Product

Product is the good or service a business sells to its customers. A good is something physical, such as a refillable water bottle; a service is something done for the customer, such as repairing a mobile phone. Product is one of the four Ps of the marketing mix — product, price, promotion and place — the four decisions a business blends together to sell successfully.

Why a product must meet customer needs

A product only sells if it does the job customers want, at a quality and reliability they accept. If a café's sandwiches are stale or its service is slow, buyers switch to a rival, because most markets have a competitor ready to serve them. Meeting customer needs is therefore the starting point of the mix: the other three Ps can only work if there is a product people actually want to buy.

Product choices are tied to the other three Ps

Product decisions cannot be made on their own. A tough, long-lasting water bottle made from expensive materials can support a higher price, but only if promotion convinces buyers that the quality is worth paying for, and only if it is sold where those buyers shop — an outdoor equipment store rather than a budget supermarket. Change the product and the price, promotion and place usually have to change with it; change the price or the place and the product may need adjusting too.

As part of the product element, a business decides:

• how to balance the design mix of function, aesthetics and cost;
• where the product sits in the product life cycle, and whether extension strategies are needed to keep sales going;
• how far to use differentiation, including a unique selling point, so the product or service stands out from competitors.

The design mix is the balance a business chooses between function, aesthetics and cost when it designs a product or service. The three parts pull against each other, so a business has to decide which one matters most to the customers it wants to attract.

The three elements

Function is what the product is meant to do and how well it does it — a rucksack needs to carry your kit, stay comfortable on a long walk and keep the rain out. Aesthetics is how it looks and feels: the colour, the shape, the texture of the straps and the overall impression it gives. Cost is what the business spends on making it, such as materials, labour and packaging. Cost is not price: cost is the business's spending, while price is what a customer hands over.

Trade-offs

Improving one element often affects another. Adding waterproof zips and breathable fabric improves function but pushes up cost, so the rucksack may need a higher price. A printed pattern makes the bag more attractive but costs extra to print. Occasionally one choice helps two elements at once — a simple design can look smart and be cheaper to make — but a business can rarely have all three at their best.

Choosing the balance

The right mix depends on customer priorities, the type of product, the market it is sold in — including what rival products offer — and the business's aims. A budget rucksack for school trips might prioritise cost, because buyers want a low price. A rucksack for serious hillwalkers would prioritise function, where performance and reliability matter most. A fashion-led daypack would prioritise aesthetics. Even so, no element should be ignored completely: a cheap bag that tears, or a stylish one that is painful to wear, will lose customers.

Function is what a product or service is intended to do — the job it is meant to perform for the customer — and how well it performs that purpose. This includes reliability, meaning it works consistently, and effectiveness, meaning it actually achieves the result the customer needs.

Take a rechargeable power bank. Its function is to charge a phone when you are away from a plug. A good one holds enough charge for several top-ups, charges at a sensible speed, works with your cable and does not overheat. If it cuts out or charges very slowly, it is unreliable and ineffective, even if it looks attractive.

Why function matters

Products that perform their function reliably and effectively are more likely to satisfy customers. Satisfied customers may return to the business, recommend it to others and leave positive reviews, which can support sales and reputation. A product that keeps failing can lead to complaints, returns and lost trust.

Prioritising function suits customers who value performance and reliability more than appearance or a low price. For example, someone who needs a power bank for a long journey may pay more for one that works every time rather than choose a cheaper model that may let them down. Function can therefore be a reason why a customer picks one product over another.

Aesthetics is how a product looks and feels — its visual appeal and the overall impression it gives customers. It is one element of the design mix.

What it includes

Aesthetics covers features such as:

• shape and style
• colour
• finish, such as matte, glossy or textured
• the look and feel of the materials used

It is not only about appearance. How a product feels in your hand — smooth, soft, solid or lightweight — is part of its aesthetics too.

Why it matters

Good aesthetics can make a product more attractive and desirable, so customers are more likely to choose it. They also help a product stand out from competitors. If two products do a similar job, a shopper may pick the one that looks and feels better, even if it is priced a little more.

For example, a small business sells reusable water bottles. One is plain grey with a smooth surface; another has a curved shape, a soft-touch coating and a coloured cap. The second bottle feels nicer to hold and looks more distinctive, so more customers choose it. Its aesthetics have made it more desirable.

Prioritising aesthetics suits customers who value appearance and style. A business aiming at that group may spend more on shape, colour and finish to create the impression those customers want.

Cost is the money a business spends when making a product or providing a service. It covers materials, labour, packaging, energy and the machines used to make the product.

Cost is not the same as price. Price is what the customer pays; cost is what the business spends. A business can charge a high price but still make little profit if its costs are high.

Keeping cost low

Low costs help a business in two ways. It can keep more of the price as profit, or it can charge a lower price than rivals and still make a profit. That can attract customers who care most about price.

For example, a business making reusable water bottles spends £4 on the steel body, £1.50 on labour and £0.50 on the cap and packaging, so each bottle costs £6 to make. It sells for £12, giving £6 profit per bottle. A simpler design uses less steel and a lighter cap, cutting the cost to £5. The business could keep the £12 price and make £7 profit, or lower the price to £11 and still make £6 while looking cheaper than rivals.

Cutting too far

Cutting cost too far can backfire. A cheaper cap might leak, so customers return bottles, leave poor reviews and stop buying. The business then pays for replacements and loses sales. Cost has to be balanced against how well the product works and how it looks and feels, so the lowest possible cost is not always the best choice.

