4.5(a) Product

What are products

A product is anything that satisfies a customer's need or want. It can be physical (like a computer) or intangible (like education). Products are sold to individuals, businesses, or governments.
Value is essential for product success. Marketing helps add value through differentiation (like quality, packaging, or branding). Many new products fail, but some become global hits.
Products are classified as:
Consumer goods: Purchased by individuals for personal use.
Producer goods: Purchased by businesses for commercial use (like raw materials or equipment).

The product life cycle (PLC) describes the stages a product goes through, from its creation to its eventual removal from the market. The length of the cycle varies greatly between products.
There are typically five stages:
Research and Development (R&D): This stage involves creating the product idea, conducting market research, and testing prototypes.
Launch (Introduction): The product is introduced to the market, often with significant marketing to raise awareness. Pricing may be high initially.
Growth: Sales and brand recognition increase. Marketing focuses on persuading customers why the product is better than competitors and expanding distribution channels.
Maturity: Sales growth slows, but the product has a large market share. Profits are high due to economies of scale. Marketing focuses on reminding customers of the product's benefits and maintaining market share through competitive pricing.
Decline: Sales and profits fall. Cost-cutting becomes necessary, and promotion may be reduced or eliminated. Companies may try to extend the product's life cycle through strategies like product modification or entering new markets. If these fail, the product is withdrawn.

A product portfolio is the collection of all products a company owns. Managing it helps control sales, costs, profits, and risks.
The Boston Consulting Group (BCG) Matrix is a tool used to analyze a product portfolio. It categorizes products into four types:
Dogs: Low market share in a low-growth market. May need to be withdrawn or revitalized.
Question Marks: High growth market but low market share. Requires investment to increase market share.
Stars: High market share in a high-growth market. Generates significant cash.
Cash Cows: High market share in a low-growth market. Generates cash but may become dogs.
The ideal portfolio is balanced, with a mix of stars, question marks, and cash cows. Cash from cash cows can be used to invest in question marks and turn them into stars. Product portfolio management is dynamic, requiring constant evaluation and adjustment of marketing strategies.

Extension Strategies are techniques used to prolong a product's life cycle and delay sales decline.
Common strategies include:
Price Reductions: Lowering prices to increase demand.
Advertising: Using new promotional campaigns to attract customers.
Redesigning: Introducing new features or limited editions.
Repackaging: Changing the packaging to refresh the product.
New Markets: Selling the product in different locations or to new customer groups.
Brand Extension: Launching new versions of the product under the same brand name.
Changing the Brand Name: Rebranding to distance the product from negative publicity.
Repositioning the Product: Finding new markets or uses for the product.

Brand Awareness: How well-known a brand is among consumers.
Brand Development: The ongoing effort to improve a brand's image and sales.
Brand Loyalty: When customers consistently choose a particular brand.
Brand Value: The extra money customers are willing to pay for a branded product.

Branding differentiates products: Branding helps distinguish a company's products from competitors.
Branding impacts perception: Strong brands can influence how consumers feel about a product.
Benefits of Branding:
Legal Protection: Brand names create legal ownership and prevent imitations.
Reduced Risk: Strong brands encourage customer trust and loyalty, leading to better product survival.
Image Enhancement: Brands allow charging premium prices due to positive brand perception.
Revenue Generation: Branding fosters loyalty and repeat purchases, leading to higher revenue.