Transcript Chapter 7

Chapter 7
Product Planning and Development
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–1
What is a product?
• A set of tangible or intangible attributes in an
identifiable form, which can be identified by a
descriptive name, and communicates the idea of a
solution to a problem.
• A product is a set of tangible and intangible
attributes including packaging, colour, price, quality
and brand, plus the services and reputation of the
seller.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–2
What are the benefits of this product?
Insert Fig 7.1 p 200
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–3
Classification of products
• Two product categories:
1 Consumer products
– Intended for household consumer, nonbusiness use.
2 Business products
– Intended primarily for producing other
products or providing services in a
business.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–4
Classification of consumer goods
• Four types of consumer goods:
1 Convenience goods.
2 Shopping goods.
3 Specialty goods.
4 Unsought goods.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–5
Convenience goods
• Consumer is familiar with and buys with
•
•
•
•
•
minimum effort.
Typically have a low unit price.
Products purchased frequently.
Readily accessible and widely distributed.
Retailers usually carry several brands,
E.g. tobacco, toothpaste batteries.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–6
Shopping goods
• Consumers usually compare price, quality and
•
•
•
•
style.
Buying habits affect distribution and promotional
strategies.
Manufacturers work closely with retailers.
Retail stores often buy shopping goods in large
quantities and distribution direct from
manufacturers to the retailer is common.
E.g. appliances, furniture.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–7
Specialty goods
• Consumer:
–
–
–
–
–
Has strong brand preference.
Is willing to forgo more accessible substitutes.
Is willing to invest time and effort in product
search.
Fewer store outlets.
E.g. sound equipment.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–8
Unsought goods
• Consumer goods that are not yet known
or that are not yet needed.
• Seller must place emphasis on
demonstrating that consumers might
have a need for this product.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–9
Classification of business goods
• Five categories:
1 Raw materials—goods in their natural state.
2 Fabricated materials and parts—they become part
of the product.
3 Installations—manufactured business products.
4 Accessory equipment—used in the production
operations of a business.
5 Operating supplies—aid in the firm’s operation.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–10
Services
• A clear definition is difficult, although services are
invariably marketed together with physical goods.
Insert Fig 7.2 p 210
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–11
Classification of services
• Several categories exist:
–
Consumer services.
– Business services.
– Delivery method.
– Customer involvement.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–12
Things to know about services
• Services can be classified according to whether
•
•
•
•
they are delivered mechanically or by people.
E.g. ATM vs bank teller.
A consistent delivery standard should apply.
Security, reliability and location of the mechanical
service.
Training, motivation and ability of customer service
staff.
The extent to which a customer is involved in the
delivery of the service, e.g. self-serve.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–13
Product innovation
• Product innovation is becoming
increasingly important owing to rapid
advancements in technology and
successful product copying by
competitors.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–14
The importance of product
innovation
• Need for growth—products, like people, go
through life cycles.
• Increased consumer selectivity—not spending
as freely.
• Resources and environmental considerations—
environmental factors will influence product
decisions.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–15
Development of new products
It has been said that nothing happens
in business until somebody sells
something.
First there must be something to sell!
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–16
What is a ‘new’ product?
• Products that are truly innovative.
–
–
E.g. cure for cancer.
Products that have no existing substitutes.
• Innovative replacements for existing products.
–
–
Product is significantly different from existing products.
E.g. digital HDTV.
• Imitative products that are new to a particular
company.
–
Imitation products are new to that company, not to the
market.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–17
New product strategy
• Defending market share position.
• Maintaining the company’s position as a product
innovator.
• Meeting a specific ROI goal.
• Establishing a position in a
new market.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–18
Stages in the new product
development process
Insert Fig 7.3 p 214
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–19
Adding a new product!
• Do enough people really want this product?
DEMAND
• Is there a FINANCIAL fit for the firm?
• Will it create environmental issues?
• What is the present marketing structure?
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–20
New product adoption and diffusion
•
•
Adoption process. A set of successive decisions an
individual or organisation makes before accepting an
innovation.
Stages in adoption process:
•
•
•
•
•
•
•
Awareness 
Interest 
Evaluation 
Trial 
Adoption 
Post-adoption confirmation.
Diffusion: The process by which an innovation is spread
through a social system over time.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–21
Adopter categories
•
•
Researchers have identified five categories of individual
adopters for new products:
1 Innovators — 3% of the market.
2 Early adopters — 13% of market.
3 Early majority — 34% of market.
4 Late majority — 34% of market.
5 Laggards — 16% of market.
Non-adopters never accept the innovation.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–22
The product life cycle (PLC)
INTRODUCTION
GROWTH
MATURITY
DECLINE
Sales Volume
Insert Fig 7.4 p 221
Profit
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–23
The product life cycle
 Definition—The stages that a product
moves through from its introduction to the
market to its disappearance from the
market.
 Used for product planning.
 Product’s profit and sales.
 There are four stages of the PLC.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–24
PLC
 INTRODUCTION STAGE




Profits are non-existent.
No awareness.
Large amounts of advertising.
The most critical stage.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–25
PLC
 GROWTH STAGE
 Trial of the product.
 Increase in distribution.
 Competitors enter the market.
 Profits increase.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–26
PLC
 MATURITY STAGE
 Prospect of saturation of competition.
 Lower prices owing to competition.
 Persuasive promotion takes place.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–27
PLC
 DECLINE STAGE
 New products replace old.
 Sales and profits decline.
 Products withdrawn from the market.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–28
Planned obsolescence
• The objective is to make an existing product out of
date, thus increasing the market for replacement
products.
• Some firms plan obsolescence as part of their
strategic marketing plan.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata
7–29