Product (Cambridge International IGCSE Business)

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 helps businesses create awareness, develop strong customer relationships, generate loyalty and sets them apart from competitors

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

The three main types of branding

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 a 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

  • For example, 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

  • For example, ASDA chocolate, Tesco's Finest range, and Sainsbury's Basics range

Examples of the ways that brands have been built

Benefits of branding to a business

1. Differentiation

• Branding differentiates a business from its competitors

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

2. Reduced 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. Brand 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's brand image

• To stand out from the competition, brands are investing more money than ever before in** creative and environmentally friendly packaging designs

  • For example, Lush Cosmetics packages gift boxes with popcorn, which can be composted by the end user and uses less energy than plastic alternatives

An example of popcorn used for packaging Lush's cosmetic products

Exam Hint When discussing products, remember that brand image and packaging can add value just as much as the product’s features – examiners often credit this wider view of “product”

Developing new products

• 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

The new product development process

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