Product.

• Technology - New technology, or better technology than rivals, can give firms a competitive edge or enable production costs to be lower thus enabling a lower price.
• Competitors Actions - It is very popular to copy successfil products by launching a 'me too' product at a slightly cheaper price.
• Entrepreneurial skills of owners/managers - The skills and initiative of owners/managers can help firms to come up with better ideas or move forward more effectively again giving a competitive edge.
• Financial Situation - Can they afford to make a new product?

What is product differentiation?

Product differentiation is the extent to which customers consider your product/service to be different to rivals. The feature that is different or unique is called the U.S.P which stands for unique selling point
.

Actual Differences e.g.

• Unique Design.
• Unique Features.
• Superior performance.

Imagined Differences e.g.

• Persuasive adverts.
• Feel good factor.
• Celebrity endorsements.

• Product portfolio analysis e.g. the boston matrix.
• Product life cycle - The stages that a product passes through during it's lifetime.

Product development: changing aspects of goods and services to meet the changing needs of existing customers or to target a different market.

Product line: a set of related goods or services.

Product mix: the full range of products offered by a business, also known as product portfolio.

Product portfolio analysis: analysing the existing product mix to help develop a balanced range of goods and services.

There are 5 stages of the product life cycle.

• Development. - Lots of money is being invested into this new product.
• Introduction. - Sales are low, profits will be negative, product may be unknown.
• Growth. - Sales increase rapidly, profits will reach highest at the end.
• Maturity & Saturation. - Sales reach it's peak, rate of growth slows.
• Decline. - Sales start to fall.

• It illustrates the broad trends in sales revenue.
• Identifys points at which the business may need to consider launching new products as older ones are in decline.
• It helps businesses identfy when and where spending is required for advertising etc.

Extention Stratagies is when a product is in its decline stage, the business may seek to prolong the product's life.

Extention stratagies include:

• Re-styling the product, changing it's appearance and packaging.
• Finding new uses for the product, and hence stimulating demand.
• Finding new markets for the product, this may involve exporting the product to foreign markets.

Benifits:

• It helps firms to realise that marketing decisions need to be changed at different stages of a products life.
• It can help managers to plan for different levels of sales and costs.

Limitations:

• You cannot always predict exactly what is going to happen to a product over time.
• Falling sales may not mean that the product is entering the decline phase. There may be other reasons e.g. new competitors or maybe a recession.