developing new products and services 03 10 2013 what are products and services the essence of marketing is in developing products and services to meet buyer needs product o a good service or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers needs and is received in exchange for money or something else of value a look at goods services and ideas a good has tangible attributes that consumers 5 senses can perceive o a good also may have intangible attributes consisting of its delivery or warranties and embody more abstract concepts such as becoming healthier or wealthier goods also can be divided into nondurable goods and durable goods o nondurable goods o durable goods an item consumed in one or a few uses one that usually lasts over many use this classification method also provides direction for marketing actions services o intangible activities or benefits that an organization provides to satisfy consumers needs in exchange for money or something else of value services have become a significant part of the U S economy exceeding 40 of its GDP in marketing an idea is a thought that leads to a product or action o such as a concept for a new invention or getting people out to product generally includes not only physical goods but services and vote ideas as well o when product is used in its narrower meaning of goods it should be clear from the example sentence classifying products two broad categories of products widely used in marketing relate to the type of user o consumer products products purchased by the ultimate consumer o business products B2B products or industrial products products organizations buy that assist in providing other products for resale some products can be considered both consumer and business items consumer products convenience products o item that the consumer purchases frequently conveniently and with a minimum of shopping effort shopping products o items for which the consumer compares several alternatives on criteria such as price quality style specialty products and buy unsought products o items that the consumer makes a special effort to search out o items that the consumer does not know about or knows about but does not initially want each type of consumer product stresses different marketing mix actions degrees of brand loyalty and shopping effort o but how a consumer product if classified depends on the individual business products a major characteristic of business products is that their sakes are often the result of derived demand o that is sales of business products frequently result from the sale of consumer products business products may be classified as components or support products o components o support product services items that become that become part of the final product items used to assist in producing other goods and product items product lines and product mixes product item o a specific product that has a unique brand size or price Stock keeping unit SKU A unique identification number that defines an item for ordering or inventory purposes Product line o A group of product or service items that are closely related because they satisfy a class of needs are used together are sold to the same customer group are distributed through the same outlets or fall within a given price range A broad product line enables both consumers and retailers to simplify their buying decisions Product mix o Consists of all of the product lines offered by an organization New products and why they succeed or fail New products are the lifeblood of a company and keep it growing but the financial risks can be large What is a new product What does new mean for new product marketing Newness compared with existing products If a product is functionally different from existing products it can be defined as new new industry o Sometimes this newness is revolutionary and creates a whole At other times more features are added to an existing product to try to appeal to more customers o This proliferation of extra features sometimes called feature bloat can overwhelm many consumers Newness from the consumer perspective A second way to define new products is in terms of their effects on consumption o This approach classifies new products according to the degree of learning required by the consumer Continuous innovation o Consumers don t learn new behaviors The benefit of this simple innovation is that effective marketing mainly depends on generating awareness so there is no need to reeducate consumers Dynamic continuous innovation o Only minor changes in behavior are required The marketing strategy here is to educate prospective buyers on the products benefits advantages and proper use Discontinuous innovation o Involves making the consumer learn entirely new consumption patters to use the product Marketing efforts for discontinuous innovations usually involve not only gaining initial consumer awareness but also educating consumers on both the benefits and proper use of the innovative product Newness in legal terms The U S FTC advises that the term new be limited to use with a product up to six months after it enters regular distribution Newness from the organizations perspective Successful organizations view newness and innovation in their products at three levels o The lowest level which usually involves the least risk is a product line extension This is an incremental improvement of an existing product line the company already sells This has the potential benefit of adding new customers but the twin dangers of increasing expenses and cannibalizing its existing line o At the next level is a significant jump in innovation or technology or a brand extension involving putting an established brand name on a new product in an unfamiliar market o The third and highest level of innovation involve a radical Effective new product development in large firms exist at all three invention levels identifies Why products and services succeed or fail A new product or service needs a precise protocol o A statement that before product development begins A well defined target market Specific customers needs wants and preferences What the product will be and do to satisfy consumers To learn marketing lessons and convert potential failures to successes we can analyze why new products fail and then study several failures in detail Marketing reasons for new product failures Both marketing and non marketing factors contribute to new product failures