
- easy to fix/service
- having good features
- easy to manufacture
- able to perform to a standard expected from it
- reliable
- capable of stimulating new wants from the consumer
- having some very distinctive qualities to make it stand out
- the first of it’s in the market or be new and improved in comparison to its competitors
Types of Products
| Consumer Goods | Goods consumed by people | Food |
| Consumer Services | Services produced for people | Hairdresser |
| Producer Goods | Goods produced for other businesses to use | Machinery |
| Producer Services | Services to help other businesses | Advertising Agencies |
Product Development
- Generate ideas with the help of:
- sales department
- research and development department
- employees
- customers’ suggestions
- competitors’ products
2. Select the best ideas for further research and abandon the rest
3. Decide if the company will be able to sell enough for the product to be a success
4. Develop a prototype. It will help foresee problems with manufacturing.
5. Launch the product in one part of the country to test the market and see how well the product does without committing large amounts of money for a nationwide launch. It can then be altered or scrapped.
6. Go to full launch of the product in the market
- Product development will help the business grow and stay competitive
Branding
- The process involved in creating a unique name and image for a product in the consumers’ mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers.
Reasons for Branding | |
| Helps in Product Differentiation | The product should distinguish itself from other products in the eyes of the consumer. The product’s unique features and reasons for buying it must be conveyed |
| Gives Assurance of Quality | Gives the customers confidence in buying it |
| Establishes Brand Loyalty | Consumers keep buying the same brand over and over again instead of choosing competitors’ brands |
| Creates Brand Image | The identity given to a product which gives it a personality of its own and distinguishes it from other brands. The brand image must be reinforced by advertising. |
| Ability to Charge Higher Prices | Allows the charging of higher price than unbranded products due to brand image & product differentiation |
Packaging
- The physical container or wrapping for a product. It is also used for promotion and selling appeal.
It must:
- be suitable for the product to be put in
- provide protection to the product
- not allow the product to spoil
- allow the product to be easily used
- be suitable for transportation
- not be too delicate otherwise the product could get easily damaged
- be appealing- color & shape
- enforce the brand image
- carry vital information about the products e.g. ingredients
Product Lifecycle
- Describes the stages a product will pass through from its introduction through its growth until it is mature and then finally its decline
- The exact length of a life cycle in terms of time varies a great deal from product to product and is affected by the type of the product.
- New developments in technology will make original products obsolete
- The exact stage that a product is at needs to be identified so that a business knows what it can do to prices or promotion to stay competitive.
- In different stages, the business will need to react differently.
| Stage | Details | Sales | Advertisement/Promotion | Competition | Price/Profit |
| Development | the prototype will be tested and market research will be carried out before the product is launched | N/A | N/A | N/A | N/A
|
| Introduction | the product will be launched to the market | Sales will grow slowly as word spreads | Informative advertisement | Little/ no competitors | Price skimming with no profit since the development costs have not yet been covered |
| Growth | High rate of sales growth | Persuasive advertisement to encourage brand loyally | New competitors begin to enter the market | Prices are reduced a little and profits start to be made since the development costs are covered | |
| Maturity | Sales only increase slowly | High advertisement | Incredibly intense competition | Competitive or promotional pricing. Profits are at their highest. | |
| Saturation | Products stabilize at their highest point | Sales are static | High and stable advertisement | High competition but no new competitors | Competitive pricing. Profits start to fall. |
| Decline | Product begins to decline since new products come along or because the product has lost its appeal. Product may be withdrawn from the market. | Low sales | Advertising is reduced and then stopped | Competitors/ new competition takes over market | Low prices. Unprofitable. |
Extending the Product Lifecycle
- When a product reaches the maturity or saturation stage of its product lifecycle, a business may stop sales starting to fall by adopting extension strategies.
There are ways that sales may be given a boost:
- introducing new variations of the original product
- sell into new markets
- make small changes to the product design or packaging
- sell through additional, different retail outlets
- introduce a new, improved version of the old product
- use new advertising campaign
- develop complementary products
- find new uses for the product
- attempt to increase usage
- If the extension strategies are effective, the maturity phase of the product life cycle will be prolonged
Business Studies IGCSE