BUSMKT 1040 Chapter 9 Developing New Products and Services.ppt

BUSMKT 1040 Chapter 9 Developing New Products and Services.ppt

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Unformatted text preview: CHAPTER 9: Developing New Products & Services What is a product? Goods – Has tangible attributes that a consumer’s five senses can perceive – You can own Services – Intangible activities or benefits that an organization provides to satisfy consumers’ needs – Does not involve ownership Ideas – Thought that leads to an action Goods/Services/Ideas/People are all products! Layers of Product Concept The Core Product Consists of all the benefits the product will provide for consumers or business customers A customer purchases a 1/2” drill bit. What does s/he want? – A 1/2” hole! Marketing is about supplying benefits, not products. The Actual Product Consists of the physical good or delivered service that supplies the desired benefit Example: – A drill’s core product (for this example) is the ability to make a particular size hole, but the actual product is a plastic and metal apparatus with a motor. Actual product also includes appearance, styling, packaging, and the brand The Augmented Product Consists of the actual product plus other supporting features such as warranty, credit, delivery, installation, and service after the sale: – Why might someone choose a Craftsman tool over other brands of tools? Pittsburgh Penguins Example Core Product: – Entertainment Actual Product: – – – Pens hockey games Penguins brand PPG Paints Arena Augmented Product: – Payment plans (for season ticket holders), customer service, information (website, programs) Classifying Consumer Products By how long they last – Durable – Nondurable – – – – Ultimately, this By how they are distinction used depends on who – Business – Consumer By how consumers buy them buys it and how it is used. Convenience Shopping Specialty Unsought Convenience Products Convenience Products: – Good or service that consumers purchase frequently with a minimum of shopping effort Examples: – – – Gum Milk Soda Shopping Products Shopping Products: – Good or service for which consumers will spend time and effort to compare alternatives on various criteria such as price, product attributes, quality, and style. – Consumers will tend to compare alternatives before making a purchase – Homogeneous shopping product Products are more easily compared because they have similar characteristics (televisions, washing machines) – Heterogeneous shopping product Products are harder to compare because their characteristics can be quite dissimilar from one another (universities, housing) Examples: – Appliances – Cars Specialty Products Specialty Products: – Goods and services the consumer makes a special effort to search out and buy – Those products for which the consumer has developed strong preferences. Consumers insist upon a particular item and will not accept substitutes Brand name tends to be very important Examples: – Clothing brands – A BMW (for someone who particularly prefers BMWs) Pseudo specialty products (less expensive, more readily available) – – Jif Peanut Butter (“Choosy mom’s choose Jif”) Hallmark (“Care enough to send the very best”) Unsought Products Unsought Products: – Goods or services for which a consumer has little awareness or interest until a need arises – Do not normally think about buying or are unaware Require a good deal of advertising or personal selling to interest people Examples: – – – Life insurance Retirement investing Funeral services Product Line Strategies A product line – Groups of associated items that consumers tend to use together or think of as part of a group of similar products or services (e.g., P&G’s line of dish detergents: Dawn, Ivory, Joy) – Products within the line can stress different characteristics or benefits – Products within the line are closely related Possible line strategies: – – – full line vs. limited line line stretch: upward, downward, or two-way filling-out vs. contracting Product Mix Strategies A product mix: – a firm’s entire range of product lines – E.g., Mars offers candy (Dove, M&Ms, Snickers, etc…), pet food (Sheba, Whiskas, etc…), food (Uncle Ben’s, Suzi Wan, etc…), pet care (Banfield), and drinks (Klix and Flavia) Strategic mix decisions usually relate to the width of the product mix – how many different product lines are produced by the firm Line Depth and Mix Width Depth (of Line) Fabric & Home Care Beauty Baby Health Tide Aussie Pampers Align Cheer Head & Shoulders Luvs Pepto-Bismol Era Ivory Prilosec Dreft Olay Metamucil Gain Old Spice Vicks Downy Secret Nyquil bounce Herbal Essences Swiffer Mr. Clean Comet … (and more) Width (of Mix) Plus P&G has more lines! Types of New Products New products differ in their degree of newness and this helps to determine how quickly products will be adopted by a target market The more novel the innovation, the slower the diffusion process Innovation continuum is based on the amount of disruption or change Innovation Continuum Little to no change Extreme changes flat screen TV VS streaming video… Which has had a bigger impact on behavior? Continuous Innovation Requires no new learning by consumers Dynamically Continuous Innovation Disrupts consumers’ normal routine but does not require totally new learning Discontinuous Innovation Requires new learning and consumption patterns New Product Development 1. New-product Strategy Development 2. Idea Generation 3. Screening and Evaluation 4. Business Analysis 5. Product Development 6. Market Testing 7. Commercializati on New-product Strategy Development Defines the role for a new product in terms of the firm’s overall objectives Given the environment (opportunities and threats) and our strengths and weaknesses, how can we accomplish our objectives? Idea Generation Sources of new ideas – – – – – – – – customers salespeople service providers anyone with direct customer contact competitors supply chain members R&D division consultants Screening and Evaluation The first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason. – Technical feasibility and consumer reactions Concept test: – A test to evaluate a new-product idea, usually before any prototype has been created. – Present concept statement to potential buyers/users to obtain their reactions. – Findings can help to predict sales potential, and thus, profitability potential of new product. Business Analysis How does the product “fit” with our mission and objectives? Specification of features and marketing strategy needed to bring product to market and make financial projections Can this likely be produced economically and marketed to be successful? Final step before significant resources are invested to create a prototype. Development Work to refine the design and production process Turn ideas into prototypes – Evaluate prototypes with prospective customers – Compare prototypes(s) to standards designated in product protocol If applicable, apply for a patent Market Testing Exposing actual products to prospective consumers under (somewhat) realistic purchase conditions. Standard – Try out the complete marketing plan (product, price, place, and promotion) in a selection of geographic areas that is similar to larger target market – Traditional test marketing is expensive and gives competition a chance to evaluate the new product – Controlled test markets guarantee some distribution during test, tend to be less expensive, give competitors exposure to product, are not as accurate. – Simulated test markets minimize/eliminate competitive viewing, cost less, but are not as accurate a test as a standard test market. Commercialization Finalize positioning, pricing, distribution, and promotion necessary for roll-out Launch the product! – Full-scale production – Regional rollouts Evaluation of Results Determine whether product and launch were a success or failure. – Satisfaction of technical requirements, such as performance – Customer acceptance – Satisfaction of firm’s financial requirements Are adjustments needed to the marketing strategy to increase technical performance, acceptance, and financial performance? Why New Products Fail • • • • • • • • Insignificant point of difference Incomplete market and product protocol Not satisfying customer needs Bad timing No economical access to buyers Too little market attractiveness Poor execution of marketing mix (4 P’s) and branding Poor product quality ...
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