Abstract
Marketing, if well planned and executed, can help boost the sales of a particular product. There are a number of aspects pertaining marketing. This paper seeks to look at two of the aspects, one being the product and the other being pricing. A product can be a good (something tangible) or a service. This paper explains in detail everything that one needs to understand about a product: the product lifecycle, packaging, labelling and branding. Implications of the stages of a product are also well explained. The paper has also covered the various strategies used to price a product, since pricing is a revenue source for business.
Introduction
Marketing is a very important aspect in any business. Marketing has been defined in so many ways, depending on the organization in question. However whatever definition an organization decides to use, the focus should be on the customer. A general definition is that marketing is a collection of strategies and tactics used to identify a market, satisfy the market and maintain the market, while adding value to both the customer and the marketer (organisation). For marketing t be successful, various decisions on a number of issues have to be made. For instance, decisions have to be made concerning the type of product or service that the organization is dealing with, how to promote and distribute the products, what pricing strategies to use, and many other decisions[ CITATION Ray10 \l 1033 ]. Following is a detailed discussion on the product and pricing.
Literature review
Project product is generally any aspect concerning a product. This includes the product lifecycle, packaging and the like[ CITATION Ray10 \l 1033 ]. It entails product development and management.
Pricing comes later after all costs have been put together. If not well done, heavy losses could result. However good pricing strategies result in good profits[ CITATION Dalon \l 1033 ]. It is an income generating exercise.
Study results
a) Project product
Project product can in one way be defined as a form of product description that explains what the organizations must deliver in order for it to be accepted in the chosen market[ CITATION Gre101 \l 1033]. Project product seeks to gain agreement from the users as per their requirements and expectations.
There are a number of factors that make up the project product. To look at the project product deeply, the paper will navigate through product management in detail.
Once an organization has selected its target market, and has identified what the requirements and needs of the customers are, the next step is to make decisions concerning the product. It all starts by understanding the product lifecycle[ CITATION Mic06 \l 1033 ].
Understanding the product lifecycle helps know how to market the product more effectively. The product lifecycle has four stages; the introduction, growth, maturity and decline stages. The lifecycle of a product may be short, such as that of an item such as a brand of skin lotion. Again, the lifecycle may be long, for products such as vehicles.
1. Introduction stage - at the beginning, when a product has just been introduced, the sales are usually very low. This is because the customers are not yet aware of the product. Again costs incurred while advertising the product are very high. The highest of the costs is advertising costs since a lot has to be done to create awareness of the product and while focusing on the market, which at the moment is the early adopter. Additional distribution costs are likely to be incurred[ CITATION MAY09 \l 1033 ]. Another characteristic of the introduction stage is that the sales volume is usually very low, hence no profits are expected, considering the high costs incurred. The main objective in this stage is to establish a market and build up a basic demand for the particular product. The introduction stage has got a number of implications on the marketing mix:
Promotion- tactics such as samples and trial incentives are very common when a product is at this stage. It is aimed at creating awareness.
Price- different methods of pricing may be adopted. For instance, starting off with low prices could attract customers to buying the product. Again, skim pricing may be adopted while targeting the early adopters to recover the incurred costs quickly.
Distribution- the product is first distributed to a few areas such as the densely populated areas and then if well received, it is distributed much widely.
Product- what is brought out in the market is usually one or few products.
2. Growth stage- by the time a product gets to this stage, customers are well aware of it and its benefits and so there is an increase in the sales volume. Consequently, there is rapid revenue growth. Demand for the product keeps growing, increasing the sales further. Distribution has to be expanded so as to meet the increasing demand[ CITATION Mic06 \l 1033 ]. At this point, competitors may be in the picture. Price competition and increased promotional costs hence become common characteristics in efforts to prove that the particular product is better than that of the competitors. The main objective in the Growth stage is to gain confidence of consumers and increase sales. The growth stage modifies the marketing mix as follows: Promotion - there is increased advertising so as to win most favour from customers.
Price - prices are set depending on the demand levels. The higher the demand the higher the price. Again the prices may be reduced to attract more customers.
Distribution- the products are now distributed to more areas. If more retailers take on the products, discounts are likely to reduce[ CITATION Ant08 \l 1033 ].
Product- there is general improvement of the product; packaging, features, and quality.
3. Maturity stage- in this stage, more profits are accumulated. Sales continue increasing, but at a slower rate. Advertising costs may be reduced since the product is already well established in the market as a brand [CITATION Ant08 \l 1033 ]. At this stage, competing products are similar and so efforts should be geared towards encouraging consumers to keep buying the product and those that do not use the product, to take it up or rather switch to the particular product. Main goal is to retain the existing market share and extend the lifecycle of the product. Implications on the marketing mix are as follows:
Promotion - promotion efforts are geared towards having brand loyalty and getting non users to switch to the product.
Price - reduction in prices is a common occurrence. This helps in dealing with competition.
Distribution- more channels of distribution are put in place and tactics to ensure that retailers carry the product are played out[ CITATION Ant08 \l 1033 ].
Product- the feature of the product are developed or changed so as to make it look a bit different and better than the competing products that are in the market.
