MAR3023 Test 2 Notes 2 13 13 Cinthia Satornino Product Concepts and New Product Development What is a product A product is a good service or idea or a combination of two or more of these EX Good service idea Goods a tangible physical entity Services an intangible result of application of human Product concepts Idea EX Kids would choose to play with Lego s over regular product because they like to build things and then play with them Consumer products purchased to satisfy personal Product types and family needs Business products purchased to use for operations to resell Managing existing products Product hierarchy the customer receives Core products physical or intangible service that Branded products core products plus characteristics that allow the consumer to differentiate it from similar products Augmented products enhance value beyond that of EX Not really a difference between Coors Light the core and branded products Core vs brands Blue Moon Budweiser Product Line products marketed by an organization Product line depth Product line breadth SBU markets Product life cycle A product line consists of the closely related The number of items in a product line The number of different lines that a company or Cycle Introduction unknown product Growth product starts to get attention Maturity hits a peak Decline new product enters market and takes customers Several kinds of product life cycles are possible high technology products fads and styles or fashions Harley Davidson targets women Extending the product life cycle Selling to a new segment Stimulate more frequent use Encourage more use per occasion Promoting more varied use Improvements and repositioning Repositionings Arm Hammer Toothpaste fridge freshener Alternatives to New Product Development NPD NPD is risky Less risky alternatives Line extensions creating a version of existing product but original doesn t go away Product modifications previous model goes away Down market extensions Products become cheaper EX Mercedes introducing a B class EX Hershey s fancy chocolates 600 bottle Up market extensions Products become more expensive fancier of beer Product modifications Changes to one or more characteristics of a product The old version usually doesn t stay in line Cost reduction quality modification Products at a lower price Products at same price at lower manufacturing costs Internal modifications Functional modifications Change something about the product to make it easier more convenient Developing new products EX Dry Bath convenience and cleanliness Infamous NPD predictions Two goals for NPD 1 Understanding NPD from the Firm s Perspective 2 Understanding NPD from the Customer s Perspective 7 stages of NPD 1 Idea generation 2 Screening most promising ideas 3 Concept testing sample of potential buyers 4 Business analysis potential contribution to firm 5 Product development technically feasible 6 Test marketing limited introduction will it work 7 Commercialization plan for full scale release Product adoption process 1 Awareness buyer becomes aware of the product 2 Interest buyer seeks information and is receptive to learning about the product and decides whether to try it 3 Evaluation buyer considers product s benefits 4 Trial buyer examines tests or tries the product to determine if it meets his or her needs 5 Adoption buyer purchases the product and is expected to use it again whenever the need for this general type of product arises New product adoption Innovators first to adopt new product Early adopters choose new products carefully help spread word of mouth Early majority adopt just prior to average person Late majority skeptics who adopt new products Laggards last to adopt a new product when they feel it is necessary 80 of new products fail Why Ineffective or inconsistent branding poor timing overestimation of market size ineffective promotion insufficient distribution a failure of one or more of the 4 P s product place distribution price promotion One of the most common reasons Product offering does NOT meet customer s needs Deleting a product necessary Product deletion eliminating a product sometimes 1 Weak product is a drain 2 Difficult to do 3 Three methods 2 18 13 Services what are they Service a deed process or performance Some overlap service exists in ALL physical goods Customer service in support of manufactured goods Dell reps Ordering Distribution of physical goods Return of defective goods Even bulk goods have service Factors contributing to growth Aging population Baby Boomers Longer life expectancies Implications Movement to information age Increased leisure time High per capita income Discretionary income Changing social and cultural Current state of the service industry Implications EX YouTube video United Breaks Guitars Almost 13 million views and an appearance on 20 20 EX Discussion what separates services from products Think about your most recent haircut Now think about a hair product you bought recently How do they differ How do you evaluate each Characteristics of services the big four Intangibility lack of tangible assets which can be seen touched or smelled prior to purchase Stress tangible cues Price quality relationship in services EX if a lawyer is only 20 hour we assume they suck Customer referrals Word of mouth Perishability inability of a service to be inventories or stored The marketing mix Manage supply and demand Pricing EX movies matinee early bird specials of a service Promotions EX frequent flier restrictions Inseparability simultaneous production and consumption Employees are key You remember how you were treated EX bank airline fast food etc EX Rainforest caf has bad food good Key the physical environment environment Other customers are a factor EX perceived similarity crying babies drunks Variability unwanted or random levels of service quality customers receive Heterogeneity service Customize a physical good standardize a EX Nike versus McDonald s curriculum at FSU The three other characteristics Keys risk expectations Service blueprinting Search qualities product service attributes that can be evaluated before purchase Test drive sampling packaging Associated with physical goods Experience qualities product service attributes that can be evaluated only after purchase Credence qualities product service attributes that cannot Movie haircut maid service be evaluated even after purchase Health care funeral services legal advice Services marketing mix 7 Ps 1 Product 2 Price 3 Place
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