The elements of the marketing mix - AQAProduct

The product element refers to the products or services the business sells.

Product development

When developing a new product, the business needs to think about the design, the price, the expected sales and the cost of development and production. Businesses need to change its products to keep up with changes in customer needs.

The stages of product development are generating an idea, checking the idea, developing the product, trialling the product and launching the product.

Product differentiation

Businesses need to stand out from their competitors. This is known as product differentiation. This can be done by:

• building brand image – advertising, celebrity endorsements and its logo
• having a unique selling point (USP)

Product portfolio

As businesses grow, so does the range of products that they sell. This collection of products is called a product portfolio. Businesses can manage their portfolio using the Boston Matrix. There are four categories on the Boston Matrix, which measures a product in terms of its market share and market growth.

• star – these products have high market share in a fast-growth market
• cash cows – these products have high market share in a low-growth market
• question marks – these products have a low market share in a fast-growth market
• dogs – these products have a low market share in a low-growth market

Product life cycle

The product life cycle shows the sales of a product from its development to its decline. There are five stages of the product life cycle.

• Development – during this stage, the product is being designed and test. Costs are high but there are no sales so therefore no revenue.
• Introduction – this is the launch of the product. The business spends money on promotion and starts to make sales and therefore revenue.
• Growth – during this stage, the product is becoming much more successful and sales increase rapidly.
• Maturity – as the product reaches maturity, sales of the product begin to slow.
• Decline – during this phase of the product life cycle, sales will start to fall. The business needs to decide whether to invest money to try and boost sales or to remove the product from sale.

Extension strategies

To prevent a product going into decline, a business can use an extension strategy. There are lots of possibilities including:

• reducing the price
• advertising
• new packaging
• new features