Chapter 14 Developing and Pricing Goods and Services Product Development and 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 Marketers must listen and adapt to changing market demands Total product offer everything that consumers evaluate when deciding whether to buy something also called a value package brand name service speed of delivery price store surroundings guarantee reputation of producer buyer s past experience package image created by advertising internet access convenience Basic product aka core product Total product offer augmented product Product line a group of products that are physically similar or intended for Product mix the combination of product lines offered by a manufacturer a similar market Product Differentiation Product differentiation the creation of real or perceived product differences water bottle companies good at this Convenience goods and services products that the consumer wants to purchase frequently and with a minimum of effort ex candy gum gas o 7 11 o Location brand awareness image are important o Make readily available promote proper image Shopping goods and services those products that the consumer buys only after comparing value quality price and style from a variety of sellers o Target o Price differences and quality differences are important Specialty goods and services consumer products with unique characteristics and brand identity Because these products are perceived as having no reasonably substitute the consumer puts forth a special effort to purchase them fine watches jewelry expensive wine fur coats Unsought goods and services products that consumers are unaware of haven t necessarily thought of buying or find that they need to solve an unexpected problem emergency car towing insurance burial services What class a good or service is in depends on how the consumer views it Goods classified as consumer goods or industrial goods based on their usage Industrial goods products used in the production of other products Sometimes called business goods or B2B goods o Marketing less important o Installations major capital equipment like new factors or heavy machinery o Capital items expensive products that last a long time o Accessory equipment capital items that are not quite as long lasting or expensive as installations computers copy machines tools Packaging Changes the Product Packages must perform the following functions o Attract buyer s attention protect goods inside stand up under handling and storage be tamperproof deter theft be easy to open and use describe and give information about the contents explain the benefits of the good inside provide info on warranties warnings and other consumer matters give some indication of price value and uses Universal Product Codes UPCs help stores control inventory Radio frequency identification RFID chip chip sends out signals telling a company where the product is at all times Fair Packaging and Labeling Act give consumers more quantity and value information on product packaging Bundling grouping 2 or more products together and pricing them as a unit Branding and Brand Equity Brand a name symbol or design or combo thereof that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors Trademark a brand that has exclusive legal protection for both its brand name and its design for the buyer Brand name ensures quality reduces search time adds prestige to purchases Brand name facilitates new product introductions helps promotional efforts adds to repeat purchases and differentiations products so that prices can be set higher Manufacturer s brand names the brand names of manufactures that distribute products nationally Xerox Kodak Sony Dell Dealer private label brands products that don t carry the manufacturer s name but carry a distributer or retailer s name instead Kenmore and Diehard are dealer brands sold by Sears aka house brands distributor brands Manufacturers fear having their brand names turn into generic names is the name for a whole product category Generic goods non branded products that usually sell at a sizeable discount compared to national or private label brands o Basic packaging little or no advertising o Some are of poor quality but many come close to the same quality as the national brand name good Knock off brands illegal copies of national brand name goods Brand equity the value of the brand name and associated symbols Brand loyalty the degree to which customers are satisfied like the brand and are committed to further purchases Brand awareness how quickly or easily a given brand name comes to mind when a product category is mentioned o Advertising helps build strong brand awareness Brand preference Brand insistence Brand association the linking of a brand to other favorable images like famous product users a popular celebrity or a particular geographic area Brand manager a manager who has direct responsibility for one brand or one product line called a product manager in some firms manages all the elements of is marketing mix price product place promotion o Greater control over new product development and product promotion The New Product Development Process The odds a new product will fail is high not delivering what is promised is a leading cause of new product failure other causes include poor positioning too few differences from competitors poor packaging Product development is a 6 stage process o Idea generator based on consumer wants needs product screening product analysis development including building prototypes testing commercialization brining the product to the market o 1 Generate idea o 2 Product screening a process designed to reduce the number of new product ideas being worked on at any one time so it can focus on the most promising one o 3 Product analysis making cost estimates and sales forecasts to get a feeling for profitability of new product ideas o 4 5 Development Testing Concept testing taking a product idea to consumers to test their reactions o 6 Commercialization promoting a product to distributers and retailers to get wide distribution and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers The Product Life Cycle Product life cycle a theoretical
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