Marketing Exam 3 Notes Chapter 11 Developing and Managing Products 03 24 14 Improvement or revisions of existing products 1 2 Repositioned products 3 Lower priced products 4 The New Product development process a Exhibit 11 1 pg 180 b New Product strategy i Have a new product Strategy ii Idea Generation 1 Sources for ideas R D Customers writing in Employees distributors vendors competitors and consultants a Pillsbury Recipe Contest Used to generate new products 2 Have a suggestion box metal box with a lock once a week the VP would open the suggestion box and read through it Part of the organization strategy to come up with new ideas create an effective way to generate new ideas 3 Bring together multiple departments to brainstorm 4 Wal Mart wanted an 18 pack of Shasta Sodas a Get the other disciplines to make comments b Nothing is too dumb to share 1 99 get screened the minute they are suggested a Material could be wrong too much money or not enough man power b Most new products are rejected at the screening stage 1 Preliminary figures for demand cost sales and profitability are calculated 1 Sketch a market strategy start developing a prototype and build sample iii Idea screening iv Business Analysis v Development products vi Test Marketing 1 Pick a city that is representative of the American Population a Tucson Arizona used to be a good cross section of the US b Grand Rapids is now the best area as the cross section of the US 2 Focus groups Gillett requests that no one shaves until they come into work 3 Frito Lay no longer Test Markets their products 4 Very Costly vii Commercialization 1 Making the decision to commercialize a product or make it available for sale 2 Firms that routinely introduce new products share the following characteristics a A history of listening carefully to customers b An obsession with producing the best product possible c A vision of what that market will be like in the future d Strong leadership e A commitment to new product development f A project based team approach to new product development g Getting every aspect of the product development process right viii New Product has been CREATED 5 The Spread of New Products a Managers have a better chance of successfully marketing products if they understand how consumers learn about and adopt products pg 187 b Diffusion of Innovation 1st Time Buyers process by which the adoption of an innovation spreads Diffusion process i Innovators 2 5 1 Venturesome ii Early Adopters 13 5 1 Opinion Leaders iii Early Majority 34 1 Deliberate iv Late Majority 34 1 Skeptical v Laggards 16 50inch T V a The Adoption process acceptance i Complexity ii Compatibility iii Relative Advantage iv Observability Trialability v a Stages i R D New item Idea HUGE COSTS ii Introduction starting to be generated 1 Womb 1 Birth 1 Traditional 2 Percentages will not be on the test 6 Product Characteristics and the Rate of Adoption Introduction of the Microwave RadarRange vs 7 Product Life Cycles The PLC can be used to analyze a brand a product form or a product category iii Growth Sales increasing Profits peak due to competition 1 Competitors begin to appear a Break even point Profits Costs b Price wars increased advertising costs profits shrink iv Maturity Stage Sales Profits highest point 2 Childhood 1 Adult v Decline Stage sales profits begin to decline 1 Old Dying Chapter 12 Services and Nonprofit Organization Marketing 3 24 14 1 12 2 How Service Goods differ from Goods a Services are i Intangibles cannot be touched seen tasted heard or flt in the same manner that goods can be sensed ii Inseparable means the consumer must be present during the production iii Heterogeneous standardization or production and consumer connection with employees 1 Subway sandwich guy iv Perishable inability of services to be stored warehoused or inventoried 1 Empty hotel room Airplane seats 2 Service Quality a Reliability b Responsiveness c Assurance d Empathy e Tangibles Physical Location 3 Marketing Mixes for Services a Product Strategy i Service as a process Services processing people or possessions ii 4 categories 1 People 2 Possessions 3 Mental Stimulus Info Process 4 iii Core and Supplementary Service Products 1 Core Service most basic benefit the customer is seeking a Bed in hotel room 2 Supplementary services a T V fridge couch lock door windows shower toilet pool breakfast iv Mass customization b The Service Mix most service organizations market more than one service i Example TruGreen 4 Place Distribution Strategy a Different locations for different types of firms 5 Promotion Strategy a Stressing Tangible Cues concrete symbol of the service offering b Using personal info sources something people can relate to celebrity in some cases c Creating a strong organizational image McDonalds golden arcs i Professor story about getting a suit from Hong Kong that was perfect and has his initials on the cuffs d Engaging in post purchase communication follow up activities after a customer transaction 6 Price Strategy a Two guys take their MCAT exams and both score high and both get accepted to Harvard and both want to do plastic surgery exactly identical but one goes to work in Beverly Hills and the other in Santa Ana Who makes more Beverly Hills guy Services pricing can vary greatly by location 7 Relationship Marketing in Services many services involve ongoing interaction between the service organization and the customer a Level 1 Financial a price incentive discount to entice people Very common b Level 2 Social Social bond concierge level of hotel Firm learns about customers individual needs and wants c Level 3 Structural Bonds many hotels leave treats for long term customers i Developed by offering value added services that are not readily available from other firms 1 Marriot Platinum Elite Membership 8 Internal Marketing in Service Firms services are performances so the quality of a firm s employees is an important part of building long term relationships with customers a Internal marketing treating employees as customers and developing systems and benefits that satisfy their needs b To satisfy employees i Companies have designed and implemented a wide variety of programs such as 1 Flextime day care concierge services 9 Global Issues in Services Marketing 10 Non Profit Organization Marketing a Organization exists to achieve some goal other than the usually business goals of profit market share or return on investment b Non Profit organization marketing i