Staying Ahead

S3 Unit 2.2

Staying Ahead

Three main areas of business activity which can help a business stay ahead of the competition:

Research and development Market research Product life cycle

Research and Development

Makes it possible for a business to improve its products, make an ‘image’ on the public and create new products. It may also help in finding better ways of producing present products.

Product Led and Market Led

Some businesses can be Product Led which means they design and make a product and they try and convince customers to buy it. e.g. drugs company like Glaxo.

Others are Market Led which is when the business finds out what consumers want before making the final product. They do this by using market research. e.g. Cadbury Fuse

Market Research

This helps businesses stay in touch with customers need and wants.

Identify the market – what type of people would be interested in new product. (old/young).

Where is this market What do they want When do they want it Can you satisfy them How can you improve the product/service for

them

Product Life Cycle The product Life Cycle will measure the

stages of a a product from development to replacement or withdrawl from sale.

Digital cameras

DVD

Players Personal

computers

Mobile Phones

Product life cycle Introduction - The product is tested and

developed before it is launched. Initial sales will be low until the consumer starts buying. At this point, production costs are much higher than the revenue from sales.

Growth - As sales increase production becomes more profitable. The early development costs can be recovered. The success of the product can lead to brand loyalty and repeat sales.

PLC

Maturity - The product reaches its peak of sale and is at its most profitable point for the company. Competitors have now entered the market which may reach saturation point.

Decline - As new models and designs come out, or fashions change, a product may become obsolete. Sales fall, as does revenue. It is no longer profitable to produce it.