CHAPTER 14 BMGT PRODUCT DEVELOPMENT THE TOTAL PRODUCT OFFER Value good quality at a fair price when consumers calculate the value of a product they look at the benefits and then subtract the cost to see if the benefits exceed the costs An organization must constantly monitor changing consumer wants and needs and adapt products policies and services accordingly o For example McDonalds is trying new ideas offering McDonuts in NY having computer stations in Atlanta in Ohio mega McDonalds had a karaoke booth Product development is a key activity in any modern business anywhere in the world Developing a Total Product Offer something dimensions Product Lines and the Product Mix Total product offer consists of everything consumers evaluate when deciding whether to buy o When people buy a product they may evaluate and compare total product offers on many o A successful marketer must begin to think like a consumers and evaluate the total product offer as a collection of impressions created by all the factors PACKAGE PRICE BRAND NAME CONVENIENCE Product line a group of products that are physically similar or intended for a similar market o Ex Diet Coke Diet Coke with Splenda Coke Zero Diet Coke w Lemon Diet Vanilla Coke Product mix the combination of all product lines offered by a manufacturer o Ex Procter and Gamble has many brands of laundry detergent Tide Era Downy and Bold PRODUCT DIFFERENTIATION Product differentiation the creation of real or perceived product differences o Often product differences are really small so marketers must use a creative mix of pricing advertising and packaging to create a unique attractive image o Small businesses can often win market share with create product differentiation Marketing Different Classes of and Services Consumer Goods Convenience goods and services products the consumer wants to purchase frequently and with a minimum of effort o Ex 7 Eleven o Location brand awareness and image are important for marketers o Best was to promote good is to have them readily available Shopping goods and services products the consumer buys only after comparing value quality price and style from a variety of sellers o Shopping centers where comparisons of products is easy for the consumer o Best way to sell is to have good combo of price quality and service Specialty goods and services consumer products with unique characteristics and brand identity no reasonable substitute they put forth a special effort to purchase them o Ex Fine watches fur coats jewelry expensive wine o Best way to sell is to rely on researching special market segments thru advertising Unsought goods and services products consumers are unaware of o Ex Emergency car towing services burial services and insurance o Best way to promote sell is thru personal selling or yellow pages Marketing Industrial Goods and Services Industrial goods aka business goods or B2B goods products used in the production of other products o As a consumer good a computer might be sold thru Best Buy but as an industrial good computers are likely to be sold thru the Internet o Advertising is less of a factor when selling industrial goods o Installations major capital equipment such as new factories and heavy machinery o Capital Items expensive products that last a long time o Accessory equipment consists of capital items that are not quite as long lasting or expensive as installations computers copy machines etc PACKAGING CHANGES THE PRODUCT Packages must perform the following functions 1 Attract the buyer s attention 2 Protect the goods inside 3 Be easy to open and use 4 Describe and give info on the contents inside 5 Explain the benefits of the good inside 6 Product info on warranties warnings etc 7 Give indication of price New packaging technology RFID chip when attached to a product the chip sends out signals telling a company where the product is at all times Bundling combines goods services for a single price o Ex Virgin airlines has bundled door to door limousine service and in flight massages in its Growing Importance of Packaging total product offer BRANDING AND BRAND EQUITY Brand a name symbol design that identifies the goods or services of one seller or group of sellers and distinguishes them from goods and services of competitors Trademark a brand that has exclusive legal protection for both its brand name and its design o Google is the number one brand today o Ex McDonald s golden arches Brand name ensures quality reduces search time and adds prestige to purchases Brand Categories Manufacturer s brand names represents manufacturers that distribute products nationally Dealer private label brands products that don t carry the manufacturer s name buy carry o Ex Xerox Kodak Sony Dell distributor or retailer s name instead o Ex Kenmore and Diehard are dealer brands o Also known as house brands or distributor brands Generic brands nonbranded products that usually sell at a sizable discount compared to national or private label brands feature basic packaging and are backed w little or no advertising Knockoff brands illegal copies of national brand name goods o Ex Fake Rolex Polo Louis Vuitton Gucci Generating Brand Equity and Loyalty Brand equity the value of the brand name and associate symbols o Ex Ziploc bags Brand loyalty core of brand equity the degree to which customers are satisfied like the brand and are committed to further purchases Brand awareness refers to how quickly or easily a given brand name comes to mind when someone mentions a product category Factors influencing the perception of quality include price appearance and reputation Consumers often develop brand preference When consumers reach a point of brand insistence the product becomes a specialty good Creating Brand Associations Brand Management Brand associations the linking of a brand to other favorable images like famous product users a popular celebrity or a particular geographic area A person responsible for building brands is known as a brand manager or product manager Brand manager has direct responsibility for one brand or product line and manages all the elements of its marketing mix product price place and promotion THE NEW PRODUCT DEVELOPMENT PROCESS The odds a new product will fail are high Over 80 of products introduced in any year fail to research their business objectives THE NEW PRODUCT DEVELOPMENT PROCESS o Idea generation o Product screening o Product analysis o Development o Testing o Commercialization Generating New Product
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