The marketing mix: The 4Ps: Product - CCEA

Key facts about product:

Invention vs. innovation: Invention is creating something new; innovation is improving or commercialising it.

Product design: Focus on function, cost, and aesthetics.

Product life cycle: Four phases—introduction, growth, maturity, decline.

Extending life cycle: Use differentiation, price cuts, rebranding, repositioning, and marketing.

Understanding customer needs is vital to ensure that a business is able to supply products that customers want to buy, at a price that allows the business to make a profit. Some products are completely new inventions, but many are the result of innovation. There is an important distinction between the two:

Invention means creating something that did not previously exist, eg self-tying shoelaces. Entrepreneurs are always trying to think of new products and services to launch, but it can be challenging to come up with a completely new and unique idea.

Innovation is the successful commercialisation of an invention, or theadaptation of a product over time to improve its features. It involves changing existing processes or creating new, more effective processes, products and ideas. Businesses can spend large amounts of money on research and development in order to develop their products.

Whether an invention or an innovation, a successful product starts with a good design that meets the needs and wants of customers. When designing a product, a business will usually consider three factors:

• function – what the product should do and how well it does it, eg a washing machine should wash clothes
• cost – how cost-effective the product will be to manufacture, eg the product should be made and sold profitably
• aesthetics – how the product appeals to consumers, eg how the product looks, feels or smells

Once it has been designed and is ready to launch, a product will typically go through four different phases during its life. These phases are referred to as the product life cycle.

The level of sales determines where a product is in its life cycle. This can be illustrated visually on a graph:

The life cycle, and how long it takes a product to go through its life cycle, can vary enormously from one product to another. Some products will exist for years before entering a decline, while other less successful products may go through their life cycle very quickly. How long a product lasts will depend upon:

• how dynamic the market is – eg, technological products (such as tablets and laptops) have short life cycles as they quickly become out of date as new technology emerges

• how strong the brand image behind the product is – eg, a new sports shoe from a well-known brand is likely to have a longer life cycle than a new sports shoe from an unknown brand

Developing new products is expensive and takes time, so businesses will usually try to extend the life cycle of a product and prevent it from going into decline. To do this, they need to find ways of keeping people interested in the product for longer, thereby increasing the number of sales.

There are a number of ways that a business can extend the life cycle of a product:

Product differentiation

Product differentiation – this means making a product stand out from its market competitors, usually by highlighting the differences between it and the other products. Ensuring that a product has a unique selling point (USP) is a good way to differentiate it from other products.

Reducing the price of the product

Reducing the price of the product – by the time a product has reached maturity, it may face competition from other products. When this happens, the business may no longer be able to charge a high price for the product. If the price is reduced, existing customers are likely to continue buying it, while other customers may switch from competing products.

Rebranding the product

Rebranding the product – tired-looking branding and packaging can put customers off. Refreshing the brand and packaging design can appeal to new customers and convince previous customers to try a product again.

Repositioning the product

Repositioning the product – this extension strategy involves exploring new markets for a product. It is possible to revive a product by testing new uses for it or adding value so that it appeals to a different audience. For example, a business could try introducing a different sized version of the product.

Increasing marketing activity

Increasing marketing activity – running new advertising campaigns and sales promotions can attract new customers, remind previous customers that the product still exists and encourage existing customers to buy more of the product.

A unique selling point, or USP, is something about a product that makes it more appealing than its competitors. Examples include being the best quality, having the lowest price or having a feature that none of its competitors have.

The term ‘consumer law’ refers to any piece of government legislation designed to protect consumers from poor-quality products and poor business practices. In the UK there are two pieces of legislation that form the basis of consumer rights: the Consumer Rights Act (2015) and the Consumer Protection Act (1987).

What is The Consumer Rights Act (2015)?

This act replaced and updated previous legislation. It was also the first consumer legislation to include digital products. It deals withtransactions between a seller and a buyer, and is designed to protect consumers from unfair and dishonest business practices. It covers:

• the product or service
• returns
• repairs and replacement
• delivery

The product or service

Goodsmust be:

• described accurately – businesses should not describe goods and services in a misleading way
• fit for purpose – goods must do what they are designed to do
• satisfactory quality – goods should not be damaged or faulty when sold as new

Services should be supplied under minimum standards, which include:

• the service provider must use reasonable care and skill in delivering the service
• any written or verbal information provided by the supplier is binding
• the service must be provided in a reasonable time, unless agreed otherwise
• the service must be provided for a reasonable price, if the price is not agreed beforehand

Returns

Under certain circumstances, consumers can reject a product (excluding digital products) and return it for a full refund within 30 days of taking ownership of it. They can do this if the product is not as described, unfit for purpose or not of satisfactory quality.

Where a fault develops within the first six months, it is presumed that the fault was there when the consumer took ownership of the product, unless the business can prove otherwise. After six months, the responsibility for proving that the fault was there when they took ownership falls on the consumer.

Repairs and replacement

After 30 days, a consumer must give a business one opportunity to repair or replace any goods, including digital goods that are not as described, unfit for purpose or not of satisfactory quality. If the repair or replacement is unsuccessful, the consumer can claim a refund or price reduction.

Delivery

Delivery should usually take place within 30 days, unless agreed otherwise at the time of sale. The business selling the goods remains responsible for them until they are in the possession of the consumer. Failure to deliver within 30 days, or by the agreed date, gives the consumer the right to cancel the purchase and receive a full refund.

The Consumer Protection Act (1987)

This Act is designed to ensure that products are safe. It makes businesses that produce, rather than just sell, liable for any damage caused by poor quality or defective products. The producer is considered to be an individual or company who puts their name or trademark on a product, or has imported it into the European Union in order to sell it on.

It gives anybody the right to claim against the producer of a product for any damage caused by a manufacturing defect.

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