The Marketing Mix – Product
This chapter focuses on the product part of the marketing mix. It explains the four Ps, product decisions, consumer and producer products, USP, product development, branding, packaging, the product life cycle and extension strategies.
Topic 1: Marketing Mix and Product Decisions
The product must meet customer needs. If the product is weak, price, place and promotion alone are unlikely to make it successful.
1. The Marketing Mix
It consists of the four Ps:
- Product – design, features, quality and packaging.
- Price – the amount customers pay.
- Place – where and how the product is sold.
- Promotion – how customers are informed and persuaded to buy the product.
2. Importance of Product Decisions
Product is one of the most important parts of the marketing mix. A product must meet customer needs or the other parts of the marketing mix are unlikely to make it successful.
Businesses need to consider:
- Design
- Quality
- Reliability
- Features
- Packaging
- Customer needs
- Competitors' products
3. Types of Products
Products can be divided into four main types.
Consumer Goods
Physical goods bought by consumers for their own use.
Examples: food, furniture and computers.
Consumer Services
Services bought by consumers for their own use.
Examples: hairdressing, car repairs and education.
Producer Goods
Goods bought by businesses to help produce other goods or services.
Examples: machinery, trucks and components.
Producer Services
Services provided to other businesses.
Examples: accounting, insurance and advertising services.
4. What Makes a Product Successful?
An effective product should:
- Satisfy customer needs. If customers do not want the product, it will not sell.
- Have suitable quality, reliability and design. The quality should match the product's price and brand image.
- Be different from competitors. A distinctive feature can encourage consumers to choose it.
- Not be too expensive to produce. Production costs need to allow the business to sell the product profitably.
5. Unique Selling Point (USP)
Examples might include a product being:
- Faster
- Easier to use
- More reliable
- Uniquely designed
Topic 2: Product Development, Branding and Packaging
Businesses use product development, branding and packaging to create products that customers recognise, value and buy repeatedly.
6. Developing a New Product
The main stages of product development are:
7. Benefits of Developing New Products
Three important benefits are:
1. Gives the business a USP
Being first with a new product may give the business an advantage over competitors.
2. Diversification
The business has a wider range of products, reducing dependence on one product.
3. New markets
New products can allow the business to enter new markets and increase sales.
8. Costs and Risks of Developing New Products
Three important disadvantages are:
1. Market research is expensive
The business must research whether customers want the product.
2. Development and testing costs
Producing prototypes and trial products can be expensive.
3. Product failure
If customers do not like the product, sales may be low and the business could lose money and damage its image.
9. Branding
Businesses use branding to make their products easier to recognise and different from competitors.
10. Brand Image
For example, a business might create an image of being:
- Luxurious
- Fashionable
- Reliable
- High quality
Benefits of a strong brand image
- Helps distinguish the product from competitors.
- Customers may be willing to pay a higher price.
- Can encourage brand loyalty.
11. Brand Loyalty
Brand loyalty can provide the business with:
- Repeat sales
- More stable demand
- Stronger customer relationships
12. Packaging
Packaging has two main roles:
1. Protect the Product
Packaging should prevent damage, keep the product fresh where necessary, make transportation easier and allow the product to be used easily.
2. Promote the Product
Packaging can attract customers' attention, reinforce the brand image and make the product easy to recognise.
Important product information
Packaging may also provide important information such as ingredients, storage instructions and expiry information.
Topic 3: Product Life Cycle
The product life cycle shows how sales can change from launch to decline. Students should be able to draw and interpret this diagram.
13. Product Life Cycle
The main stages are:
14. Development Stage
During development:
- The product is designed and tested.
- Market research is carried out.
- There are no sales yet.
- Development costs are incurred.
15. Introduction Stage
The product is launched onto the market.
Characteristics
- Sales are low and grow slowly.
- Customers may not yet know about the product.
- Heavy informative promotion may be required.
- Profits may be low or negative because development costs have not yet been recovered.
16. Growth Stage
The product becomes more popular.
Characteristics
- Sales increase rapidly.
- Profits begin to increase.
- Competitors may enter the market.
- Promotion may focus on creating brand loyalty.
17. Maturity Stage
The product is well established.
Characteristics
- Sales continue to increase, but slowly.
- Competition becomes intense.
- Advertising is used to maintain sales.
- Profits are usually high.
18. Saturation Stage
Sales reach their highest level and become stable.
Characteristics
- Sales stop growing.
- Competition is high.
- Prices may need to be reduced.
- Profits may begin to fall.
19. Decline Stage
Sales begin to fall. This may happen because:
- Customer tastes change.
- New products appear.
- New technology makes the product outdated.
Promotion is usually reduced and the business may eventually stop producing the product.
20. Product Life Cycle Diagram
Students should be able to draw and interpret this diagram.
21. Product Life Cycle and Marketing Decisions
The stage of the product life cycle can influence price and promotion.
| Stage | Price and promotion decisions |
|---|---|
| Introduction | Promotion is usually high to make customers aware of the product. A new and unique product may have a relatively high price. |
| Growth | Advertising encourages brand loyalty. Prices may remain relatively high but competition begins to increase. |
| Maturity/Saturation | Prices may be reduced because competition is strong. Promotion is used to maintain sales. |
| Decline | Prices may be heavily discounted. Advertising is usually reduced unless an extension strategy is used. |
Topic 4: Extension Strategies and Exam Focus
Extension strategies aim to keep a product successful for longer and delay the decline stage.
22. Extension Strategies
Important methods include:
- Introduce an improved version: add new features or improve the existing product.
- Change the design or packaging: a new appearance may attract customer attention again.
- Enter new markets: for example, start selling the product in another country.
- Use a new advertising campaign: promotion can renew customer interest.
- Introduce new variations: for example, new flavours, sizes or versions.
Key Definitions
| Term | Meaning |
|---|---|
| Marketing mix | Product, price, place and promotion used to market a product |
| Consumer good | Physical product bought by consumers for personal use |
| Consumer service | Service bought by consumers for personal use |
| Producer good | Good bought by another business to assist production |
| Producer service | Service provided to another business |
| USP | Special feature that distinguishes a product from competitors |
| Brand name | Unique name that distinguishes a product |
| Brand image | Identity or personality created for a product |
| Brand loyalty | Customers repeatedly buying the same brand |
| Packaging | Physical container or wrapping used to protect and promote a product |
| Product life cycle | Stages a product passes through from introduction to decline |
| Extension strategy | Method of extending the maturity stage and delaying decline |
What Students Must Know for the Examination
- Identify the four Ps of the marketing mix.
- Explain the importance of product decisions.
- Distinguish between consumer and producer goods and services.
- Explain what makes a product successful.
- Explain key benefits and risks of developing new products.
- Explain USP, brand name, brand image and brand loyalty.
- Explain the main purposes of packaging.
- Draw and interpret the product life cycle.
- Identify the stages of development, introduction, growth, maturity, saturation and decline.
- Explain how life-cycle stages affect pricing and promotion.
- Recommend suitable extension strategies for a product.