What is the product?
A product is a physical object or a service that people and businesses buy to perform a task, and customers acquire a product to meet a need. A product carries value propositions that customers want. Such value propositions can be unique features, specifications, benefits or pain reliever. A firm must concentrate on making products that best meet customers’ needs and improve its features to meet those needs more effectively. In practice, customers usually acquire products to perform a particular job, which can be professional, emotional or social. A professional task involves improving a customer’s productivity, and emotional task makes the customer feels happy and satisfied. While a social task aims at enhancing the customer’s social status and recognition.
How to develop a product?
Product development is the process of spotting a pressing challenge that a group of customers face and crafting a unique solution for it. The new way of thinking in developing a new product focuses on customers’ needs to produce a product that is desirable to customers, feasible to make and viable to sell. This method is called agile product development, which is a function of blending customers’ needs, technical specifications and commercial requirements. This is opposed to the old theory of product development, which used to focus on the technical specification and not on the customers’ needs.
Differentiate your product to stand out of the crowd
A business chooses the function, appearance, channel, promotion, price, customer segment or niche to make their product offers more appealing to customers than rivals and to stand out from the competition. This process is called product differentiation. Product differentiation is a strategy that a firm applies to penetrate and win a significant share of a target market. A firm utilizes its competitive advantages or a market research or innovation or branding or improve quality or channels or reduce costs or all of these, to differentiate its product offering to the market.
Should you go for top quality and higher cost product or not?
Producing a super quality product usually leads to higher costing and selling prices; therefore, firms face a cost disadvantage if they choose to launch a premium brand. Improving the quality or appearance of a product adds to the cost of producing it, which means that businesses must charge higher prices if they want to make a profit. An alternative marketing strategy is to build an average-quality brand. If a mobile phone has limited functions and features, it can be manufactured cheaply and the low production costs allow for low pricing. A firm must conduct market research and define its marketing positioning before deciding on the quality of the product. Firms check their vision for product quality and selling prices by evaluating the ability of the marketing strategy to meet the customers’ needs.
Be aware of the product life cycle
The product life cycle shows the stages of the ‘working life’ of a product. It consists of the launching, growing, maturity and declining phases. In the launch and growth stages, a firm conducts an intensive promotion to increase awareness; furthermore, the sales and cost rise. In the maturity stage and beyond, revenues flatten out and begin to decline, and the business has to decide whether to withdraw the item or use an extension strategy to boost sales. Extension strategies include updating packaging, adding extra features, improving quality or lowering the price.
How to analyse your product’s performance?
A product portfolio is a group of items sold by a business. The product performance can be analyzed using the Boston Matrix. This analyses a product’s performance based on a model of sales growth and market share. It describes the four stages of product-performance analysis, namely: Star, Cow, Question Mark and Dog. Star products capture a high market share and show higher growth, and Cash-Cow products show a high market share and slow growth. Question-Mark products show low market share and fast growth, and Dog products show low market share and slow growth. The importance of this model is that a product must grow in sales and capture higher market share to become a star product.
This article is extracted from my new book- Mastering Enterprise Skills for Potential Entrepreneurs, which can be found on www.amazon.co.uk. If you want to receive more information about the book and our activities, you can register in our newsletter by using this link.
Prepared by: Munther Al Dawood
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