Product Concepts Products are broadly defined as a good service idea or a combination of these Good vs Service vs Idea o Good A tangible physical entity Ex Toilet Paper o Service An intangible result of application of human and mechanical efforts to people or objects Ex Car Wash o Ideas Concept philosophy image or issue Ex MADD Mothers Against Drunk Driving Consumer Products vs Business Products o 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 products o 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 Cookies o Branded Products Core Products the characteristics that allow the customer to differentiate THIS product from similar ones Oreo Sandwich Cookies o Augmented Products They have characteristics that enhance value past Core and Brand Oreo Sandwich Cookies that have the resealable package Strategic Product Management o 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 and sinus 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 Stages o 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 bugs o Encourage More Use per Occasion Ex Super Size It o Stimulate More Frequent Use Ex Colgate to go toothbrushes o Selling new Segments Ex Harley Davidson for Women Repositioning and Improvements o Repositioning Changing use of product to appeal to more new customers Ex Arm Hammer being used as a fridge freshener o 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 chocolate o 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 product o 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 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 as well to use New Product Development Ex Crystal light on the go packets huge success 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 Development o Understanding NPD from the Firm s Perspective o 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 review o Concept Analysis Seeking a sample of potential buyers responses to a product idea o Market Testing A limited introduction of a product in geographic areas chosen to represent the intended market o Product Launch release product to the general public 5 Steps of the Product Adoption Process In order o Awareness buyer becomes aware of the product o Interest Buyer seeks information and is receptive to learning about o Evaluation Buyer considers the product s benefits and decides o Trial Buyer examines tests or tries the product to determine if it the product whether to try it meets his her needs o Adoption Buyer purchases the product and is expected to use it again whenever the need for this general type of product arises 5 Types of Product Adopters o Innovators first to adopt a new product o Early Adopters Choose new products carefully help spread word of o Early Majority Adopt just prior to average person o Late Majority Skeptics who
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