Transcript Chapter 8

MARKETING
Real People, Real Choices
CHAPTER 8
Creating the Product
Chapter Objectives
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Explain the layers of a product
Describe the classifications of products
Explain the importance of new products
Describe how firms develop new
products
• Explain the process of product adoption
and the diffusion of innovations
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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 he want?
– A 1/2” hole!
• Marketing is about supplying benefits,
not products
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The Actual Product
• Consists of the physical good or delivered
service that supplies the desired benefit
• Example:
– A washing machine’s core product is the
ability to get clothes clean, but the actual
product is a large, square, metal apparatus
• Actual product also includes appearance,
styling, packaging, & the brand
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The Augmented Product
• Consists of the actual product plus other
supporting features such as warranty,
credit, delivery, installation, & service
• Have you heard: “sell the sizzle not the
steak?”
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Classifying Consumer Products
• By how long they
last
– Durable
– Nondurable
• By how consumers
buy them
– Convenience
– Shopping
– Specialty
– Unsought
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Classifying Business Products
• By how products are used
– Equipment
– Maintenance, repair, operating
– Raw materials
– Processed materials
– Specialized services
– Component parts
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Convenience Products
• Good or service that consumers
purchase frequently with a minimum of
comparison and effort
• Types of convenience products
– staples
– impulse products
– emergency products
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Shopping Products
• Good or service for which consumers
will spend time & effort gathering
information on price, product attributes,
& product quality
• Consumers compare alternatives before
purchase
• Types of shopping products
– attribute-based shopping products
– price-based shopping products
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Specialty Products
• Goods or services bought with much
consumer effort in an extended
problem-solving situation
• Consumers insist upon a particular item
and will not accept substitutes
– Rolex Watch: real or fake?
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Unsought Products
• Goods or services for which a consumer
has little awareness or interest until a
need arises
• Require a good deal of advertising or
personal selling to interest people
1-800-Metlife
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It’s New and Improved
• What is a new product?
– According to the FTC, a new product
is one that is entirely new or changed
significantly and that product may be
called new for only six months
– From a marketing perspective, new is
anything a customer perceives as
new & different
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New Product Development
• Idea Generation
• Product Concept Development &
Screening
• Marketing Strategy Development
• Business Analysis
• Technical Development
• Market Testing
• Commercialization
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Step 1: Idea Generation
• Sources of new ideas
– customers
– salespeople
– service providers
– anyone with direct customer contact
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Step 2: Product Concept Development
• Expand ideas into more complete
product concepts
• Describe what features the product
should have and benefits those features
will provide for consumers
• Evaluate the chance for technical and
commercial success
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Step 3: Marketing Strategy Development
• Develop a marketing strategy that can be
used to introduce the product to the
marketplace
– Identify the target market
– Estimate its size
– Determine how the product can be
positioned
– Plan pricing, distribution, and promotion
expenditures necessary for roll-out
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Step 4: Business Analysis
• Assess how the new product will fit into
the firm’s total product mix
• Evaluate whether the product can be a
profitable contribution for the
organization’s product mix
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Step 5: Technical Development
• Work with engineers to refine the design
and production process
• Develop one or more prototypes
• Evaluate prototypes with prospective
customers
• If applicable, apply for a patent
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Market Testing
• Try out the complete marketing plan
(product, price, place, and promotion) in
a small geographic area that is similar
to larger target market
– Traditional test marketing is
expensive and gives competition a
chance to evaluate the new product
– Simulated test markets eliminate
competitive viewing and cost less
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Commercialization
• Launch the product!
– Full scale production
– Distribution
– Advertising
– Sales promotion
– and more
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Issues for Discussion
• Should knockoffs be illegal? Who is hurt
by knockoffs? Is the marketing of
knockoffs good or bad for consumers?
• What are some new products that have
made our lives better? That have been
harmful to consumers or to society?
Should there be a way to monitor new
products that are introduced?
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