In order to define a specific offer, a serious product study must be carried out. Indeed, the product proposed by a company is the first factor of success. When a company is created, a study of the product launched must be carried out. This study must be carried out on two specific points.
The life cycle of the product
Firstly, the company must be attentive to the life cycle of the product. The lifespan of a product can be broken down into several phases:
- The launch (arrival of a new product)
- Growth (increase in Sales)
- Maturity (stabilization of Sales)
- The decline (drop in turnover)
The duration of each of these phases will first of all depend on the type of product that the company is going to create. Consumable products will have to be constantly renewed in order to remain in the maturity phase.
Another factor in the lifespan is market dynamics. Indeed, if the company is in a very dynamic market, which is constantly evolving, then the product’s lifespan will be quite short (typical example: mobile phones). The company will have to stay one step ahead of the market by constantly innovating. Companies that cannot keep pace with competing innovations will end up with obsolete products.
Defining an offer does not stop at product development. Indeed, if the product goes through four phases, the entrepreneur must take into account everything that surrounds it. First of all we have the price of the product, which also has to evolve during the four phases.
Price:It is high when it is launched
The price is high when it is launched because like any innovation, it will attract a clientele who are eager to discover new things.
During its growth phase, the price may remain high because it has been successfully launched, but it may also fall in order to reach a new customer base.
In the mature phase, the price of the product must keep up with the competitors in order to stay in the race.
To define an offer, the company must of course determine the distribution channels for the product. This step will depend on the results of the market research carried out by the company before launching the product. It will also depend on the type of product. Indeed, some products can be adapted to several markets and therefore have a larger distribution. But in all cases, the company must seek to expand its distribution channels.
-Finally, in order to define the offer, the company must work on the communication and image of the product. To do this, it will use advertising. In the launching phase, the company will have to invest in a significant communication around its product in order to make it known to everyone. This communication will have to be elaborated in order to make the product known and to seduce the target market. But it must be broad enough to interest other markets.
In order to define an offer, the life cycle is not the only factor. Indeed, the product range will play a role. A company has the choice to have a wide range of its products, i.e. several kinds of company products that aim to meet the expectations of the same customer, while being on the same distribution channel.
A company can also decide to keep its product range low.
Broadening its product line
It can be beneficial to the company for several reasons:
- On the one hand, the company will cover a larger share of the target market, and if it decides to diversify its range, it can tackle new markets.
- then, if one of the products in the range no longer works, sells less, then it can take it off the market without jeopardizing its survival.
Keeping a product line small can also have benefits for a business. By keeping its core products, the company will have a better understanding of its market, which is smaller than if it were to move to a higher range. This knowledge of its market allows the company to get to know its customers and their expectations better. Also, if the company concentrates on a selected clientele, then the knowledge of this clientele will be important, so it will be able to fully meet its expectations while raising prices without fearing a departure of its customers.