BASIC Marketing Concepts Exam 3 Chapter on Product Concepts o Products broadly defined as a good service idea or a combination of these Can be tangible or intangible and includes functional social and psychological utilities or benefits o Be able to explain the difference between a good service and idea and recognize an example of each Good is a type of item that has tangibility Something that can be touched Ex I phone textbook Beats Service Is something that is intangible It comes from the result of human and or mechanical efforts to people or objects Ex a concert colleges medical services Idea a concept philosophy image or issue Ex Red cross Religious groups etc o Be able to distinguish between consumer products and business product Consumer Products Are products that are purchased to satisfy personal and family needs Consumer products are broken down into 4 classification of products which are defined as so Convenience products they are products that are generally less expensive and are purchased with minimal efforts Normally marketed through many retail outlets Ex Soft drinks break gum gasoline Shopping Products products that consumers are willing to put much more effort into researching before making a purchase They will compare stores for things like price product features etc Purchased less frequently then convenience products Specialty Products Possess one or more unique thing that makes it a specific item a person needs They will not expect different from what they are looking Ex Rolex Mont Blonc Unsought Products people do not want to buy these products that consumers do not expect to have to purchase Things like emergency services or funeral arrangements or automobile repair services Business products Products purchased to achieve an organizations goals and objectives Products that a business will either resell or will assist in the selling aspect They are classified into 7 categories Installations buildings factories etc Accessory equipment file cabinets tools etc Raw materials Component parts become part of the physical good Process materials directly in the production not identifiable MRO Supplies maintenance repair and operating items Business Services Financial services legal marketing research janitor services etc o Be able to explain the product hierarchy o Product Hierarchy Understand the hierarchy from core products to branded products to augmented products what each of these are and examples of each o Be able to explain product management including product mix product line product line breadth and product line depth examples in the slides Product mix is the total group of products and organization has for its customers to purchase Product line group of similar products that are considered one Product line breath width They measure this by the number of product lines that a company offers to consumers Product line depth Is an average count of the different products offered up in each product line o Be familiar with the product life cycle including the phases and the different types of product life cycles 4 different phases Introduction stage The products initial entrance into the market sales are at 0 and the total profits are generally negative due to initial startup costs Very risky during this stage as the product is introduced Growth Stage Sales begin to climb quickly and competitors become more interested in entering a similar product depending on the success of the product Price cuts generally occur in this stage to help compete Maturity Stage the amount of sales the company will generate begins to peak out and will eventually start to decline while profits will decrease as well LOTS OF COMPETITION Decline Stage Sales being to fall quickly and the product starts to lose its worth They begin to cut marketing efforts and decide on whether to divest the product or reposition the product to another market Being to decrease the amount of sales efforts on the declining product o Be able to explain how companies extend the PLC Extending the Product life cycle can allow the company to squeeze more sales out of the product as it being to decline Ways to extend the product life cycle Reposition the product to a new segment stimulate more frequent use encourage more use and promote varied use for the product o Be familiar with repositioning and improvements Repositioning can include finding another market for the product or in some cases finding another use for the product Improvements Are modifications or changes to the product that improve its quality or function o Understand the less risky alternatives to NPD what they are and why they are less risky new product development is a risky thing about 80 of new products released into the market fail There are alternatives to NPD Line Extensions Products that are developed similar to a currently successful product but are designed to reach a specific niche Brand Extensions the product developed is not closely related but it still uses that recognizable brand name Product Modifications Changing the characteristics of a currently successful product which replaces that current product ex Automobiles released new each year Quality modifications either increasing or decreasing quality of a specific product Reducing quality reduced price Functional modifications changing a products ability to function or its ability to be used for specific situations o Understand the difficulty in developing new products and why they are so likely to fail and what percentage of new products fail Developing a product that consumers want it s a very tricky thing Being able to understand what the consumer wants and what consumers are willing to buy is tedious 80 of new products fail and firms must offset those failures with the ones that actually lead to success o 2 goals for NPD understanding NPD from 1 The firm s perspective What the firm produces must match its goals and objectives Must match its manufacturing capabilities and its New Product Development branding goals Whether it is through a new product development or through a line extension 2 The customer s perspective How will the consumer react to the new product what do the consumers want Marketing researchers are the ones who find what the consumer actually wants outside of the firm s perspective o Know the 5 steps of developing a new product and their order Idea Generation When the firm seeks product ideas that with help them accomplish the organizations goals and objectives
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