The intangible result of the application of human and mechanical efforts to people Marketing Test 3 Notes 1 Product 2 Good 3 Service A good service or idea received in an exchange A tangible physical entity or objects 4 Idea 5 The Total Product Core product A concept philosophy image or issue i The product s fundamental utility or main benefit ii Addresses the basic need of the consumer iii Example Sports Drink Rehydrates Supplemental Features i Provide value in addition to a product s core utility ii Helps differentiate the product brand Symbolic and experiential benefits i Buyers purchase the benefits and satisfaction they think the product will provide ii Products carry a symbolic meaning 6 Types of products Consumer products Business Products products 7 Types of consumer products Convenience Products i Products purchased to satisfy personal and family wants and needs i Products bought to use in a firm s operations to resell or to make other ii Purchased to satisfy the goals of the organization i Inexpensive frequently purchased items for which buyers put minimal purchasing effort Shopping Products Specialty Products i i Unsought Products Items buyers are willing to expend considerable effort in planning and making purchases Items with unique characteristics that buyers are willing to expend considerable effort to get i Products purchased to solve a sudden problem ii Products of which customers are unaware iii Products that people do not necessarily think of buying i Maintenance repair and operating items that are not part of the final 8 Types of Business Products Installations i Facilities and non portable equipment Accessory Equipment i Not part of the final product Raw Materials i Natural materials that are part of a product i Finished items ready for assembly i Used in production but not identifiable Component Parts Process Materials MRO Supplies product Business Services Intangible products in operations i 9 Product Item line of products 10 Product Line A specific version of a product that is a distinct offering among an organizations A group of closely related product items viewed as a unit because of marketing technical or end use considerations 11 Product Mix The total group of products that an organization makes available to customers i Width of Product Mix The number of product lines a company offers 2 ii Depth of Product Mix The average number of different products in each product line 12 Stages of the Product Life Cycle Introduction Stage i The first stage ii Sales start at 0 and profits are negative iii High risk of failure i Sales rise rapidly ii Profits reach a peak and then decline i The sales curve peaks and starts to decline and profits continue to fall Growth Stage Maturity Stage Decline Stage i Sales fall Innovators Early Adopters Early Majority Late Majority Laggards 13 Innovative Product Adopter Categories i First adopters of new products i Careful choosers of new products i Those adopting new products just before the average person i Skeptics who adopt new products when they feel it is necessary i The last adopters who distrust new products 14 Why some products fail succeed Failure to match product needs Failure to send right message Technical problems Poor timing Ineffective promotion Insufficient distribution 15 Line Extensions 3 The development of a product that is closely related to existing products in the line 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 16 Brand Extensions Use an existing brand for a new product in a different product category Example Bic i Pens ii Razors iii Lighters 17 Product Modifications Changes in one or more characteristics of a product Drawback i Customers accustomed to the original may resist the modified version 18 Quality Modifications 19 Functional Modifications Changes related to a product s dependability and durability Changes affecting a product s versatility effectiveness convenience or safety Benefits 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 smell or 20 Aesthetic Modification appearance Drawback 4 i What is aesthetically appealing is subjective and varies between 21 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 22 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 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 Business Analysis 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 represent the intended market ii Benefits i A limited introduction of a product in geographic areas chosen to Lets marketers measure sales performance An opportunity to identify weaknesses in the product Allows for experimentation with advertising pricing and packaging 5 iii Risks Expensive Competitors may interfere Gives competitors time to copy the product i Refining and finalizing plans and budgets for full scale manufacturing and Commercialization marketing of a product 23 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 24 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