4. Decline stage- in this stage, sales begin to reduce due to factors such as the market becoming saturated. Changes in technology may also lead to reduction of sales. Customers may also become bored and desire to have a change of product. If loyalty to the product was well established, profits may be enjoyed for much longer. Reduction in sales may lead to an increase of unit costs, hence reducing the profits[ CITATION Mic06 \l 1033 ]. At this stage, the firm can; retain the product in the market by reducing costs and finding new uses for the product, or cut down on production and marketing activities but keep the product in the market till no more profits are made. The firm can also just withdraw the product from the market if profits are no longer evident or if there is another product in the market. Changes in the marketing mix could be as follows:
Promotion- costs are generally lower and are mainly incurred when trying to reinforce the image of the product brand.
Price- two options are available; maintaining the price for continued products or reducing the prices to liquidate inventory of discontinued products.
Distribution- channels that are no longer profitable are done away with.
Product- many products may be taken removed from the market or for the continued products, some improvements are made to make them survive longer in the market.
The product lifecycle is important to managers as it helps them prepare for whatever challenges that could occur in the market. However, referring to the product lifecycle when making forecasts is highly discouraged
After understanding the product lifecycle, a manager should then work on the development of new products. New products may be added through development or acquisition. Acquisition may take place through a company buying another company, a company acquiring patents from other companies or a company buying a license or goods from another company[ CITATION Lin06 \l 1033 ]. On the other hand, the company creating new products in its own laboratories or the company contracting with other bodies to make new products may achieve development. New product development is essential as it helps the company to stay abreast in the dynamic market[ CITATION Ste98 \l 1033 ]. Development of new products can be hindered or rendered unsuccessful by a number of reasons:
- Making decisions without referring to findings of market research
- Competitors having better ideas and products
- Having products that do not match the target market
- Lack of good ideas
- Social and legal constraints
- Lack of funds to develop new products
- Short product lifecycles
- Poor designed products among many other reasons.
This means that a lot of things have to be considered before embarking on the exercise of product development. For new product development to be effective, good ideas should be sought, effective strategies be put in place and sufficient funds be set aside to support the whole project, as well absorb whatever losses that may be incurred[ CITATION Gre10 \l 1033 ].
Another aspect to look at is the product and product mix. This is about product planning which entails all activities involved in development and management of a product e.g. Packaging. Levels of products are also identified here and they are: products with core benefits (have essential benefits to the buyer), basic products, expected products, augmented products, and potential products[ CITATION Gre10 \l 1033 ]. Again, the products are classified further according to their durability, shopping habits of the consumer and on an industrial basis.
Branding
A brand is any feature that is used to identify and differentiate a product from one line from products from other lines. A successful brand is one that is able to create a lasting impression on the buyer[ CITATION Ray10 \l 1033 ]. A brand could be a name, symbol, style, design or just anything else that is serves as a unique identity to a product[ CITATION Lin06 \l 1033 ]. Types of brands include the manufacturer and the distributor brands. Branding has a lot of benefits to the consumer, the manufacturer as well as the retailer, the most outstanding benefit being attracting the consumers.
Packaging and labelling
A package is the outer covering of a product. It helps catch the attention of a buyer and so it should be made as attractive as possible[ CITATION Gab10 \l 1033 ]. Packaging can help to reinforce a brand, promote a product, and can help tap overall favour from consumers. With the passing of time, packaging has been considered a powerful marketing tool[ CITATION Ste98 \l 1033 ].
Labelling is an important element of packaging. Labels serve to provide information about the product. The information could be about the weight, manufacturing and expiry dates, ingredients or components of the product, as well as warnings and instructions. Labelling should be taken very seriously and should be well done, as according to the law.
b) Pricing
Costs incurred right from the manufacturing of a product up to the point when it gets to the consumer greatly influence the final price of a product[ CITATION Ron06 \l 1033 ]. For this, various pricing strategies are used. They include:
Premium pricing- this is where a product is priced highly because it has got a unique competitive advantage[ CITATION Joh02 \l 1033 ].
Penetration pricing- a strategy where the prices are set low so as to attract as much customers as possible[ CITATION Dalon \l 1033 ]. As soon as enough customers have adopted the product, its price is increased.
Economy pricing- costs of manufacturing and marketing are kept low in order to ensure the final price of the product remains low[ CITATION Ron06 \l 1033 ].
Price skimming- pricing the product very highly if it has a competitive advantage[ CITATION Mic10 \l 1033 ]. However, the price is reduced as soon as other competitors creep into the market.
Psychological pricing- a pricing strategy that takes advantage of the buyer’s emotions rather than their rational thinking[ CITATION Ken03 \l 1033 ].
Product line pricing- pricing based on the benefits of the product or service [CITATION Ree08 \l 1033 ].
Optional product pricing- offering an extra product or service and then increasing the general price of the product[ CITATION Rob05 \l 1033 ].
Captive product pricing- strategy where a product is given a higher price because of its complementary features [ CITATION Rob05 \l 1033 ].
Product bundle pricing- many products are put in one packaging and a price is set[ CITATION Mic10 \l 1033 ]. This also helps to clear off old stock.
Promotional pricing- a good example is the Buy One Get One Free[ CITATION Mic10 \l 1033 ].
Geographical pricing based on the availability of product, accessibility of the area and other factors in relation to geographical issues[ CITATION Rob05 \l 1033 ].
Conclusion
Marketing would not be a complete exercise if proper planning for the product management and pricing is not well done. Project product and pricing go hand in hand and both depend on each other. If a product is well manufactured, packaged, labelled, distributed and marketed, then that calls for a higher pricing. The pricing should be done in a way that all cost incurred are recovered and there are healthy profits to ensure survival of the firm.
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