Download Product - resources

DEVELOP
A NEW PRODUCT
10.1
10.2
10.3
10.4
What Is a Product?
Components of a New Product
Product Market Classifications
Developing Successful New Products
© South-Western Publishing
WHAT IS A PRODUCT?
GOALS for Lesson 10.1
Explain that, for consumers, products
are more than just the tangible objects
that are offered for sale.
Describe the role of marketing in
keeping the focus on consumers during
product development.
© South-Western Publishing
More Than Just a
Tangible Object
Product – anything tangible offered to a
market by the business to satisfy needs.
 “More than an item” – physical
characteristics (durable, attractive, safe),
must be useful and meet needs
 “Consumers know best” – business people
vs. consumers interest (car example)
© South-Western Publishing
Product Development as
a Marketing Functions
“5 out of every 10 new product ideas will
be unsuccessful”
The role of marketing
Marketing activities in product
development
The product planning function
© South-Western Publishing
The role of marketing
Businesses must understand and apply
the marketing concept
 Products that meet customer needs vs.
Products that do not meet customer needs
 Easier to sell, increase brand image, return
customers
 Tough for sale people, consumers not happy,
consumers will not buy your companies
products
© South-Western Publishing
Marketing activities in
product development
“Marketing is the eyes, ears, and mouth
of the customer in a business”
 Gathering information – study the results
and use it to assist with planning
 Types of information, ways of collecting info
 Designing strategies – different strategies
will apply to different products or situations
 Testing marketing mixes – test marketing,
focus groups, panels
© South-Western Publishing
The product planning
function
Marketers need to work cooperatively
with the individuals in product
development in order to meet the needs
of the consumers.
© South-Western Publishing
Marketing Supports
Product Development
Customers
Companies
Product Development
Gathering
Information
Designing
Effective
Marketing
Strategies
Testing
Marketing Mixes
© South-Western Publishing
COMPONENTS OF
A NEW PRODUCT
GOALS for Lesson 10.2
Show how even a very simple product
can be a complex mix of a basic item
with assorted features.
Describe the three steps of the product
design process.
Explain the importance of product lines,
packaging, and brand development.
© South-Western Publishing
Parts of the Product Mix
Element
Basic product
Features
Options
Services
Brand name
Packaging
Guarantee
Uses
Example – Tooth Brush
© South-Western Publishing
Designing a Product
 Basic product – readily identifiable
product in its simplest form, able to easily
see the need, similar to competitors
(computer, shampoo, bike)
 Enhanced product – features, options,
colors, quality, brand names, packaging
 Extended product – services,
guarantees, information on effective use,
additional products to improve the product
© South-Western Publishing
Product Mix Components
 Product line – a group of
similar products with slight
variations in the marketing
mix to satisfy different
needs in a market
 Variation in quantity
 Variation in quality
 Product Assortments –
complete set of all
products a business
has to offer
 Packaging





Ease of use
Safety
Attraction
Handling
Environment
 Brand development
 Brand – name, symbol
 Trademark – legal
 Licensed Brand – selling
(Disney, sports)
© South-Western Publishing
Levels of Brand Recognition
Non-recognition
Rejection
Consumers are unable to identify the brand.
Recognition
Consumers will not purchase the product
because
of the
Consumers
canbrand.
recall brand name but it has
Preference
little
influence
on the
purchases.
rejectand
other
Consumers
view
brand asThey
valuable
Insistence
brands.
will
chose it value
if available.
Consumers
the brand to the extent that
they reject other brands.
© South-Western Publishing
PRODUCT MARKET
CLASSIFICATIONS
GOALS for Lesson 10.3
Define consumer markets and describe
what is meant by direct demand.
Define business markets and explain
the business product classification
system.
Understand the importance of product
classifications for product planning.
