STUDY FOR EXAM MAR3023 Exam 3 Study Guide TOPIC 1 NEW PRODUCT CONCEPTS What is a Product A good service or idea or a combination of 2 or more of these o Includes supporting services installations guarantees warranties 80 of what we do isn t tangible education is considered a service Intangible services ideas o EBay provides a platform for others to sell products eBay is considered a product Products Defined Product Types Goods a tangible physical entity Services an intangible result of application of human and mechanical efforts to people or objects Ideas concept philosophy o Tangible can you touch it can you feel it o Intangible consulting advice education health care Consumer Products purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them o Convenience Products o Shopping Products o Specialty Products niche products have to seek o Unsought Products products you don t seek out Business Products Purchased to use for operations to resell or to use in manufacture of other products o Training people to sell Business business products o One business is selling to consumer one business is selling to other businesses Managing Existing Products Product Hierarchy o Core products are the physical or intangible service that the customer receives o Branded products are the core products plus the characteristics that allow the consumer to differentiate it from similar products o Augmented products have characteristics that enhance value beyond that of the core and branded product o Core vs Brands o Core product cereal eat in the morning when you re hungry o Cola you buy the core product and you know what it is you re getting o When you put a brand on a product your perception of the product changes o Ex cheerios vs scooters o Ex stop and shop cola vs coca cola o Ex acetaminophen vs Tylenol o Ex generic beer vs keystone light Product Mix All of the products a company sells Product Line o A Product Line consists of the closely related products marketed by an organization o Ex Coca Cola is a complete beverage company water energy drinks vitamin water Page 1 of 16 o Ex Nabisco Oreos double stuffed peanut butter reduced fat chocolate vanilla etc o Products Lines Evolve From A Segmentation Strategy dividing up a product line to aim it at consumers with different wants and needs o Splenda brown sugar granulated etc o Key To Understand a group of closely related products that generally evolve around one brand o Example Nevardis makes Excedrin o Have different variations depending on what consumers are looking for Ex back and body tension headache sinus headache migraine Product Line Depth o Product Line Depth The number of items in a product lines o In the Excedrin example the product depth would be 8 there are 8 different kinds of Excedrin o Ex the amount of diet coca colas the company makes o Ex however many different kinds of Oreos Oreo makes Product Line Breadth the of different product lines that a company or SBU markets o In the Excedrin example Novartis consumer health markets 40 lines of consumer health products so their breadth score would be 40 PLC Product lifecycle o Each product goes through a lifecycle Introductory Stage Growth Maturity Decline o Product Life Cycles are different for different products High Technology Products Go up quickly fall go up quickly tic tock motion Fad Products are a one time thing short term Fashions go up really quickly and their cyclical over time Styles or Fashions Go up slowly peak and then go up and down over time Extending the PLC o Find New Segments Ex Harley Davidson targeting women o Stimulate more frequent use Ex Wisps toothpaste already on it you can use it anytime o Encourage more use for occasion o Promoting more varied use Ex Supersize stuff selling more of the product to consumers Page 2 of 16 Ex Dryer Sheets on hats to repel gnats and Baking soda for refrigerators Reposition and Improvements Repositioning Improvements o Arm and hammer people only use this in small amounts for baking Found out that it acts as a good fridge deodorant now for fridge and freezers o Modifications to product formulas or service processes Wendy s improved their formula for fries now makes fresh cut and they have had lots of success o Another way to take products and create results attractive to wall street Alternatives to New Product Development New Product development NPD is RISKY Less risky alternatives o Line Extensions product developed is closely related line but specifically designed to meet a somewhat different need to one or more successful products in existing product Down Market Extension Mercedes B class Up Market Extension Hershey s chocolate created a more expensive brand Utopias beer created by Sam Adam company that costs 600 Acura up market of Honda o A way to extend the market share of a core brand o Brand Extensions Product developed is not closely but should still be somewhat related to one or more products in existing product line Starbucks sells coffee now they sell ice cream and liquor somewhat related but not closely Lifesavers unsuccessful tried to make soda Reese s selling peanut butter now fairly close to the original product o Product Modification Changes to one or more characteristics of a product The original product does not generally exist on the market Ex corvette in 1960s the old version usually doesn t stay in the line o Cost Reduction quality modification Products at a lower price Products at the same price at lower manufacturing costs Generally products at the mature phase and they re trying to cut costs Hamburger helper changed its recipe to reduce costs but it s sold at the same price point o Functional Modifications Modifications on the packaging of the core product Crystal Light came up with on the go packets for water bottles Campbell s made soup on the go you can put it in the microwave and drink from the container Heinz went from Ketchup packets to Dip Squeeze servers Page 3 of 16 TOPIC 2 NEW PRODUCT DEVELOPMENT The vast majority of new products actually don t work New Products 80 of new products fail o Starburst Yogurt Drinks failure o Product Failure Crystal Pepsi soda product that was clear it tasted just like soda but people hated it o Egg Nog Flavored Soda Christmas Tree Soda Christmas Ham Soda o Diet Coke With Bacon o The Baby Mop New Product Predictions o People are really bad at predicting which products will work and which won t work Two Goals
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