Prioritising low cost suits customers who value low prices, but it can put off customers who want a product that lasts.

The product life cycle shows the stages a product passes through, from the first idea and development all the way to being taken off the market. It maps a product's sales against time, so you can see how popular it is at each stage of its life.

It tracks the life of the product on the market, not how long a customer can use it. A tin opener might last twenty years in a kitchen, but sales of that model still rise and fall: once most households own one the market is full, and only newer designs from rivals tempt buyers.

The four phases

• Introduction — the product is designed, developed and launched.
• Growth — sales rise as more customers buy.
• Maturity — sales reach their highest level.
• Decline — sales fall and the product may be withdrawn.

Introduction

The introduction phase covers the designing and developing of the product before a single sale is made, and then the launch onto the market. Sales are usually low at first: the product is new, customers may not know it exists, and few shops may stock it yet.

Sales can still climb quickly after launch if the product is a hit and attracts attention. For example, a small firm called WrapIt launches reusable beeswax sandwich wraps and sells about 150 a month at local markets, because few shoppers have heard of them. A short clip of the wraps being washed and used again is shared widely, and sales jump to 1,200 the next month — still early in the product's life, but rising fast.

Growth

In the growth phase sales rise because demand grows and more shoppers buy, often after hearing about it from others or seeing it in more shops. Growth also attracts competitors, who spot the demand and launch similar products, sometimes at lower prices. To keep sales rising, the business may need to keep improving the product or promoting it more heavily — WrapIt, for instance, adds a larger lunch-bag size once rivals copy its wraps.

Maturity and decline are the final two phases of the product life cycle. In maturity a product is at its most popular; in decline demand falls away and the business must decide whether to keep selling it.

Maturity

In the maturity phase sales are at their highest. Most customers who want the product already own it, so sales stop climbing and level off.

How long maturity lasts varies by product and market. A plain cotton T-shirt or a standard kettle can stay in maturity for decades, while a novelty gadget may peak within a few months. Businesses aim to stay in growth and maturity for as long as possible, often using extension strategies to hold off decline.

Maturity can bring real benefits: high sales mean high revenue, and if costs are controlled the product can be highly profitable and generate positive cash flow, with more money coming in than going out. Marketing spending to grow sales may also be lower, because customers already recognise the product.

None of this is guaranteed. Rival products, rising costs and changing customer tastes all eat into profit, so a product with record sales can still earn very little.

Decline

In the decline phase sales fall, usually because newer alternatives or shifting tastes make the product less appealing. Eventually the business may withdraw the product and use its resources on something else.

A business may keep a declining product on sale for a while if it still earns a contribution (what is left of the price after variable costs), if loyal customers keep buying, or if costs are low because development and promotion have stopped. For example, Luma sells plug-in night lights for young children. Sales peak as most families who want one buy one, then slip as phone apps replace them; Luma keeps selling to loyal parents for two more years because each light is cheap to make, before withdrawing it.

Extension strategies are actions a business takes to keep a product selling for longer, delaying or reducing the fall in sales once demand begins to drop.

They are used when a product is becoming less popular, or when a business wants to keep an existing product earning money before a replacement is ready. Common extension strategies include:

• changing product features, such as adding a useful new function
• updating the design or packaging so the product looks fresher
• finding new uses for the product
• targeting new customer groups or selling in new markets
• rebranding or relaunching the product with a new image
• renewed promotion to remind customers about it or attract new ones

For example, a business selling the Luma desk lamp finds sales slowing because many households already own one. It adds a dimmable setting and a clip for bunk beds, targets university students moving into halls, and refreshes the packaging. These changes could keep sales and revenue coming in for longer, and give the business more time to develop a replacement product.

Extension strategies do add cost, though: design work, new packaging and promotion all have to be paid for. They may also fail if demand has fallen permanently. If built-in lighting or phone torches mean most customers no longer want a separate desk lamp, spending more on the Luma is unlikely to create lasting demand. The business may then need to accept the fall in sales and focus on a new product instead.

Differentiation means making a product or service distinct from competitors so that it stands out and customers choose it. A unique selling point (USP) goes further: it is a difference that no competitor offers, that customers value, and that is difficult to copy.

Where a difference can come from

A business can differentiate through design, features, quality, reliability, brand image or customer service — in fact anything customers value. Imagine two shops selling plain white mugs at the same price: with nothing to choose between them, buyers pick almost at random. Give one shop a design nobody else stocks and it has a reason to be chosen.

Why it pays

• It gives customers a reason to pick you rather than a rival, so sales and market share can rise.
• It reduces direct competition: you compete on the difference rather than on price, so you can often charge more and earn more revenue on each sale.
• Customers who value the difference come back, which builds loyalty.

Unique selling points and staying ahead

A clear USP gives a business a competitive advantage and makes marketing easier, because every advert can push one simple message. Picture a bag company that repairs any of its bags free of charge, for life. No rival makes that promise, and copying it would mean setting up a whole repair service, so the advantage holds for a while.

It will not hold for ever. Successful differences get copied, so differentiation helps a product stay in growth or maturity for longer rather than protecting it permanently. How much it matters depends on how crowded the market is — in a busy market you need a reason to stand out — and on whether customers actually value the difference. A difference nobody cares about is not real differentiation, and “better quality” only counts as a USP if no competitor matches it.