Product (Edexcel GCSE Business)

The Design Mix

• The marketing mix (4Ps of marketing) provides a framework for businesses to create and implement successful marketing strategies

• The 4Ps represent the key elements of a marketing strategy: product, price, place, and promotion

• These four components work together to satisfy the needs and wants of a target market while achieving the company's objectives 

• The product design mix refers to the combination of elements that make up a product's design

  • These elements include function, aesthetics, and cost

  • Products can be tangible goods (they can be held) or intangible services (something the customer pays for but cannot necessarily touch e.g. web hosting service)

• Balancing the elements of function, aesthetics, and cost, helps the product design to be both functional and attractive, while also being cost-effective for both the manufacturer and the consumer

  • Some manufacturers aim to balance all three elements e.g. Fentimans ginger beer is relatively affordable and is packaged in eye catching bottles and the product itself is very good quality

  • Other manufacturers may focus on one aspect, more than the others e.g. Asda own brand ginger beer is produced at the lowest possible cost and sold to consumers at a very low price

Function

• The function of a product refers to its intended purpose and the specific tasks it is designed to perform

• A product's function is the most important aspect of its design because it determines how well the product will meet the needs of its intended users

  • E.g. A multi-plug adaptor which breaks after one months use will to be seen by customers to fulfil its function

Aesthetics

• Aesthetics refer to the product's visual and sensory appeal, including its form, shape, colour, and texture

• Aesthetics play an important role in attracting customers, creating brand loyalty, and generating word of mouth recommendations

  • E.g. Apple products are well known for their pleasing looks and use of quality materials

 Cost

• The cost of production must be considered when designing a product, as it directly affects the price point at which it can be sold

• A well-designed product should balance cost and value, ensuring that customers perceive the product as valuable enough to justify its cost while still maintaining profitability for the manufacturer

  • E.g. Asda own brand ginger beer is very cheap to produce and is sold at a very low price

The Product Life Cycle

• The product life cycle describes the different stages a product goes through from its conception to its eventual decline in sales

• There are typically five stages in the product life cycle: development, introduction, growth, maturity, and decline

•  The implications for cash flow and marketing vary at each stage of the product life cycle

• Companies should tailor their marketing strategies and manage their cash flow to ensure long-term profitability and success
   

The Implications of the Product Life Cycle for the Business Cash Flow and Marketing Strategy

Extension Strategies to the Product Life Cycle

• Extension strategies refer to the techniques used by businesses to extend the life of a product beyond its natural life cycle

• These strategies are designed to boost sales and maintain profitability for a product that has reached the decline stage of its life cycle

• There are two types of extension strategies:

  • Product-related extension strategies

  • Promotion-related extension strategies 

Product-related extension strategies

• Involves changing or modifying the product to make it more appealing to customers and extend its life cycle and cone be achieved in one of three ways:

  • Product improvements e.g. Samsung releases new versions of its Galaxy Smartphone every year with upgraded features and improvements to the previous model

  • Line extensions e.g. Coca-Cola introduced Diet Coke and Coke Zero as line extensions of its original Coca-Cola

  • Repositioning e.g. when IBM's personal computer division started losing market share to other brands, it repositioned its products as high-end business machines and focused on the enterprise market 

Promotion-related extension strategies

• Involves changing the marketing and promotion of the product to extend its life cycle and could include one or more of the following changes:

  • Changes to advertising e.g Kellogg's continues to recreate adverts for its Corn Flakes cereal which has been around since 1906

  • Price promotions e.g. Cyber Monday occurs on the first Monday after Thanksgiving in the USA and electronic firms discount prices significantly in order to boost sales of their products

  • Sales promotions e.g. many coffee shops offer a loyalty program where customers can earn a free drink for every six consumed

The Purpose of Product Differentiation

• Product differentiation is an attempt by a business to distinguish its products from those of competitors

  • This involves creating functions or features of the product (or firm) which help it to stand out from its competitors

  • Strong product differentiation helps the firm to develop its competitive advantage

  • The development of product differentiation often helps a firm to create a unique selling point for its product which can be used in marketing

  • Product differentiation may be tangible (clearly visible) or it may be a perception that is created about the product in the consumer's mind 

• Successful product differentiation helps the business to increase demand for its products, increase brand loyalty, and allow the business to charge higher prices 

• Examples of successful product differentiation include:

  •  In 2014 Hyundai Cars in Singapore introduced a three year warranty on all new cars when the industry standard was one year

  • Green and Black use Fairtrade cocoa AND sugar in the production of their chocolate