Products and Brands

GCSE Business Studies

tutor2u™ Revision Presentations 2004
 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.

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 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

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 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

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 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.

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 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)

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 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

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 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
manufacturer’s
 Examples: Tesco tea or Sainsbury Cola

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 Examples of “Global” Brands
Microsoft
Coca Cola
Disney
Mercedes
Hewlett Packard

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 Brand Extension & Stretching
Brand extension
 When a business uses a brand name on a new product that has
some of brand’s 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

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 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)
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 Product Life Cycle (1)

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 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

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 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

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 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

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 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

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

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 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.

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 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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