Product Concepts Day 9 Exam 3 Review Products a good service idea or combination of these Also includes supporting services that come with it warranties Good tangible physical object ex iPhone Service intangible human and or machine supplying a public need to people or objects ex Apple support Idea concept philosophy image or issue ex patent on using i before their product name iPod Consumer Products Purchased to satisfy personal family needs classified according to buyer behavior such as Product Types Convenience products Shopping products Specialty products Unsought products Business Products Purchased to use in operations to resell or to use in manufacturing of other products Be able to distinguish between consumer products and business product Product Hierarchy Core Products physical or intangible service customer receives ex generic cereal Branded Products core products and the product characteristics allowing customers to differentiate the product ex Pepsi Augmented Products characteristics that enhance value beyond the core and branded product ex hybrid Strategic Product Management Product Mix all of the products a company sells ex PepsiCo Lays Gatorade Quaker Product Line closely related products marketed by an organization ex Coke Diet Coke Cherry Coke Diet Coke Lime Product Line Depth number of items in product line Coke Diet Coke Cherry Coke Product Life Cycle PLC Product Line Breadth number of different product lines a company owns 1 Intro stage high failure rates little competition freq product modifications negative profit 2 Growth stage increase in sales competitors enter initial profits 3 Maturity stage heavy competition prices and profits fall 4 Decline stage long run drop in sales wasted inventory Different PLCs High technology Fads and Styles Fashion Extending the PLC Selling to new segments ex Dr Pepper Ten Men Promote more variations of use ex Dryer sheets in smelly shoes Stimulate more frequent use ex to go tooth brushes Encourage more use per occasion ex McDonalds supersize Repositioning Changing your product to pursue a new market segment Improvements Modifications to product methods or service processes New Product Development NPD risky look for alternatives like Line extensions new different product that is closely related to one or more successful products in the product line Modifications Up Market Extensions providing higher class product to attract different segments Down Market Extensions providing lower class less expensive products to attract more middle to lower class customers Brand Extensions new product developed is slightly but not entirely related to product line ex Starbucks and ice cream Product Modifications changing one or more of the original product s characteristic Cost Reduction Quality Modification sell product at lower price or lower manufacturing cost and sell at the same price Functional Modifications increase the utility of a product ex Heinz new ketchup packets New Product Development NPD Day 10 New products Developing a New Product are difficult to sell In fact 80 of them fail Idea Generation Idea Screening initial yes or no decision on a possible product 1 2 3 Concept Analysis target market production costs customers price willing to pay ex focus groups 4 Beta and Market Testing find appropriate test market city and test it out 5 Product Launch Two goals for NPD understanding NPD from The firm s perspective The customer s perspective Product Adoption Process Interest buyer seeks information and knowledge of product 1 Awareness buyer becomes aware of product 2 3 Evaluation buyer considers benefits and decides whether to try it 4 Trail buyer tests product to determine whether it satisfies their needs 5 Adoption buyer purchases product New Product Adoption Innovators first to adopt new product Early Adopters choose new products carefully help spread word preferred Early Majority adopt just prior to average person Late Majority skeptics who adopt when they feel is necessary Laggards last to adopt a new product Managing Service Products Day 11 Services Phil Kotler World s most recognized marketing scholar professor at Kellogg School written 50 books on marketing A deed process or performance that exists in ALL physical goods sold ex customer service distribution of physical goods return of defective goods Services are responsible for 82 of US employment 91 of all new jobs and 80 of GDP Causes Aging population i e longer life expectancies increased leisure time higher income changing social and cultural values Complex Evaluation ex Judge a haircut based on length look experience etc Judge hair gel based on whether it made you hair stay still or not Service Characteristics The Big Four Service vs Products Intangibility lack of tangible assets to see touch or feel before purchase Stress tangible cues price quality relationship expensive wine good wine and customer referrals word of mouth Perishability cannot be inventoried or stored Build demand where it would otherwise not exist manage the supply and demand marketing mix pricing happy hour matin es etc promotions frequent flier miles rewards programs Inseparability simultaneous production and consumption of service Good employees lead to better customer experience physical environment rainforest caf Wrigley field manage other customers crying babies drunks obnoxious Heterogeneity Variability unwanted or random levels of service quality customers receive when they patronize a service firm Employees moods ethics morals etc effect their work but products are constant customize a physical good curriculum at FSU recognize risk and expectations service blueprinting to standardize the process Three Other Characteristics Search Qualities product service attributes that can be evaluated before purchase test drive sampling Experience Qualities product service attributes that can be evaluated only after purchase movie haircut Credence Qualities product service attributes that cannot be evaluated even after purchase funeral services legal advice Customers evaluate in much more depth more services compared to products Service Marketing Mix 1 Product ex how you evaluate your education 2 Price changes frequently signifies quality not always true ex expensive lawyer good lawyer 3 Place typically direct 4 Promotion manage expectations offer guarantees 5 People functional quality employees and customers appearance sometimes people are the service 6 Process operation flow ex McDonald s multiple
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