MAR3023 Exam 3 Study Guide Chapters 11 16 Managing Products 1 Product a good service or idea or any combo This includes supporting services of installations guarantees and warranties a Good tangible physical entity b Services intangible due to the efforts of people and or machines c Ideas concept philosophy image or issue 2 Consumer products purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them a convenience products b shopping products c Specialty products d Unsought products 3 Business products purchased to use for operations to resell or to use in manufacture of other products Product Hierarchy gets you somewhere Core products physical or intangible service that the customer receives A car Branded products core products plus the characteristics that allow the consumer to differentiate it from similar products Mints on the pillow at a hotel Augmented products characteristics that enhance value beyond that of the core and branded product Strategic Product Management 1 Product mix all of the products a company sells 2 Product lines consists of the closely related products a Depth the number of items in a product line b Breadth the number of different lines that a company or SBU markets 3 Extensions up and down a Down market extension making a product a lower class to try to get people to marketed by an organization buy it it b Up market extension making something higher class to try to get people to buy c Brand extensions product developed is not closely but should still be somewhat related to one or more products in existing product line i Starbucks extending into making coffee flavored ice cream 4 New Product Development NPD is risky and a less risky alternative includes a 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 b Product modifications product modification means changing one or more of the products characteristics different from line extensions because the original product is removed from product line 5 Product Life Cycle a Introductory stage i High failure rates Frequent product modification High advertising and production costs negative profits b Growth stage c Maturity stage i increasing rate of sales entrance of competitors initial healthy profits heavy advertising prices normally fall i sales increase slower saturated markets annual models appear lengthened product lines service and repair assume become important heavy promotions to dealers d Decline stage 6 Extending the PLC i long run drop in sales large inventories of unsold items elimination of all nonessential marketing expenses a stimulate more frequent use brush your teeth more often selling to new segments Harley marketing to women promoting more valued use and encourage more use per occasion supersizing b Repositioning like Arm and Hammer showing other uses for your product c Improvements modifications to formula or service processes Wendy s trying not to have horrific fries d Modifications changes to one or more characteristics of a product e Cost reduction quality modification products at a lower price products at same price at lower manufacturing costs f Functional modifications changed the packaging like Crystal Light has packages with enough for 1 bottle of water easy and convenient Developing New Products a new products like water car apple making a bike b 80 of new products fail 2 2 goals for NPD a understanding new product development from the firms perspective i 5 steps to develop new production 1 Idea generation Neurofocus by Nielsen ratings found that Cheetos lovers actually like the orange mess on their fingers Brainstorming and seeing what ideas are out there 2 Idea screening doggie air conditioner Filter out the ones that will clearly not work 3 Concept analysis have to do some forecasting Who is the target market how much will it cost to produce how much will consumers pay for it One way to do this is with focus groups 4 Beta and market testing Jacksonville is 15 Tallahassee is terrible 143 out of 150 Characteristics demographic profiles should be similar to that of the entire country Hardee s is test marketing a foot long burger Pepsi is looking at cinnamon and mint flavored soda Hot dog stuffed pizza crust and bacon milk shakes KitKat pops by pizza hut 5 Product launch a Even here some products slip by that have to be pulled out of the market Like the incredibly loud Sun Chips bag of 2009 2010 ii The stakes are high in developing new products because they need an upward trend in sales and revenue and have to pour a lot of money into advertising and promotions about the new launch b understanding new product adoption from the customers perspective i Awareness buyer becomes aware of the product ii Interest buyer seeks information and is receptive to learning about the product iii Evaluation buyer considers products benefits and decides whether to try it iv Trial buyer examines tests or tries the product to determine if it meets his or her needs v Adoption buyer purchases the product and is expected to use it again whenever the need for this general type of product arises 1 New Product Adoption 1 Innovators first to adopt new product In line at the apple store the day something launches 2 Early adopters chose new products carefully help spread word of mouth 3 Early majority adopt just prior to average person 4 Late majority skeptics who adopt new products when they feel it is necessary 5 Laggards last to adopt a new product Your grandma and her flip phone Jobs in New Product Development the integration between engineering and marketing Product Marketing Analyst Product Specialist 59K bachelor s degree with 0 to 3 years of experience 81k median with bachelor s degree and 5 years of Product Marketing Director 118k with a masters and 10 years of experience experience Managing Service Products Phil Kotler kind of the grandfather of marketing professor at the Kellogg school written over 50 books on marketing Books including Marketing 3 0 Marketing Management and Firms of the world s most recognized marketing scholar Endearment 1 What Are Services a a deed process or performance b Some overlap service exists in all physical goods too Like customer service representatives and ordering Distribution of physical goods even bulk goods have service And the return of defective goods c Approximately 82 of U S
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