Exam 2 Review Sheet Ch 11 12 Product Concepts and Managing Products Product Classification Consumer products products purchased to satisfy personal and family Convenience products relatively inexpensive frequently purchased items for which buyers exert minimal purchasing effort usually found at retail stores a Ex chewing gum bread soft drinks newspapers gas etc b Not much thought put into which to buy or don t compare brands and needs prices Shopping products items for which buyers are willing to expend considerable effort in planning and making purchases buyers spend time comparing brands and prices last a relatively long time c Ex Furniture appliances cameras shoes etc Specialty products items with unique characteristics that buyers are willing to expend considerable effort to obtain a One does not consider substitutes and only wants the specific product Ex a mont blanc pen a one of a kind piece of baseball memorabilia Unsought products products purchased to solve a sudden problem products of which customers are unaware and products that people do not necessarily think of buying a Ex a new radiator if yours breaks on the highway medicine if you get the flu Business products products bought to use in a firms operations to resell or to make other products Installations facilities and non portable major equipment decisions made by top level management because these products are expensive and intended for long use Ex buildings factories and very large machines Accessory equipment equipment that does not become part of the final physical product but is used in production or office activities Ex calculators tools file cabinets etc Raw materials basic natural materials that become part of a physical a Ex Minerals chemicals agricultural products and materials from forest product oceans Component parts items that become part of the physical product and are either finished items ready for assembly or items that need little processing before assembly Ex brakes spark plugs tires are all component parts of an automobile Process materials materials that are used directly in the production of other products but not readily identifiable Ex Caesar salad dressing has a little bit of vinegar in it but the vinegar is not identifiable MRO supplies maintenance repair and operating items that facilitate production and operations but do not become part of the finished product a Ex paper pencils cleaning agents and paint all fall into this category b Ex febreeze is an MRO supply to hotels but is a consumer good to us Product Line and Product Mix Product line a group of closely related product items viewed as a unit because of marketing technical or end use considerations a Ex Colgate tooth whitening Colgate cavity control Colgate sensitive gums b Ex proctor and gamble detergent line includes tide bold cheer gain and etc era Product mix the composite or total group of products that an organization makes available to customers Width of product mix the number of product lines a company offers a Ex GE has different types of products including housewares healthcare commercial each product line Depth of product mix the average number of different products offered in Product Life Cycles and Marketing Strategies Product life cycle the progression of a product through 4 stages introduction growth maturity and decline Introduction stage the initial stage of a products life cycle its first appearance in the marketplace when sales start at zero and profits are negative Growth stage the product life cycle stage when sales rise rapidly profits reach a peak and then they start to decline Profits start to decline at end of this stage when other competitors enter the market Maturity stage the stage of a products life cycle when the sales and curve peaks and starts to decline and profits continue to fall Characterized by intense competition Companies begin using promotional or globalizing 3 objectives of companies in maturity stage a Generate cash flow b Maintain share of market c Increase share of customer Decline stage the stage of a product life cycle when sales fall rapidly Companies begin to eliminate products or product lines that are no longer profitable Product Adoption Process product adoption process 5 stage process of buyer acceptance of a product awareness interest evaluation trial adoption 1 Awareness buyer becomes aware of a new product 2 Interest buyer seeks information about new product 3 Evaluation buyer decides to use new product or not 4 Trial buyer tries new product to see if it meets his her needs 5 Adoption buyer tries product likes it and is expected to buy it again Line Extension development of a product that is closely related to other products in the line but is design specifically to meet different customer needs For example the Porsche cayenne S Hybrid V 1 can drive short distances using electric power but at high speeds can switch to gas an match the power of a V 8 engine Product Modifications changes in one or more characteristics of a product Example Ford 2011 Ford 2012 There are 3 types of product modifications Quality changes to a product s dependability and durability Functional changes affecting a product s versatility effectiveness convenience or safety Aesthetic changes relating to the sensory appeal of a product Developing New Products New Product an innovative product that has never been sold by an organization such as the digital camera was when introduced for the first time New Product Development Process o 7 Phase process for introducing products 1 Idea generation seeking product ideas to reach 2 Screening selecting the ideas with the greatest potential organizational objectives for further review 3 Concept testing seeking a sample of potential buyers responses to a product idea 4 Business Analysis evaluating the potential impact of a product idea on the firm s sales costs and profits 5 Product development determining if producing a product is technically feasible and cost effective 6 Test marketing a limited introduction of a product in geographic areas chosen to represent the intended market 7 Commercialization refining and finalizing plans and budgets for full scale manufacturing and marketing of a product Roll out a product is introduced in stages starting in one set of geographic areas and gradually expanding into adjacent areas Product Differentiation Quality Design Support creating and designing products so that customers perceive them as different from competing
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