© South-Western Publishing
The Product/Service
Classification System
The system is based on two factors:
The importance of the purchase to the
consumer
The willingness of the consumer to shop
and compare products before making
the purchase
© South-Western Publishing
Classifying Products for
the Consumer Markets
 Convenience goods – staple, impulse,
emergency
 Shopping goods – price, attribute
 Unsought goods
 Specialty goods
Direct Demand – quantity of a product needed
to meet the needs of the consumer
© South-Western Publishing
Classifying Products for
the Consumer Market
 Convenience Goods
 Staple goods – bread,
milk, snacks
 Impulse goods –
unplanned purchases
 Emergency goods –
repairs, medical services
 Shopping Goods
 Attribute / Qualities -based
goods
 Price-based goods
 Specialty Goods – brand
loyalty, well known, delay
purchase
 Unsought Goods – life
insurance, preparing a will
© South-Western Publishing
Business Markets
 Capital equipment – land, buildings, large pieces of
equipment
 Operating equipment – tools, small machines,
furniture
 Supplies – office supplies, parts for repairs
 Raw materials – unprocessed material used in
production
 Component parts – partially or totally processed parts
Derived Demand – the quantity of a product or needed by
a business in order to operate at a level that will meet
the demand of its customers.
© South-Western Publishing
Planning Products
for Consumer and
Business Markets
Need to know if the customer is the final
consumer or a business consumer
Some products are sold to both
consumer markets and business
markets
© South-Western Publishing
DEVELOPING SUCCESSFUL
NEW PRODUCTS
GOALS for Lesson 10.4
Understand what businesses mean by
“new” products.
Describe the six steps in new product
development.
© South-Western Publishing
What Is a New Product?
Is it really new?
Federal Trade Commission regulates
the use of the term “new.”
 Entirely new or changed in an important
and noticeable way
 Six-month time limit
© South-Western Publishing
The Steps in New
Product Development
Idea development
 Gathering information from consumers
 Organizing panels
 Regular meetings with employees
 Identifying problems that consumers have
 Brainstorming, creative thinking exercises
© South-Western Publishing
The Steps in New Product
Development
Idea Screening – evaluate ideas
 Is there an identified market for the product?
 Is the competition in the market reasonable?
 Do we have or can we obtain the resources
to produce the product?
 Is the product legal and safe?
 Can we produce a quality product at a
reasonable cost?
© South-Western Publishing
The Steps in New Product
Development
Strategy Development –
1. Create and test a sample marketing
strategy (research to clearly identify an
appropriate target market and insure
that customers exists)
2. Marketing mix is planned and
analyzed (product, distribution, price,
promotion)
© South-Western Publishing
The Steps in New Product
Development
Financial Analysis
 Cost of production and marketing
 Sales projections for the target market
 Calculations of profits
 Scenario analysis (worst case vs. best
case)
© South-Western Publishing
The Steps in New Product
Development
Product Development and Testing
 Designing the production process
 Obtaining the needed equipment and
materials
 Training the production staff
 Identifying a producer or manufacturer
 Design a prototype to be tested
 quality and cost / used in the test market
© South-Western Publishing
The Steps in New Product
Development
Product Marketing
 Introduction into the market
 Cooperating companies must be involved
(wholesalers, retailers, transportation
companies, ad agencies
 Production levels must be high enough
 All activities must be coordinated
© South-Western Publishing
Introduction Stage
 competing against older, established products
 businesses need to identify those that are
dissatisfied with the current problems
 product should be basic and not too
complicated
 guarantees and warranties
 not widely distributed – test markets
 price usually high
 promotion needs to inform the customer
© South-Western Publishing
Distribution, Price,
and Promotion
 Distribution is the marketing mix element that
facilitates the physical exchange of products and
services between businesses and their customers
 Price as a marketing mix element is defined as the
amount a buyer pays as well as the methods of
increasing the value of the product to the customers.
 Promotion includes the methods and information
communicated to customers to encourage purchases
and increase their satisfaction.
© South-Western Publishing
Distribution
Where will the customer be best able to
obtain the product?
Where will the customer use the product?
Are there special requirements to
transport, store or display the product?
When should distribution occur?
Who should be responsible for each
type of distribution activity?
© South-Western Publishing
Price
 Does the business want to increase sales,
increase profits, or enhance image of the product?
 Should price be based on cost, what customers
are willing to pay, or what competitors are
charging?
 Will there be one price for all customers,
negotiation, discounts?
 Will the price be clearly communicated?
 Are there things that clearly satisfy the customer
and make the product better and more valuable
than alternatives?
© South-Western Publishing
Promotion
 Will the audience for the promotion be a general
market or specific segment?
 Is the specific goal of promotion to increase
knowledge, to change attitudes, or influence
behavior?
 What specific information does the audience
need?
 What means of promotion will be most effective?
 How much money is needed for effective
marketing?
 What information does the business need from
consumers?
© South-Western Publishing