Product

Introduction

Introduction:
 Product is a good or service that is bought and sold within a market
 Products are developed so that they satisfy a specific consumer need or want that has
been targeted by business
 Successful products are normally bought by consumers for more than one reason
o Physical benefits: e.g. taste of coke
o Psychological benefits: e.g. brand image of coke

Ideas for new product development:

 The sources are
o Owner
o Employees
o Consumer through market research
o Competitors
 Since more firms are becoming market orientated day by day, market research plays a
vital role in developing a product that will be accepted by the market.

Influence on new product development:

 Technology
 Competitors’ action
 Entrepreneurial skills of managers and owners
o Owners and managers must be good at spotting gaps in the market and take
early initiative

Product differentiation:
 Product differentiation is the degree to which consumers perceive that the firm’s brand
is different from its competitors.
 A product’s point of differentiation is often described as a unique selling point
 A highly differentiated product will evade competition much easily.

Creating product differentiation:

 Can be created in two ways:
o Actual differentiation: that creates genuine product advantages that benefit
consumer in some way. Actual product differentiation can be created by
 Unique design
 Unique taste
 A unique product function
 A superior performance
 User friendly than rival products.
o Imagined differentiation: this is the type of differentiation involves creating
differences that exist only in mind of the consumer
 A product can be differentiated by psychological factors even though it
is not physically different from the similar products in the market
 Imaginary product differentiation can be created by persuasive
advertisement, celebrity endorsements and sponsorships
Conclusion:
 Firms operating in the competitive market need products with strong USP to hold on to
the market share
 Product differentiation reduces price sensitivity of consumers, as product differentiation
boosts value
 However, product differentiation is rarely permanent, due to fast changing consumer
tastes and technological advances. Although it can be argued that imagined
differentiation might be more long lasting, because it is harder for rival firms to copy the
distinctive personality of the product.