MAR3023 EXAM TWO STUDY GUIDE CHAPTER 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 issue o When buyers purchase a product they are really buying the benefits and satisfaction they think the product will provide Classifying Products o 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 effort o 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 purchases o Examples furniture stereos cameras cell phones shoes etc Specialty Products are items with unique characteristics that buyers are willing to expend considerable effort to obtain o 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 buying o 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 Mix o 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 Strategies o 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 The maturity stage of a product is when the sales curve peaks and stars to decline 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 rapidly o 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 try it or her needs Evaluation the buyer considers the product s benefits and decides whether to Trial the buyer examines tests or tries the product to determine if it meets his Adoptions the buyer purchases the product and can be expected to use it again whenever the need for this general type of product arises o New Product Adoption Cho ose ne w pro duc ts car eful ly hel p spr ead wor d of mo uth Firs t to ad opt ne w pro du ct Skeptic s who adopt new produc ts when they feel it is necess ary Adopt just prior to average person Last to adopt a new produc t Why do products fail o One of the most common reasons o Product Offering o Why Customer Need 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 products o 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 modifications o Functional modifications are changes that affect a product s versatility effective Example on the go food products o Brand Up Market and Down Market Extentions Developing New Products o 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 potential contribution to firm Product development technically feasible Test marketing limited introduction will
View Full Document
Unlocking...