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IUB BUS-M 300 - Developing New Products and Services

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BUS-M 300 1nd Edition Lecture 7Outline of Last Lecture I. Today’s Organizations II. Strategy in Visionary OrganizationsIII. Setting Strategic Directions IV. The Strategic Marketing Process Outline of Current Lecture I. What is a Product? II. Types of Products III. Why Products Fail IV. The New Product Development Process Current LectureI. What is a Product? - It is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfy consumers, and is received in exchange for money or some other unit of value - Products can be physical goods, people or places- Without new products, marketing wouldn’t exist - Product line: group of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same type of outlets, or fall within a given price range- Product mix: the number of product lines offered by a company- Durable goods—provide long term benefits, expensive and purchased less frequently- Nondurable goods—wide distribution and heavy consumer advertisingare essential, inexpensive and purchased frequently II. Types of Products- Core product: actual benefits received by consumer, basic function of the product, anyone can design products to do core functions, basic benefits - Actual product: the quality level, features, design, packaging, and brand name of the product, marketing begins here - Augmented product: delivery and credit, warranty and after sale service associated with the product, develops relationships with customers, where marketers try to differentiate their products from their competitors - Desired product: the product consumers really want, marketing research reveals these types of products to marketers and tells them how to develop actual augmented features into products desired by consumers - Convenience products: products that are purchased frequently, immediately, and with a minimum of effort - Shopping products: products purchased only after comparisons with other products have been made - Specialty products: unique products that cause a buyer to prize them and make special efforts to obtain them, NOT price sensitive - Unsought goods: items that the consumer either does not know aboutor knows about but does not initially want - New products—customers view of a new product may be classified according to the degree of learning required in order to use the product properly III. Why Products Fail - Insignificant point of differenceo Must be important enough for consumers to switch from a competing product - Incomplete market and product definition before product development startso Customers specific needs, wants, preferences are not clearly defined - Too little market attractiveness o The target market maybe too small and/or competitive to warrant the product - Poo execution of the marketing mixo Name, package, price, promotion, and distribution must be executed precisely or the new product will fail - Poor product quality or insensitivity to consumer needs on critical factorso If the product does not meet the consumer needs, it will fail- Bad timing o Product is introduced too soon, too late, or consumer tastes change- No economic access to buyers o The fight for exposure is tremendous in terms of costs for ads, distribution, and self space IV. The New Product Development Process - Linear—must follow the steps - Step one: New Product Strategy Development o This stage used to identify opportunities or threats to a company, involves defining the role for a new product interns of the firm’s overall corporate objective, help company identifynew markets it can compete in - Step two: Idea Generation o Many good ideas come from consumers, employees, and competitive products - Step three: Screening and Evaluationo Separate ideas that have merit form those that do noto Is there a real customer need for the product?o Does the organization have the scientific and technological ability to develop the product?o Is the potential for such a product large enough to offer some promise of making a profit? - Step four: Business Analysis o Involves specifying the features of the product and the marketing strategy needed to commercialize ito Involves assessing the total “business fit” with the company’s mission and objectives o Critical elements include—a detailed financial analyses, copyright and patent issues, price points, type of entrance into market - Step five: Development o The measurement of consumer attitudes and perceptions relevant to the product o A prototype of the project is developedo Helps to ensure that products are developed with the needs of the consumer in mindo Helps companies develop a target market of customers - Step six: Test “Marketing”o Process of selecting a specific geographical area considered to be generalizable to the product’s overall target market o The idea of a test market is to have consumers evaluate and buy without knowing they are participating in a test marketo Expensive o Can be risky because it gives competitors information about the new product and competitors can imitate the product or offer a better product - Step seven: Commercialization o At this stage the product is in full scale production and sales o Companies must be aware of competitors introducing productsthat are similar and can hurt sales o Cannibalization is a real threat—stealing sales from company’s other products o Most expensive step in the


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