A Product can be anything (including services; ideas; places; people) which is valued by a buyer and is available for exchnage (eg purchase, hire, adoption etc).
Developing and managing products is critical to an organisations survival and growth. The various approaches available for organising product management share common activities, functions, and decisions necessary to guide a product through its life cycle.
The product portfolio approach attempts to create specific marketing strategies to achieve a balanced product mix that will produce maximum long-run profits. To maximise the effectiveness of a product mix, an organisation usually has to alter its mix through modification of existing products, deletion of a product, or new-product development. Product modification is changing one or more characteristics of a firm’s product. This approach to altering a product mix can be effective when the product is modifiable, when customers can perceive the change, and when customers want the modification. Quality modifications are changes that relate to a product’s dependability and durability. Changes that affect a product’s versatility, effectiveness, convenience, or safety are called functional modifications. Style modifications change the sensory appeal of a product.
Product deletion is the process of eliminating a product that no longer satisfies a sufficient number of customers. Although a firm’s personnel may oppose product deletion, weak products are unprofitable, consume too much time and effort, may require shorter production runs, and can create an unfavourable impression of the firm’s other products. A product mix should be systematically reviewed to determine when to delete products. Products to be deleted can be phased out, run out, or dropped immediately.
A new product may be an innovation that has never been sold by any organisation, or it can be a product that a given firm has not marketed previously, although similar products have been available from other organisations. Before a product is introduced, it goes through the six phases of new-product development. In the idea generation phase, new product ideas may come from internal or external sources. In the process of screening ideas, those with the greatest potential are selected for further review. During the business analysis stage, the product idea is evaluated to determine its potential contribution to the firm’s sales, costs, and profits. Product development is the stage in which the organisation finds out if it is technically feasible to produce the product and if it can be produced at costs low enough for the final price to be reasonable. Test-marketing is a limited introduction of a product in areas chosen to represent the intended market. The decision to enter the commercialisation phase means that full-scale production of the product begins and it complete marketing strategy is developed. The process that buyers go through in accepting a product includes awareness, interest, evaluation, trial, and adoption.
Product positioning comprises the decisions and activities intended to create and maintain a certain concept of the firm’s product (relative to competitive brands) in customers’ minds. Product positioning is part of a natural progression when market segmentation is used. A firm can position a product to compete head-on with another brand or to avoid competition.
As a product moves through its life cycle, marketing strategies mainly require continual adaptation. In the growth stage, it is important to develop brand loyalty and a market position. In the maturity stage, a product may be modified or new market segments may be developed to rejuvenate its sales.
A product that is declining may be maintained as long as it makes a contribution to profits or enhances the product mix. Marketers must determine whether to eliminate the declining product or try to reposition it to extend its life.