3.3 The Marketing Mix: Product (knowledge)

Question 1

Explain the 4Ps of the marketing mix ?

Answer 1

1. Product: the design, features and quality of the good or service itself
2. Price: price at which the product is sold to customer is a key part of marketing mix => compare with competitors’
3. Place: the channels of distribution that are selected e.g sell to shops, sell to wholesalers, online websites
4. Promotion: how product is advertised & promoted e.g types of advertising media, discounts, gifts (vouchers)

Question 2

What are the different types of products ?

Answer 2

1. Consumer goods: goods bought by consumers for own use e.g furniture, computers
2. Consumer services: services bought by consumers for own use e.g repairing cars, hairdressing
3. Producer goods: goods produced for other businesses to use e.g trucks, machinery
4. Producer services: services produced to help other businesses e.g insurance, advertising agencies

Question 3

What are the two types of goods ?

Answer 3

1. Durable goods: goods that last & give enjoyment over a long time
2. Single-use goods: goods that do not last long

Question 4

What makes a product successful ?

Answer 4

• Satisfies existing needs and wants of consumers
• Design: performance, reliability & quality should all be consistent with product’s brand image
• Not too expensive to produce relative to the price that could be charged
• Has something very distinctive that makes it appear different
• First business to produce new product/introduce changes to original product before its competitors

Question 5

What is the process of developing a new product ?

Answer 5

1. Generate ideas
2. Select the best ideas for further research
3. Decide if the company will be able to sell enough for the product to be success
4. Develop a prototype to foresee problems & improve them
5. Launch the product in one area to test the market
6. Go to a full launch of the product to the whole market

Question 6

What are the benefits for developing new products ?

Answer 6

+ Unique selling point => business will be first into the market with the new product
+ Diversification for business => broader range of products to sell & spread risk
+ Business can expand into new markets/existing market

Question 7

What are the costs (limitations) for developing new products ?

Answer 7

• Costs of carrying out market research & analyse the findings
• Costs of producing trial products e.g costs of wasted materials
• Lack of sales if target market is wrong
• Loss of company image if new product fails to meet customer needs

Question 8

What is the importance of brand image to a business ?

Answer 8

• Branded products considered to be higher quality than unbranded products => assurance for customers => increase sales
• Branded products can be charged higher price than unbranded products => increase profits
• Encourage customers to keep buying existing products (brand loyalty)

Question 9

What is the role of packaging for the marketing mix of a product ?

Answer 9

1. Give protection to the product => prevent it from being spoiled
2. Attractive & appealing => promotes the product & catch the eyes of customers when they shop
3. Establish & reinforce the business’s brand image
4. Provide key information to customers through labels (legal requirement)
5. Easy to transport the product from factory to shop

Question 10

What are the stages in the product life cycle ?

Answer 10

1. Product is developed, prototype is tested & no sales at this time
2. Introduced/launched to the market, no profits made as development costs haven’t been covered
3. Sales start to grow rapidly, start to make profit as development costs are covered
4. Maturity: sales increase only slowly (profits are at their highest)
5. Sales reach saturation point & stabilise (profits start to fall)
6. Sales of product decline => usually withdrawn from the market as no longer profitable

Question 11

Draw the product life cycle diagram

Answer 11

I have drawn it

Question 12

How can a business extend the life cycle of their products ?

Answer 12

• Introduce new variations of original product e.g a children’s version
• Sell into new markets e.g export product to another country
• Make small changes to the product’s design, colour or packaging
• Use a new advertising campaign
• Introduce a new, improved version of the old product

Question 13

When the extension strategies are effective, how can this benefit the product ?

Answer 13

The maturity phase of the product life cycle will be prolonged

Question 14

How the stages of the product life cycle influence marketing decisions ?

Answer 14

Knowing the stage of the life cycle that a product is in can help a business with pricing and promotion decisions

Question 15

How can knowing the stage of the life cycle that a product is in can help a business with promotion decisions ?

Answer 15

• Spending on promotion will be higher at introduction stage => inform consumers of the product & to define the identity of the new brand
• Advertising reduced in later stages either as the product is well known/business wants to use marketing budget on newer products
• Promotion spending might increased again if business decides to adopt extension strategy => convince customers that product is worth buying once more

Question 15

How knowing the stage of the life cycle that a product is in can help a business with pricing decisions ?

Answer 15

• A branded product is likely to be sold at high price when first introduced to market (low price could give wrong message about quality)
• Prices are likely to be higher than competitors in growth stage as product is “newer” than those of rivals
• In saturation/maturity stage, business reduce price of products to stop sales declining/because competitors launch new versions of product
• Substantial price discounts might be offered during decline stage especially if business does not plan to “extend is life”