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Marketing and Product Development Market research reveals What consumers want and points towards opportunities 2 questions before developing a new product: 1. can we produce it 2. can we sell it Production team answers: 1. can we produce it 2. costs For many businesses product Once the business is underway development is infrequent In the case of most successful An ongoing marketing activity businesses product development is Cooperation between marketing and production is complex and constant Feasibility study To determine if a business opportunity is possible, practical and viable Who performs feasibility studies All businesses Invention or Innovation Product development begins An idea that is based on solving a problem for with consumers “Necessity is the mother of invention” Inventions are New devices, methods or processes developed from study or experimentation Businesses use invention to Create original solutions to consumer needs Innovation is A product or service that uses new technology, items, or process to change: 1. existing products 2. methods used to produce products 3. ways to distribute them There are many more Innovators than there are inventors Most innovations develop as Competitive market a result of the Example Tracking packages for shipping Stages of Product Development Inventors tend to Sell or license their ideas to others who know how to develop products for the marketplace Innovators on the other hand marketers are more likely to be Stages of product development 1. 2. 3. 4. idea generation idea screening concept development market strategy 5. 6. 7. 8. feasibility study product design test marketing Market Entry Prototype Sample of what the product might look like and operate Market strategy discovers: Primary and secondary market Feasibility is closely tied to what other stages? Product design takes into account the preferences of 1. market strategy 2. product design Primary market Test marketing often includes A survey Product Development and Utility Utility What is added to the product to make it valuable on the market Utility affects The value equation by providing consumers with something they did not have before Types 1. form 2. information 3. place 4. time 5. possession Function What the product is intended to do Form follows function means: The product’s looks will be dictated by what it’s intended to do Components of the Form Utility 1. 2. 3. 4. 5. 6. material scent flavour colour design packaging Information utility Provides consumers with instructions, directions, manuals Place utility Makes it possible for consumers to purchase the product Time utility refers to Making the product available when consumer needs it Possession Utility When they are easy to purchase How can we increase possession utility 1. payment plans 2. lower price .1 - Positioning and Branding “Perception is Reality” Positioning allows us to Create an image, the outward representation of the person we want to be Positioning by others can lead to Misunderstandings and limited choices Marketers too make choices How to position their product or service about These choices mean That the brand will appeal to some people and not to others 6.2 - Types of Positioning 5 Types of positioning: 1. 2. 3. 4. 5. Benefit target price distribution service Benefit positioning Customers want the product they buy: to do something for them Often a company will position its products or service as being One that offers consumers more benefits than competitors Problem with benefit positioning Competition can do the same Price Positioning Marketer is faced with 2 options when using price for positioning: 1. cheapest 2. most expensive If a marketer chooses a price in the middle range, they must use a different positioning strategy! A luxury good offers Status more than quality Consumers of luxury products want The product to be expensive Examples of luxury items 1. caviar 2. diamond watches 3. expensive ties Many consumers are willing to pay high prices for Quality Manufacturers who use price positioning with the promise of quality must Be sure to provide it It is possible that if a The product is of inferior quality. product boasts the same features but less expensive consumers will think Distribution Positioning Examples: 1. Avon 2. Amazon Service Positioning Examples: 1. convenience stores 2. free installation Ikea uses price and service Low price, less service because products not assembled in combination. 6.3 How to Position a Product The initial positioning premise Marketers have to be prepared to alienate some consumers Businesses may decide that It doesn’t want! there are some consumers Some companies try to be Examples: all things to all consumers 1. nike 2. apple 3. Car manufacturers Clear and coherent positioning If consumers don’t know: they won’t go! A company that does not position its product in a distinctive manner will discover Consumers have no reason to choose it over a competitors 6.4 Branding Business creates a brand for a product to give it A distinct identity Why? To keep consumers from confusing it with competitors Product Differentiation includes 1. branding 2. advertising 3. positioning A brand consists of Includes: Commodities All the features that make up the product’s image 1. name 2. logo 3. slogan Unbranded products Why don’t farmer’s need to They sell stuff like potatoes, lettuce…all the same engage in marketing activities? Commodity marketing is usually conducted by: Marketing boards Marketing boards try to Increase the overall consumption of the commodities Brand Names Corporate dominant 1. corporate dominant 2. product dominant Examples: 1. 2. 3. 4. 5. Product Dominant Roots Mastercraft President’s Choice Kelloggs Nike Examples: 1. Zest 2. Kodiak 3. Luvs Logo Symbolic ways to create a brand Includes: 1. 2. 3. 4. 5. trademarks trade names brand marks logotypes symbols 3 types of logos: 1. monogrammatic Example: 2. Visual Symbols Example: 3. Abstract Symbols Example: Slogans Short catchy phrase that is always attached to the company’s name and logo How many words should a 7 slogan have? Brand Strategies Brand Strategies 1. 2. 3. 4. 5. Support Develop Extension license co-brand acquire Once a brand has been reposition positioned it is very hard to When is it feasible to change? Introducing into foreign market Brand Extension Capitalize on other brand’s success Examples: 1. coke/diet coke 2. Humpty Dumpty chips/Cheezys 3. Nike apparel/golf clubs Licensing: similar to Brand extension but for a fee license to other companies Famous people even license Themselves Co-Branding: when two Or more brands combine Acquisition of a successful brand If you can’t beat ‘em, buy em! – Branding for International Markets The Internet connects 3 choices when going international: Consumers and businesses around the globe 1. leveraging positive reputation and use the same brand identification 2. rename to reflect local culture and market preferences 3. acquire local brand Factors when choosing: 1. Centralized or not? If centralized, stay the same Glocal means: Thinking global but acting local 2. Expansion Strategy If wants to go global, build on original, but if wants limited trade, acquire or rename 3. Corporate Identity Strong international identity would lead to keeping it, otherwise change or merge 4. Similarity of Products If the product mix is narrow it is easier to push it into foreign markets 5. Similarity of markets The more similar the market is to your own the easier it is to push the same product 6. Competition in foreign markets Joint ventures or buyouts best if heavy competition exists 7. Cultural Associations If bad blood exists, use different brand or acquire/merge 8. Changing Dynamics Brand can be local one day and international the next