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Product economics are models for production, competitive advantage and consumer behavior that are applicable to product marketing. This includes product differentiation, relative advantage and pricing theory that is useful in developing and marketing products. Products here mean products and services that solve real-world customer and user problems.
In the earlier two episodes, we discussed few elements of Product Economics along with real-world examples where they are applied. Here are some more elements.
Market saturations occurs when sales of a product or service have reached the customer needs. In this case, the further expansion will be reduced since the demands are met. A given product may reach market saturation because there is a drop in consumer confidence or, alternatively, because it is outdated and no longer needed. The problem of market saturation has also caused many companies to change their revenue models, especially when product sales begin to slow.
Customer willingness to purchase a product or service at a given price. Demand is a basic economic force that drives product revenues. The customers may not consider a company if it doesn't have the ideal value they're looking for. Unsought products are products of little or no demand.
A competition to offer higher quality items that consumers value. This is the opposite of commoditization. Premiumization occurs in a product category, market industry where the customers are willing to pay more high-quality products.
Large mature markets are dominated by three competitors. A company that dominates an industry with few competitors is vulnerable to competition. The smaller competitors sometimes must merge in the top three competitors to ensure benefits. Large dominant firms tend to be less responsive to customers hence it might even bring in another competitor
Sustainable economic growth is economic development that attempts to satisfy the needs of humans but in a manner that sustains natural resources and the environment for future generations. Every company needs to be sustainable since it is another factor that attracts the customers and to ensure environment conservation.
As stated in the Agile Manifesto written by a group of 17 thought leaders during 2001, "Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely"
This concludes the 3 episodes about the important elements of Product Economics and real-world examples. If you have any feedback or suggestions, please provide below.