Chapter 11 Products Marketing Test 3 Product a good service or idea or a combination of those o Can include supporting services such as installation and warranties Goods tangible and physical Services intangible applied human machine efforts to people or objects hybrids Ideas concept philosophy issue etc o Types of products includes Consumer products satisfy personal needs Classified by how consumers behave when buying them Convenience shopping specialty unsought products etc Marketers try to convert unsought goods to sought goods Business products bought to use for operations to make other products or to resell ex installations equipment raw materials etc Product Hierarchy o Core products the product or service the customer receives o Branded products core products its characteristics that make it different from other Typical characteristics such as packaging styling features quality name etc o Augmented products characteristics that enhance value beyond the core and branded similar products product Awesome extras such as delivery returns recycling warranty installation repairs service etc Strategic Product Management o Product mix all of the products a company sells Coca Cola sells Fanta Powerade Sprite and a lot more other than just Coke o Product line the closely related products marketed by an organization Diet Coke Coke zero Diet Coke plus etc are closely related to regular Coke o Product line depth the number of items in a product line If Coca Cola only sold regular Coke Diet Coke Coke zero and Diet Coke plus their product line depth would be 4 o Product line breadth the number of different lines that a company markets If Coke only sold Coca Cola Fanta Powerade and Sprite and those products in its product line closely related its breadth score would be 4 Product Life Cycle there are many types o Introductory o Growth o Maturity o Decline High failure rates less competition constant change limited distribution high costs negative profits etc Higher sales competitors enter the market you consolidate the market healthier profits aggressive advertising lower prices etc Sales increase at a decreasing rate saturated markets more models service and repair is more important heavy promotion prices and profits fall etc Long run drop in sales large unsold inventory eliminate unessential marketing expenses etc o To extend the product s life cycle Promote more varied use Listerine has been used as floor cleaner medicine etc Sell to new segments Reposition and improve products like Wendy s natural cut fries Encourage more frequent use Encourage more use per occasion Developing new products is very risky most fail o Line extensions are less risky the product developed is closely related to one or more successful products in a current product line but meets a different need companies in the middle may want to introduce i e Frosted toast crunch Cinnamon toast crunch Down market extensions lower priced lines to attract customers related to one or more products in a current product line Up market extensions Brand extensions when companies extend to the high end of the market product developed is not closely related but still somewhat i e Starbucks has coffee coffee ice cream and coffee liqueur o Product modifications are also less risky than developing new products it changes one or more of the existing product s characteristics This is different from line extensions because the original product is removed from the product line i e new car lines each year o Cost reduction quality modification offers products at a lower price OR at the same price but with lower manufacturing costs o Functional modifications i e small on the go packaging Chapter 12 Developing and Managing Products To develop new products 80 of new products fail you must understand from the company s and the customer s perspective 1 Idea generation Ideas often come from within employees wives etc You want to become a one stop shop Crowdsourcing companies offer rewards for customers with new ideas like Lego gathering ideas from a large group typically customers many Idea screening i e Shark Tank 2 3 Concept analysis Who is your target market How much will it cost to make How much will consumers pay 4 Beta and market testing Find a city representative of the U S as a whole to test your product on Jacksonville is 15 Tallahassee is a bad tester because it s all college kids 5 Product launch Qwikster Netflix s split was the worst product launch Product Adoption Process Interest buyer seeks info 1 Awareness 2 3 Evaluation buyer considers benefits and decides whether to buy or not to buy 4 Trial buyer examines and tests the product 5 Adoption buyer purchases the product and will use it again later NEW Product Adoption follows a normal distribution Innovators first to adopt a new product smallest group 1 2 Early adopters choose new products carefully and tell others about it 3 Early majority adopt just before the average 4 Late majority skeptics only buy new products when they feel it s necessary 5 Laggards the last to adopt new products Chapter 13 Managing Service Products Services Phil Kotler professor at Kellogg written 50 marketing books a deed process or performance about 82 of total employment o Service exists in ALL physical goods too Customer service in support of manufactured goods Distribution of physical goods even bulk goods Return of defective goods o 85 billion trade surplus o All o 40 of the time customers switch because of bad service new job growth is in services Why are services growing so rapidly o Aging population o Increased leisure time o High per capita income o Changing social and cultural values The Big Four characteristics of services Longer life expectancies means they will need more nurses medicine etc Discretionary income the amount of income left for spending saving etc o Intangibility it cannot be seen touched or smelled before purchase Stress tangible cues Price quality relationship in services wine and lawyers Customer referrals word of mouth Humanizing an impersonal transaction automated thanking machine o Perishability you cannot inventory or store services for later Manage supply and demand Pricing early bird specials 5 o clock happy hour etc Promotion frequent flier restrictions buddy passes weekday events o Inseparability there is simultaneous production and consumption of a service as the customer and employee interact Employees are key The physical environment why go to nice places Other
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