Exam 3 Study Guide Product Concepts Products A good service idea or a combination of these Services drive the economy don t have to be just tangible items can be intangible things that support the product Goods tangible physical entity Services an intangible result of application of human and mechanical efforts to people or objects hybrids most important Ideas concept philosophy image or issue example Consulting Product Types Consumer products purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them Convenience easy to pick up Shopping Specialty special needs Unsought insurance utilities Business products purchased to use for operations to resell or to use in manufacture of other products majority bigger market Product Hierarchy Products are more than what you just see on the surface buying the brand says something about you Core products the physical or intangible service that the customer receives basic core product for a car is transportation Branded products 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 The core product could be just as good as the brand but the brand speaks to you more because you understand and are comfortable with it Strategic Product Management Product mix all the products a company sells sell a lot of products in the same space arrange to meet the needs of a market Ex Proctor Gamble Product line consists of the closely related products marketed by an organization usually under the same brand segmentation under a line Ex Excedrin has pills for different things like Tension Headache or Back and Body Product line depth the number of items in a product line how many exist within the line Coca Cola is deep because they have a lot of products Product line breadth the number of different lines that a company or SBU markets Ex Pepsi does not just make soda but Frito Lay as well so you count that in their breadth Product Life Cycle Introduction new high failure rates risk expensive Growth increase sales entrance of competitors aggressive advertising Mature people who are drinking diet coke are already drinking it so growth is small make majority of money and use the money to make new products Decline unsold items drop in sales High tech products fads styles or fashions Extending the PLC Keep products in the mature phase as long as possible grow by targeting a new segment Selling to new segments stimulate more frequent use encourage more use per occasion sell more lower price promoting other verified use find different use for same product Repositioning Arm Hammer baking soda used as a fridge freezer deodorant Improvements modifications to product formulas or service processes Ex Extension cord that goes under the carpet Alternatives to NPD Less risky alternatives 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 Product modifications changing one or more of the product s characteristics different from line extensions because the original product is removed from the product line come out with a new model and the old one goes out of sale Cost reduction quality modification products at a lower price products at same price and a lower manufacturing cost Ex Take more expensive ingredients out and put less expensive ones in Functional modifications easier to use convenient Down market extensions extended line consumers buying at a lower price Ex Mercedes B class Up market extensions leverage higher price point Ex Cappuccino kit kat is sold at a higher price point than regular kit kats Brand Extensions Product developed is not closely but should still be somewhat related to one or more products in existing product line take the brand and make different related products Ex Starbucks makes coffee flavored ice cream New Product Development 80 of new products fail consumers have a schema not enough connection between the brand and the product itself Two goals for NPD 1 The firm s perspective what the firm is trying to do 2 The customer s perspective Firms Perspective 5 steps to develop new products Idea generation Idea screening 1 2 3 Concept analysis 4 Beta and market testing 5 Product launch Idea Generation use medical devices to understand why consumers like dislike something Neurofocus found that Cheetos lovers actually like the orange mess on their fingers Idea Screening filter good from bad decide what is a viable product Concept Analysis what the product will become forecasting financial analysis focus groups Test Markets companies use places to test new products before they launch it on a national sale this saves money Demographic profile similar to the U S Jacksonville Product launch put the product on the market and see if it sells Customers 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 products benefits and decides whether to try it 4 Trial buyer examines tests or tries the product to determine if it meets his or her needs 5 Adoption buyer purchases the product and is expected to use it again whenever the need for this general type of product arises New Product Adoption Innovators first to adopt a new product Early Adopters choose new products carefully help spread word of mouth Early Majority adopt just prior to average person Late Majority skeptics who adopt new products when they feel it is necessary Laggards last to adopt a new product Companies are really interested in the innovators Branding Packaging Brand a name term design symbol or other feature that identifies the marketer s product as distinct from other marketer s products Ralph Lifshitz Born in the Bronx NY made a successful company from selling ties on the streets turned his name into Ralph Lauren to brand himself and make an extremely popular company Brand Mark the part of a brand that is not made up of words such as a symbol or design easily processed Trademark a legal designation of exclusive use of brand legal right to own the shape name color Ex Nike swoosh Brand Loyalty Levels Recognition buyer is aware that a brand exists and considers it as an alternative if the preferred brand is unavailable
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