Chapter 12 Developing and Managing Products 1 Line Extensions the line The development of a product that is closely related to existing products in Designed specifically to meet different customer needs Examples Reese s i Pieces ii Miniatures iii Big Cup iv Cereal v Dark Chocolate vi White Chocolate Reasons for line extensions i Lower risk way to introduce a new product ii Focus on different segments iii Satisfy needs of current segment iv Capture market share 2 Brand Extensions Use an existing brand for a new product in a different product category Example Bic i Pens ii Razors iii Lighters 3 Product Modifications Changes in one or more characteristics of a product Drawback i Customers accustomed to the original may resist the modified version 4 Quality Modifications 5 Functional Modifications safety Benefits Changes related to a product s dependability and durability Changes affecting a product s versatility effectiveness convenience or i Makes product more useful ii Provide benefits that competing brands do not offer iii Helps organizations achieve a progressive image Changes the sensory appeal of a product by altering taste texture sound i What is aesthetically appealing is subjective and varies between 6 Aesthetic Modification smell or appearance Drawback 7 New Product consumers Innovative benefits Different and better than existing products Never been sold by any organization Never been sold by a particular firm or in a market 8 Phases of the New Product Development Process Idea Generation i Seeking product ideas that help to achieve organizational objectives ii Sources Internal a Managers b Researchers c Employees d Sales Personnel External a Customers b Competitors c Advertising agencies d Consultants Screening Concept Testing Business Analysis i Choosing the ideas with greatest potential for further review i A small sample of potential buyers is presented with a product idea to determine their attitudes and buying intentions i The product idea is evaluated to determine its potential contribution to sales costs and profits Product Development i The phrase in which the organization determines if it is feasible and cost effective to produce the product Test Marketing i A limited introduction of a product in geographic areas chosen to represent the intended market ii Benefits Lets marketers measure sales performance An opportunity to identify weaknesses in the product Allows for experimentation with advertising pricing and packaging iii Risks Expensive Competitors may interfere Gives competitors time to copy the product Commercialization i Refining and finalizing plans and budgets for full scale manufacturing and marketing of a product 9 Gradual Product Introduction Roll Out i Introducing a product in stages across geographic areas ii Benefits Reduces the risks of introducing a new product No product can be introduced overnight Allows time to increase production capacity iii Risks Allows competitors to observe a firm s tactics and introduce competing products 10 Product Deletion Eliminating a product from the product mix because it no longer satisfies a sufficient number of customers 3 Ways to delete a product i Phase Out Allows the product to decline without a change in the marketing strategy ii Run Out Exploits any strengths left in the product iii Immediate Drop The best strategy when losses are very great 11 Types of managers and teams Product Manager i Responsible for a product a product line or several distinct products that make up a group Brand Manager Market Manager i Responsible for a single brand i Responsible for managing the marketing activities that serve a particular group of customers Venture Teams i A cross functional group that creates entirely new products that may be aimed at new markets
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