Product 

Product Development 

Product development is a continuing process for many businesses. New products are needed to replace those that are out of date. They are also needed to gain a competitive edge in the market. In some industries, product development is a very lengthy process. For example, in the pharmaceutical industry some products have taken many, many years to develop. When product development takes a long time, it is very risky for a business. This is because money is being spent on research and development, and the size and timing of the return is not known. In some cases, product development may result in no return at all. New products may pass through a number of different stages while they are being developed. 

GENERATING IDEAS 

Ideas for new products may come from business owners, customers, competitors, staff, and research and development. Ideas might also result from time spent analysing the products of rivals. A business might try to copy, adapt or improve upon the best features of a rival’s product. 

ANALYSIS 

Once a list of product ideas has been drawn up, there is a need to analyse each one closely. A business must decide whether products are marketable, technically possible, a suitable fit with the current portfolio and legal. 

DEVELOPMENT 

This might be a lengthy stage and could involve carrying out experiments, using simulations, building models, producing samples and initial testing. Frequent changes and modifications in designs might be a necessary part of this process. 

TEST MARKETING 

This stage involves testing the product in a small section of the total market. The sample used must be representative of the whole market. Test marketing is used to gather information about what consumers think of the product. 

COMMERCIALISATION AND LAUNCH 

During this stage, a business puts the ‘final touches’ to the product. Any problems identified during the test marketing stage can be resolved by making changes or modifications. A marketing strategy will be designed that will begin with the national launch of the new product. Some businesses organise a high profile press conference to launch their products. Finally, at each stage of the development process, a number of product ideas are likely to be rejected. However, the number of rejections will tend to fall sharply at each stage. 

Goods and Services 

The goods and services produced by businesses are called products. These products can be split into different categories. For example, some businesses supply consumer goods, such as clothes, food, mobile phones and motor cars. However, an increasing number of products are services. These might include telecommunications, holidays, banking, financial advice, health care, transport, restaurants, domestic services (cleaning, gardening, 

car washing and catering) , child minding, laundry and lifestyle management. 

Many businesses supply producer goods, such as machines, tools and equipment. These are sold to other businesses. Specialist services such as accounting, maintenance, printing, debt collecting, consultancy and business insurance are also examples of producer goods.

Packaging 

One aspect of the product is its packaging. 

Factors that may influence the choice of packaging:

• Environment: Materials used should be minimised and when possible packaging should be recyclable.
• Convenience: It should be easy to handle, open and use.
• Protection: Fragile or perishable goods need strong packaging to provide protection in storage and transit.
• Design: It should be appealing, reflect the nature and quality of the product and identify the brand
• Information: Labels etc. should comply wth the law and give information about ingredients and safe usage.
• Cost-effective: The weight and shape of packaging should not be too bulky to keep production and distribution costs down.

Product Life Cycle 

Product life cycle – levels of sales at the different stages through which a product passes over time.

1. Development: When the prototype is tested and the market research is carried out.
   1. Introduction: When it is launched on to the market. Sales will grow slowly as not many people are aware of the product yet, and therefore informative advertising will be used. Usually, price skimming is used as there’s no competition. 
2. Growth: When sales start to grow rapidly. Advertising is changed to persuasive to encourage brand loyalty. Prices are reduced as new competitors enter the market. 
3. Maturity: Sales increase slowly. Competition becomes intense and pricing strategies are now competitive or promotional pricing. A lot of advertising is made to maintain sales growth.
4. Saturation: Sales have stabilised at their highest point. Competition is high but there is no new competition. Competitive pricing is used, and there’s a high, stable level of advertising. 
5. Decline: When sales decrease as the product has lost its appeal. Advertising is reduced and stopped, and prices are reduced a lot. 

Extension strategies extend the life of the product before it goes into decline. Again businesses use marketing techniques to improve sales. Examples of the techniques are: 

• Advertising – try to gain a new audience or remind the current audience 
• Price reduction – more attractive to customers 
• Adding value – add new features to the current product, e.g. video messaging on mobile phones 
• Explore new markets – try selling abroad 
• New packaging – brightening up old packaging, or subtle changes such as putting crisps in foil packets or Seventies music compilations 

Managing and Reviewing the Product Portfolio 

• Product Portfolio – (product mix) range of products is currently marketing. 
• Boston Matrix – describes products according to the market share they enjoy and whether the market has any potential for growth. 

The Boston Matrix puts products in four categories: 

• Star products have a high market share in a fast-growing market. 
• Cash cows have a high market share in a slow-growing market. 
• Question marks products have a low market share in fast-growing markets. 
• Dogs are products with a low market share in slow-growing markets.