• Producer goods: Bought goods to make other goods.
• Consumer goods: Goods directly consumed by individuals.

Products

• Product Life Cycle:

  • Research and Development: Develop new products, conduct market research, create prototypes, and discuss with key shareholders. There are no sales during this time and investment costs will be high. (Pre-Launch Phase)
  • Launch: Launching/Introducing product into the market. Marketing expenditure will be high in order to raise word about the product. Investment costs will also be high. Limited distribution networks. High Price (Added Value) to regain R&D Costs
  • Growth: Sales revenue increases, it will start to make a profit for the business. More customers are available so more distribution channels are required. (Make customer loyal) The pricing strategy needs to be changed according to the market. Investment costs are still high.
  • Maturity: Improve product life cycle. Marketing is extensive and the product is well-known in the market. Brand loyalty is required and is a vital aspect. Extension strategies may be required in order. Marketing is extensive and the product is well-known in the market, the marketing focuses on the product to maximize its profits. There is also price competition as the product competes in a mature market. Investment costs will be low as the product becomes well-established and mature. Profit will be PEAK.
  • Decline: Decrease in sales of the product. It is the final stage in a product life cycle. Prices have been slashed or lowered since they are becoming replaced/obsolete. Profits decreased, and losses were incurred. Disinvestment will occur, and businesses will stop investing in the business.

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  Extension strategies:

  • Marketing strategies are used to improve the product life cycle to go on longer and stay in the maturity stage for longer instead of going into a decline stage. This is usually done when a product is going into a decline stage.
    • Reducing the price of the product to encourage people to buy it.
      • New promotional strategies such as Film star promotions etc.
    • Product enhancements or modifications to attract more customers such as limited editions or special features.
    • Expansion into new markets such as exporting to international markets
    • USP

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  Relationship between the PLC, Investment, Profit, and Cash Flow.

  Stage in the PLC	Level of Investment Expenditure	Level of Profits	Cash Flow Position
  Research and Development	Extremely High	Loss	Highly negative
  Launch	Relatively High	Minimal if any	Negative
  Growth	Moderate	Rising profits	Positive
  Maturity	Low	High	Highly positive
  Decline	Minimal, if any	Failing	Less Favourable

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  • Branding:

    • Unique identity or brand/name for the products

    • Includes an identity

    • Product differentiated from other companies/products

    • Build brand loyalty for the product.

      • Repeated purchases of the same product
      • Seeing to it that they don’t switch brands from one to another.

    • Brand awareness:

      • Telling potential/existing customers knowing about the product and remembering the particular brand.

    • Create a corporate image in the market.

    • Brand development:

      • Communicating the values of the brand
      • What the brand stands for
      • Increasing sales of the brand while making more people know about the brand.
        • Market Research
        • Market Segment
        • Brand name/logo
        • USP
        • Brand and business strategies.
        • Focused marketing mix/strategies.

      Brand Value

      • Expected earning potential for a brand.
      • Future SR of the brand.
      • How much the brand will be worth in the future
      • Intangible fixed asset.

      Branding is important for several reasons:

      • It creates a unique identity and name for the product, making it stand out from competitors.
      • It builds brand trust/loyalty among customers, encouraging repeated purchases and reducing the likelihood of switching to a different brand.
      • It increases brand awareness, making potential and existing customers aware of the product and the particular brand.
      • It helps create a corporate image in the market.
      • It can increase the expected earning potential (charge more using added value) and future worth of the brand.Price

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      Price is one of the four Ps of marketing and refers to the amount of money that a customer must pay in order to purchase a product or service. It is an important factor in determining the profitability of a business and should be set strategically based on factors such as production costs, competition, and customer demand. Pricing strategies may vary depending on the stage of the product life cycle, with different strategies employed during the launch, growth, maturity, and decline phases.

      Price sees to it that they earn enough for the profit of the business.

      • Cost Plus Pricing - Markup Pricing
        • Added Value
        • You make sure you don’t go into a loss and will always have a profit
          • Advantages:
            • Easy to calculate
            • No losses
            • Used when raw material costs are rising
          • Disadvantages:
            • Motive is not towards the customer but just profit so it can lead to customer dissatisfaction
            • Rather than the demand for the product, they focus on price.
            • Doesn’t focus on other competitor’s pricing
      • Penetration Pricing
        • Set a low price to enter the industry
        • Competitive advantage over existing firms/competition
        • Large discounts/sales/advertisements to attract more customers.
          • Advantages:
            • Easier to launch a product
            • Advantage over competitors so you get a higher market share
            • Lower prices can increase word of mouth.
          • Disadvantages:
            • Possible Losses, especially in the long term
            • If raw material costs increase, then you can’t use this method.
      • Loss Leader
        • Price their products below their cost of production to attract consumers but higher profit margins
          • Advantages:
            • More market share
            • Attract more customers
            • More SR
            • Have more loyal customers
            • Sell excessive stock.
          • Disadvantages:
      • Predatory Pricing
      • Premium Pricing
      • Dynamic Pricing
      • Competition Pricing
      • Contribution Pricing