The Product

Product refers to what the business sells

This could be a good – tangible or a service – intangible
Products are composed of different features which help consumers identify them e.g. their size, their colour
Products need to be developed to meet customer needs and wants

This video looks at the Product and the Product Life Cycle

The Product Life Cycle

The Product Life Cycle shows the life of a product from its conception to its death

There are five stages in the product life cycle:

1. Research and development – the product is being developed, high costs
2. Introduction – the product is introduced to the market, sales are low, profit is negative as research and development costs are being met
3. Growth – Sales increase rapidly, firm starts to make a profit
4. Maturity – Sales reach their peak, profits start to decline as competition increases
5. Decline – Sales fall, profits begin to fall, the product might be taken off the market

This video looks at the product life cycle and some examples of differing products

Extending the Product Life Cycle

Firms often try and extend the life of their products to stop them going into decline

Extension strategies include:

Reduce price of product
Find alternative uses for product
Increase frequency of use of the product
Change packaging

Product Portfolio Analysis

Classifies products according to two dimensions:

Market growth
Market share

Organisations aim to have a “balanced portfolio” ideally with cash cows where they can reap the profits and stars that will grow into cash cows

These tools can be used to analyse the portfolio of products a business offers. Businesses need to ensure that they have sufficient new products coming onto the market for the future.

New products are funded by profits from products in the maturity phase of the Product Life Cycle (PLC ) / cash cows

This video looks at the Boston Matrix

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