Product: Products and Brand Image (Cambridge International IGCSE Business)

Introduction to the Marketing Mix

Spec point — "• The limitations and benefits of developing new products • Brand image; impact on sales and customer loyalty • The role of packaging"

Introduction to the marketing mix

• The marketing mix provides a framework for businesses to create and implement successful marketing strategies

  • Sometimes known as the 'Four P's', it represents the key elements of a marketing strategy: product, price, place, and promotion
  • These four components work together to satisfy the needs and wants of a target market while achieving the company's objectives

• By understanding and manipulating the marketing mix, businesses can differentiate themselves from competitors, maximise marketing impact and achieve long-term success

The four P's of the marketing mix

Businesses combine the 4 P's of the marketing mix in appropriate and unique ways to maximise their chances of success

1. Product

• The product design mix refers to the combination of elements that make up a product's design

  • These elements include function, aesthetics and cost

• Balancing the elements of function, aesthetics and cost helps to ensure a product's design is both functional and attractive while also being cost-effective for both the manufacturer and the consumer

  • Many manufacturers aim to balance all three elements

    • E.g., Fentimans ginger beer is relatively affordable and is packaged in eye catching bottles and the product itself is very good quality

  • Other manufacturers may focus on one aspect more than the others

    • E.g., Asda's own brand of ginger beer is produced at the lowest possible cost and sold to consumers at a very low price

  • Businesses must take care to balance customers' quality expectations with these elements

    • The target market may value quality less than price and will not be prepared to pay a high price for goods, even if they are of the highest quality

• Most companies are market-orientated when developing new products

  • They spend a lot of money researching consumers’ buying habits and their likes and dislikes
  • They then design and package a product, which this research suggests people will want to buy

New Product Development

• One way to stay ahead of the competition is by developing new products and innovating existing ones
• The process of new product development involves a number of important stages

1. Generate ideas

• New product concepts are discussed and brainstormed using customer suggestions, ideas from competitors’ products, employees’ ideas and information collected through market and technical research

1. Select the best idea

• Ideas are weighed up with some dropped and others chosen for further research
• This decision relates closely to costs and likely demand
• Research includes looking into forecast sales, size of market share, and cost-benefit analysis for each product idea

1. Develop a prototype

• This allows the operations department to see how the product can be manufactured, any problems or difficulties arising from its production and how to fix them
• Computer simulations are often used to produce 3D prototypes on screen

1. Test launch

• The developed product is sold to on a small scale to a limited market to see how well it sells before its full launch
• Changes may be needed prior to an expensive, large scale launch
• Digital products like apps and software run beta versions, which is a method of test-launching

1. Full launch of the product

• The finalised version of the product is launched to the entire target market

Evaluating new product development

The Importance of Brand Image

• Developing a strong brand involves creating a unique and identifiable name, design, symbol or other feature that differentiates a product or service or company from its competitors

  • This can help a business to add value as customers are often willing to pay higher prices for brands they recognise and trust

• Branding is a strategic tool that helps businesses create awareness, develop strong customer relationships, generate loyalty and sets them apart from competitors

The three main types of branding

Building a brand using one of these three methods, or all of them, will help a business to develop a strong and loyal customer base

• Manufacturer or corporate branding

  • Manufacturer or corporate branding refers to the use of a company name or logo to promote all the products or services offered by the company

    • This type of branding is used by companies like Nestlé, Nike, and Apple

• Product branding

  • Product branding refers to the use of a unique name, design, or symbol to promote a specific product

    • E.g. KitKat, Coca-Cola, and McDonald's Big Mac

• Own brand product

  • Own brand or private label branding refers to the use of a retailer's name to promote a specific product or service and is often used by supermarkets

    • E.g., ASDA chocolate, Tesco's Finest range, and Sainsbury's Basics range

How are brands built?

• Brands can be built using various methods, including

  • Developing unique selling points
  • Advertising
  • Sponsorship
  • Social media presence and activity
  • Emotional branding

Examples of the ways that brands have been built

The benefits of branding to a business

1. Business differentiation

• Branding differentiates a business from its competitors

  • This supports marketing and advertising efforts to build memorable promotional materials and campaigns

2. Reduces price elasticity of demand

• Customers are less sensitive to price changes of products with strong and appealing branding

  • Customers who are loyal to a brand are more likely to continue purchasing the product even if the price increases

3. Ability to charge premium prices

• Customers may be willing to pay more for a product that is associated with a well-established brand

  • They often perceive products with strong branding to be of higher quality and therefore worth the extra cost

4. Establishes recognition and identity

• Strong branding helps to build trust and credibility

  • This can create an emotional connection with customers, which helps generate repeat purchases

The Role of Packaging

• Packaging is the physical container or wrapping for a product. It is also used for promotion and selling appeal

• Packaging is normally designed to

  • **Present **products in the most practical yet attractive way
  • Communicate the quality of the product
  • Catch the customer's eye when they shop
  • Provide** key information to customers**
  • Establish the business brand image

• To stand out from the competition and establish a long-lasting relationship with consumers, brands are investing more money than ever before in creative and environmentally friendly packaging designs

  • This is becoming increasingly important for businesses as they place a greater emphasis on sustainability and their CSR policies

Exam Hint Brands are considered intangible assets on a company's balance sheet. A strong brand adds to the overall value of these intangible assets, which may be an important part of a company's net worth and make it more attractive to investors.