Ch 11 MAR 3023 Exam 3 Study Guide Product Concepts Segment 1 Products Defined Product Hierarchy A product is a good service or idea o Goods a tangible physical entity o Services an intangible result of application of human and mechanical efforts to people or objects hybrids o Ideas concept philosophy image or issue Consumer Products Purchased to satisfy personal and family needs o Classified according to how buyers generally behave when purchasing them Types of consumer products o Convenience products relatively inexpensive frequent o Shopping Products more effort in planning purchasing o Specialty Products unique characteristics o Unsought Products tow truck emergency room We marketers should aim to convert unsought goods to sought goods Difference between convenience product and shopping product is the effort put in before you purchase it Business Products Purchased to use for operations to resell or to use in manufacture of other products o Most products produced in the U S are for other businesses Ex Raw materials Product Hierarchy o Core products are the physical or intangible service that the customer receives o Branded products are the core products plus the characteristics that allow the consumer to differentiate it from similar products o Augmented product have characteristics that enhance value beyond that of the core and branded product Product Management Product mix is all of the products a company sells Product line closely related products marketed by an organization o Ex Oreos have cookies with different fillings and thickness Product line depth the number of items in a product line o Ex Diet Coke has cherry cherry vanilla lime etc Product line width breadth The number of different product lines that a company markets o How many different consumer oriented products their selling Segment 2 PLS Managing a Product Line Product Life Cycle Product progress from introduction to decline o Impacts distribution o Impacts promotion o Impacts price o Impacts profits Growth Maturity phase is where companies want their product Intro stage Maturity D D D d High failure rates Little competition Frequent product modification Limited distribution High advertising and production costs Negative profits Promotion focuses on awareness awainformation Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the differences between brands Wider distribution Prices normally Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines Service and repair assume important roles Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers Extending the life of products o Selling to new segments o Stimulate more frequent use o Encourage more use per occasion o Promoting more varied use If the varied use becomes popular you reposition the product o Ex Arm and Hammer fridge freshener not cooking New product development is risky so they use o Line extensions product developed is closely related to one or more successful products in existing product line but specifically designed to meet a somewhat different need 2 kinds of line extensions o Down market extension making a product that is less luxurious than products before Ex Mercedes B class o Up market extensions making a product that is more luxurious than the previous products Ex Cappuccino flavored kit kat Brand extensions product developed is not closely related to one or more products in existing product line should still be somewhat o Ex Reese s made a jar of peanut butter Ch 12 Product modifications changing one or more of the product s characteristics o Different from line extensions because the original product is removed from product line Ex Start selling new corvette model and the old style corvette is no longer available for sale Quality modifications changing durability of a product o Alternating materials or the production process Functional modifications changes that impact versatility effectiveness convenience or safety of the product o Usually requires redesign of the product Developing and Managing Products 80 of new products fail Two Goals for NPD 2 Understanding New Product Adoption from the Customer s Perspective 7 Steps to Develop New Products Won t be asked test questions of order 1 Idea Generation 2 Idea Screening 3 Concept Testing 4 Business Analysis 5 Development of Physical Product 6 Beta and Market Testing 7 Product Launch Some Nielsen BASES Products Product Concept Screening Pre BASES BASES Snapshot Neurofocus Product Pricing Price Advisor Product Launch BASES Launch Advisor Early Adjustments BASES Product Advisor Product Modifications BASES Restager 1 Understanding New Product Development from the Firm s Perspective 7 Steps to Develop New Products 1 Idea Generation Ex Neurofocus see what people think of a product without having to ask them and make them feel awkward or anything found that Cheetos lovers actually like the orange mess on their fingers Crowdsourcing Consumers tell you which products they want vote for best Consumers are invested in the product by voting so when the product is launched they are more likely to buy it Product Innovation In TED talk someone created a very realistic robot bird 2 Idea Screening Take a bunch of different versions of a product to consumers and in a focus group setting and ask them which one they would actually buy and get suggestions on the product price etc 3 Concept Testing What will my target market think Take product and test it on a broader level pay focus groups to test products more further serious testing than screening 4 Business Analysis How much will it cost to produce How much will consumers pay for it How will this affect profits 5 Development of Physical Product 6 Test Markets Will it test well when we actually launch it to the market Test products in markets that have similar demographics to whole U S Richmond Virginia test market 10 2 Understanding New Product Adoption from the Customer s Perspective 7 Product Launch Two Goals for NPD 1 Understanding New Product Development from the Firm s Perspective Product Adoption Process 1 Awareness Buyer becomes aware of the product 2 Interest Buyer seeks information and is receptive to learning about the product 3 Evaluation Buyer considers product s benefits and decides whether to try it 4 Trial Buyer examines tests or tries the product to determine if it meets his or
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