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MAR3023: EXAM TWO STUDY GUIDECHAPTER 11: PRODUCT CONCEPTS• A product is a good, service, or idea received in an exchange (or a combination of two or more of these)o Includes supporting services, such as installation, guarantees, product information, and promises of repair or maintenance (ex: 4 year/50,000 mile warranty is part of the product)o Three types of goods: Goods – a tangible, physical entity Services – an intangible, result of application of human and mechanical efforts to people or objects (hybrids) Ideas – concept, philosophy, image or issueo When buyers purchase a product, they are really buying the benefits and satisfaction they think the product will provide• Classifying Productso Products fall into two major categories: Consumer Products: Purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them. There are several types of consumer products:• Convenience products are relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing efforto Examples: bread, soft drinks, gum, gasoline, etc.o Normally marketed through many retail outlets• Shopping Products are items for which buyers are willing to expend considerable effort in planning and making purchaseso Examples: furniture, stereos, cameras, cell phones, shoes, etc.• Specialty Products are items with unique characteristics that buyers are willing to expend considerable effort to obtaino Examples: Mont Blanc pen, one-of-a-kind piece of baseball memorabilia, etc.• Unsought Products are products purchased to solve a sudden problem, products of which customers are unaware, and products that people do not necessarily think of buyingo Examples: emergency medical services, automobile repairs, etc. Business Products: Purchased to use for operations, to resell, or to use in manufacture of other products.• Includes installations, accessory equipment, raw materials, component parts, process materials, MRO (maintenance, repair, and operating) supplies, business services.o Consumers buy products to satisfy personal wants, whereas business buyers seek to satisfy the goals of their organization.o Product Hierarchy Core products are the physical or intangible service that the customer receives Branded products are the core products plus the characteristics that allow the consumer to differentiate it from similar products. Augmented products have characteristics that enhance value beyond that of the core and branded product• Product Line and Product Mixo A product item is a specific version of a product that exists within a product line, which consists of the closely related products marketed by an organization. o A product mix is the composite, or total, group of products that an organization makes available to consumers The width of a product mix is the number of product lines a company offers and the depth of product mix is the average number of different products offered in each product line.o Example product: Excedrin o  The product depth line is the number of items in a product line. • In the Excedrin example, the Product Depth would be 8 The product line breadth is the number of different lines that a company or SBU markets• In the Excedrin example, Novartis Consumer Health markets 40 lines of consumer health products, so their breadth score would be 40. • Product Life Cycles and Marketing Strategieso A product life cycle is the progression of a product through four major stages: The introduction stage of a product begins at a products first appearance in the marketplace, where sales start at zero and profits are negative During the growth stage, sales rise rapidly and profits reach a peak, then start to decline. The maturity stage of a product is when the sales curve peaks and stars to decline, and profits continue to fall.• Three general objectives can be pursued during the maturity phase:o Generate cash flow, maintain share of market, increase share of customer During the decline stage, sales fall rapidlyo Several kinds of product life cycles are possible: High-technology products, fads, and styles or fashions.• The Product Adoption Process o the five-stage process of buyer acceptance of a product: Awareness – the buyer becomes aware of the product Interest – the buyer seeks information and is receptive to learning about the product Evaluation – the buyer considers the product’s benefits and decides whether to try it Trial – the buyer examines, tests, or tries the product to determine if it meets his or her needs Adoptions – the buyer purchases the product and can be expected to use it again whenever the need for this general type of product ariseso New Product Adoption • Why do products fail?o One of the most common reasons:o Product Offering Customer Need o 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.CHAPTER 12: DEVELOPING AND MANAGING PRODUCTS• Managing Existing Products o New Product Development (NPD) is risky. o Goals of NPD:  Understanding New Product Development from the Firm’s Perspective Understanding New Product Adoption from the Customer’s Perspective o Less risky alternatives: Line extensions – product developed is closely related to one or more products in existing product line but specifically designed to meet somewhat different need. Product modifications – product modification means changing one or more of the product’s characteristics; different from line extensions because the original product is removed from product line• There are three major ways to modify productso Quality modification are changes relating to a product’s dependability and durability Cost reduction: • Products at a lower price, products at Same Price at Lower Manufacturing Costs, Internal modificationso Functional modifications are changes that affect a product’s versatility, effective Example: on the go food productso Brand, Up Market, and Down Market Extentions• Developing New Productso Before a product is introduced it goes through the seven phases of the new product development process: Idea generation – ideas, anyone? Screening – most promising ideas? Concept testing – sample of potential buyers? Business analysis –


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FSU MAR 3023 - EXAM TWO STUDY GUIDE

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