Product Concepts- Products are broadly defined as a good, service, idea, or a combination of these.- Good vs. Service vs. Ideao Good: A tangible, physical entity Ex: Toilet Papero Service: An intangible, result of application of human and mechanical efforts to people or objects Ex: Car Washo Ideas: Concept, philosophy, image or issue Ex: MADD (Mothers Against Drunk Driving)- Consumer Products vs. Business Productso Consumer Products: Purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them Convenience Products: inexpensive, frequently purchased, minimal purchasing effort Shopping Products: Items for which buyers are willing to expend considerable effort in purchasing process Specialty Products: have unique characteristics that buyers will put in a decent amount of effort to obtain Unsought Products: purchased to solve a sudden problem, people don’t usually think to buy these productso Business Products: Purchased to use for operations, to resell, or used in the manufacture process of products- Product Hierarchy (ordered from middle to outermost ring)o Core Products: the tangible service that the customer receives Ex: Publix Brand Sandwich Cookieso Branded Products: Core Products+ the characteristics that allow the customer to differentiate THIS product from similar ones Oreo Sandwich Cookieso Augmented Products: They have characteristics that enhance value past Core and Brand Oreo Sandwich Cookies that have the resealable package- Strategic Product Managemento Product Mix: All of the products a company sells Ex: Coca Cola sells Coke, Powerade, Sprite, Vitamin Water, etc.o Product Line: all CLOSELY related products marketed by an organization Ex: Oreo has double stuffed, mint, original, birthday cake, etc.o Product Line Depth: The number of products in a product line Ex: Excedrin has: Express gels, extra strength, migraine relief, menstrual complete, tension headache, back and body, PM, andsinus headache. So, in this example, Excedrin’s product line depth would be eight.o Product Line Breadth: The number of different lines a company or Strategic Business Unit markets. Example: Coca cola has Coca cola, Minute maid, Dasani, etc.- Product Life Cycle Stageso Introductory Stage: High failure rates, but little competition. Product is often modified in this stage. There is limited distribution, since success is uncertain. There is a lot of advertising, and productions costs are high. Profits are usually negative, and the real focus is awareness and providing information. o Growth Stage: Sales increase, and competitors enter the market. Profits are earned, and advertising is aggressive, to distinguish product between other competing brands. Distribution becomes wider, and prices normally fall.o Maturity Stage: Sales increase, but less and less. Product lines begin to grow, and promotions begin as an attempt to increase sales. Marginal competitors drop out of the marketplace, and prices and profits fall. “Niche Marketers” (People specified to produce specifically this product) emerge.o Decline Stage: Long-run drop in sales. At this stage, there are large inventories of unsold items, and all nonessential marketing expenses are eliminated. - 3 types of Product Life Cycles- 4 ways to extend the Product Life Cycle:o Promoting more varied use Ex: Using dryer sheets to get rid of bugso Encourage More Use per Occasion Ex: “Super Size It”o Stimulate More Frequent Use Ex: Colgate to-go toothbrusheso Selling new Segments Ex: Harley Davidson for Women- Repositioning and Improvementso Repositioning: Changing use of product to appeal to more/new customers Ex: Arm & Hammer being used as a fridge freshenero Improvements: Making product better Wendy’s new “natural cut” fries- Alternatives to New Product Development:o Line Extensions: product developed is closely related to one or more of already existing, successful, products in a product line. Designed to meet a “somewhat” different need “Down Market Extension” Ex: Mercedes came out with a “B-class” vehicle “Up Market Extension” Ex: Hershey’s premium chocolateo Brand Extensions: Product developed that is NOT closely (but a little) related to one or more products existing in the product line Ex: Reese’s came out with a jarred peanut butter available in grocery stores Ex: Lifesaver’s came out with a soda, which was a failure because it wasn’t related closely enough to the original producto Product Modifications: Changing one or more of the product’s characteristics. This is different from line extensions because the original product is removed from the product line. (Think of it as a “new and improved” replacement)o Cost reduction: Lowering the price, but quality is reduced minimally as well Ex: Hamburger Helper removed some of it’s spiced in their packets to lower the cost of production, hence leading to the ability to reduce the price.o Functional modification: makes product easier and more convenient to use Ex: Crystal light “on-the-go” packets=huge successNew Product Development- New Product Development is difficult because of the amount of new resources it requires, and it is extremely risky, since you can never be totally sure that people will actually want to spend money on the product.o 80% of new products fail. - 2 Goals for New Product Developmento Understanding NPD from the Firm’s Perspectiveo Understanding NPD from the customer’s perspective- 5 Steps of New Product Development (In order): o Idea Generation: Seeking product ideas to achieve organizational objectives—gather information about what people like o Idea Screening: Selecting the ideas with the greatest potential for further reviewo Concept Analysis: Seeking a sample of potential buyers’ responses to aproduct ideao Market Testing: A limited introduction of a product in geographic areas chosen to represent the intended marketo Product Launch: release product to the general public- 5 Steps of the Product Adoption Process (In order):o Awareness: buyer becomes aware of the producto Interest: Buyer seeks information and is receptive to learning about the producto Evaluation: Buyer considers the product’s benefits and decides whether to try ito Trial: Buyer examines, tests, or tries the product to determine if it meets his/her needso Adoption: Buyer purchases the
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