Transcript Solomon_ch08_basic

MARKETING
Real People, Real Choices
Fourth Edition
CHAPTER 8
Creating the Product
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!
• What is the core product?
– A toothpaste
– The I-Pod
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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, and the brand
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The Augmented Product
• Consists of the actual product plus other
supporting features such as warranty,
credit, delivery, installation, and repair
service after the sale
8-4
Distinguishing between 3 levels of
product
• Why do we do it?
– Zero in on the most important
benefit(s) which consumers are
looking for
– Make sure the actual product delivers
the benefits
– Then focus on additional features
which serve to make the product
more attractive
8-5
Classifying Consumer Products
• By how long they
last
– Durable
– Nondurable
• By how consumers
buy them
– Convenience
– Shopping
– Specialty
– Unsought
8-6
Classifying Business Products
• By how products are used
– Equipment
– Maintenance and supplies
– Raw materials
– Processed materials
– Specialized services
– Component parts
8-7
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
• Parallels with involvement levels, consumer
decision making strategies and the buying
process
• Implications for marketers?
8-8
Shopping Products
• Good or service for which consumers will spend time
and effort gathering information on price, product
attributes, and product quality
• Consumers will tend to compare alternatives before
making a purchase
• Types of shopping products
– attribute-based shopping products
– price-based shopping products
• Parallels with involvement levels, consumer decision
making strategies and the buying process
• Implications for marketers?
8-9
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
• Parallels with involvement levels,
consumer decision making strategies
and the buying process
• Implications for marketers?
8-10
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
• Parallels with involvement levels,
consumer decision making strategies
and the buying process
• Implications for marketers?
8-11
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 and different
8-12
Types of innovations
• Continuous innovations: “newness” in
small continuous increments
– E.g. adding new features to existing
products, new brand names, etc.
– Minimal learning, hence faster
diffusion, easier acceptance
• Knock-off: copies with slight differences
from the original
– Aimed at different target audiences
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Types of innovations
• Dynamically continuous innovations
– Much greater ‘newness’
– Requires greater learning hence
slower acceptability and slower
diffusion
– E.g. vinyl records to tapes to CDs
– Convergence of technologies
8-14
Types of innovations
• Discontinuous Innovations
– Maximum ‘newness’
– Requires major learning, slowest
acceptance and diffusion
– E.g. writing letters as opposed to
email
• Marketing implications of degrees of
‘newness’?
8-15
Types of Innovations
• Innovations 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
8-16
New Product Development
• Idea Generation
• Product Concept Development and
Screening
• Marketing Strategy Development
• Business Analysis
• Technical Development
• Market Testing
• Commercialization
8-17
Step 1: Idea Generation
• Sources of new ideas
– customers
– salespeople
– service providers
– anyone with direct customer contact
– Employees (e.g. Nike’s Deep Dives)
– Consultants
8-18
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 e.g. Burger King’s
new starch coated fries
8-19
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
• E.g. McDonalds and a sweeter
breakfast offering
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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
• E.g. Listermint vs. Scope mouthwash
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Commercialization
• Launch the product!
– Full scale production
– Distribution
– Advertising
– Sales promotion
– and more
8-24
Adoption and Diffusion Processes
• Adoption is the process by which a
consumer or business customer begins
to buy and use a new good, service, or
idea
• Diffusion describes how the use of a
product spreads throughout a
population
8-25
Six Stages of Adoption
• Awareness – advertising aims at enhancing
recognition and recall
• Interest – advertising that evokes curiosity
• Evaluation – advertising that focuses on
product benefits
• Trial – demonstrations, sampling, trial size
pouches, etc.
• Adoption – recommendations, endorsements,
distribution
• Confirmation – communications which
reassure customers
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Diffusion Process
• Concerned with the broader issue of
how an innovation is communicated and
adopted throughout the marketplace
• The process of spreading out
• Adopter categories
– Five different type of consumers
– Normal distribution
8-27
Adopter Categories
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Innovators
Early adopters
Early majority
Late majority
Laggards
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Innovators
• 2.5%, the first to accept a new idea or
product
• Venturesome and willing to take risks
• Generally better educated, younger and
financially better off
• Rely heavily on impersonal information
sources
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Early Adopters
• 13.5%, the second to adopt an
innovation
• Heavy media users
• Use products extensively to make
statements about themselves
– Believe social acceptance is rooted in
product adoption
• Opinion leaders primarily come from the
early adopter group
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Early Majority
• 34% adopt the product prior to the
mean time of adoption
• Deliberate and cautious middle class
consumers
• Slightly above average education and
income levels
• Spend more time in the innovation
decision process
8-31
Late Majority
• 34% follow the average adoption time
• Older, more conservative
• Peers are the primary source of new
ideas
• Below average in education, income,
and social status
• Wait to purchase until product has
become a necessity and/or peers
pressure to adopt
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Laggards
• 16% - last to adopt an innovation
• Lower in social class than other
categories
• Bound by tradition
• Product may have already been
replaced by another innovation
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Factors Affecting the Rate of Adoption
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Relative Advantage
Compatibility
Complexity
Trialability
Observability
8-34
Relative Advantage
• A product innovation is perceived as better
than existing alternatives
• Positively correlated with an innovation’s
adoption rate
• Exist when a new product offers:
– Better performance, increased comfort,
saving in time and effort, or immediacy of
reward
• E.g. Microwaves in the 1960s and 1970’s
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Compatibility
• An innovation is perceived to fit into a
person’s way of doing things
• The greater compatibility, the more
rapid a product’s rate of adoption
• Overcome perception of incompatibility
through heavy advertising to persuade
consumers
• E.g. New software versions are
backward compatible
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Complexity
• The more complex the product, the
more slowly a product’s rate of adoption
• Overcome perception of complexity with
demonstrations, personal selling, and
emphasis on ease of use
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Trialability
• An innovation can be used on a limited
basis prior to making a full-blown
commitment
• The trial experience serves to reduce
the risk of a consumer’s being
dissatisfied with a product after having
permanently committed to it through
outright purchase
• E.g. stores cooked whole dinners in
microwaves to demonstrate their use
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Observability
• The product user or other people can
observe the positive effects of new
product usage
• The higher the visibility, the more rapid
the adoption rate
• E.g. The I-pod; the Razor scooters, etc.
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B2B Adoption Factors
• Increase in gross margin and profits
• Consistency with firm’s way of doing
business
• Benefit relative to required investment
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• www.vosswater.com
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