Product

The ‘four Ps’ of the marketing mix

The marketing mix consists of four different elements, which are known as the ‘four Ps’:

  • product
  • price
  • place
  • promotion

These elements need to work together if a business is to sell its products or services successfully.

Product

Understanding customer needs is vital to ensure that a business is able to supply products that customers want to buy, at a price that allows the business to make a profit. Some products are completely new inventions, but many are the result of innovation. There is an important distinction between the two:

Invention

Invention means creating something that did not previously exist, eg self-tying shoelaces. Entrepreneurs are always trying to think of new products and services to launch, but it can be challenging to come up with a completely new and unique idea.

Innovation

Innovation is the successful commercialisation of an invention, or the adaptation of a product over time to improve its features. It involves changing existing processes or creating new, more effective processes, products and ideas. Businesses can spend large amounts of money on research and development in order to develop their products.

Whether an invention or an innovation, a successful product starts with a good design that meets the needs and wants of customers. When designing a product, a business will usually consider three factors:

  • function – what the product should do and how well it does it, eg a washing machine should wash clothes
  • cost – how cost-effective the product will be to manufacture, eg the product should be made and sold profitably
  • aesthetics – how the product appeals to consumers, eg how the product looks, feels or smells

The product life cycle

Once it has been designed and is ready to launch, a product will typically go through four different phases during its life. These phases are referred to as the product life cycle.

Phases of the product life cycleExplanation
IntroductionThe product is launched, so sales may be low because only a small number of customers are aware that the product exists.
GrowthAs more customers become aware of the product, sales increase rapidly, especially if customers like it.
MaturitySales reach their peak during this phase, as the product becomes established. It may become a regular purchase for customers who like it.
DeclineSales fall during this phase as the product loses popularity and customers look for alternatives. It is withdrawn when it becomes unprofitable.

The level of sales determines where a product is in its life cycle. This can be illustrated visually on a graph:

Line graph showing the level of sales and where a games console is in its life cycle.

The life cycle, and how long it takes a product to go through its life cycle, can vary enormously from one product to another. Some products will exist for years before entering a decline, while other less successful products may go through their life cycle very quickly. How long a product lasts will depend upon:

  • how dynamic the market is – eg, technological products (such as tablets and laptops) have short life cycles as they quickly become out of date as new technology emerges
  • how strong the brand image behind the product is – eg, a new sports shoe from a well-known brand is likely to have a longer life cycle than a new sports shoe from an unknown brand

Extending the product life cycle

Developing new products is expensive and takes time, so businesses will usually try to extend the life cycle of a product and prevent it from going into decline. To do this, they need to find ways of keeping people interested in the product for longer, thereby increasing the number of sales.

Line graph showing the level of sales and where a games console is in its life cycle and the extension strategy at the point of decline.

Ways of extending the life cycle of a product

There are a number of ways that a business can extend the life cycle of a product:

  • Product differentiation – this means making a product stand out from its market competitors, usually by highlighting the differences between it and the other products. Ensuring that a product has a unique selling point (USP) is a good way to differentiate it from other products.
  • Reducing the price of the product – by the time a product has reached maturity, it may face competition from other products. When this happens, the business may no longer be able to charge a high price for the product. If the price is reduced, existing customers are likely to continue buying it, while other customers may switch from competing products.
  • Rebranding the product – tired-looking branding and packaging can put customers off. Refreshing the brand and packaging design can appeal to new customers and convince previous customers to try a product again.
  • Repositioning the product – this extension strategy involves exploring new markets for a product. It is possible to revive a product by testing new uses for it or adding value so that it appeals to a different audience. For example, a business could try introducing a different sized version of the product.
  • Increasing marketing activity – running new advertising campaigns and sales promotions can attract new customers, remind previous customers that the product still exists and encourage existing customers to buy more of the product.
curriculum-key-fact
A unique selling point, or USP, is something about a product that makes it more appealing than its competitors. Examples include being the best quality, having the lowest price or having a feature that none of its competitors have.