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Marketing: Real People, Real Decisions
Creating the Product
Chapter 9
Lecture Slides
Solomon, Stuart,
Carson, & Smith
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Marketing: Real People, Real Decisions
Chapter Learning Objectives
When you have completed your study of this chapter,
you should be able to:
• 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.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Introduction to the Topic
• It was once said that if you built a better mousetrap, the world
would beat a path to your door. Whoever said this was certainly not
familiar with today’s hyper-competitive marketing environments!
• This chapter looks at the
new product development
process, as well as
different ways to classify
products.
• Goods: tangible
products we can see,
touch, smell, hear, or
taste.
• But we get more than just
the physical product when
we buy something.
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Marketing: Real People, Real Decisions
Layers of the Product Concept
• Core product: all of the benefits the product will provide for
consumers or business customers. The core product of a winter coat
is warmth and protection from the elements.
• Actual product: is the
physical good or the delivered
serve that supplies the desired
benefit.
• Augmented product: the
actual product plus other
supporting features such as
warranty, credit, delivery,
installation, and repair service
after the sale. These features
add value for the consumer.
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Marketing: Real People, Real Decisions
Classifying Products
• Marketers group products into different categories to help them
understand how buyer behaviour differs for them, and to assist in the
new product development process.
• Products can be grouped based on how
long they last.
• Durable goods: consumer products
that provide benefits over a period of
time, such as cars, furniture, and
appliances.
• Nondurable products: consumer
products that provide benefits for a
short time because they are consumed
(such as food) or are no longer useful
(such as newspapers).
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Marketing: Real People, Real Decisions
Classifying Products by Behaviour
• Convenience product: a consumer good or service that is
usually low priced, widely available, and purchased frequently with a
minimum or comparison and effort.
• Convenience products can be a/an:
– Staple, which are basic necessities that
consumers do not perceive much
different between brands, such as mik,
bread, and gasoline.
– Impulse product, which is a product
that people often buy on the spur of the
moment, usually because it looks
interesting, such as a magazine.
– Emergency product, which is a
product that is purchased when the
consumer is in dire need, such as an
antacid for heartburn, or drain opener.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Classifying Products by Behaviour
• Shopping product: a good or service for which consumers
spend considerable time and effort gathering information and
comparing alternatives before making a purchase.
• Casual clothing is a good example.
• Specialty product: a good or service
that has unique characteristics, that is
important to the buyer, and for which the
buyer will devote significant effort to
acquire.
• Luxury items such as jewelry, a fur coat, or
artwork are examples.
• Level of involvement with these types of
products will vary, but will tend to increase
as the value of the good increases, as
discussed in Chapter 6.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Business-to-Business Products
• Marketers classify business-to-business products based on how
organizational customers use them.
• Equipment: expensive goods an
organization uses in its daily operations
that last for a long time.
• Maintenance, repair, and
operating products: goods that a
business customer consumes in a
relatively short time.
• Specialized services: services
purchased from outside suppliers that
are essential to the operation of an
organization but are not part of the
production of a product.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Business-to-Business Products (continued)
• Raw materials: products of the fishing, lumber, agricultural,
and mining industries that organizational customers purchase to use
in their finished products.
• Processed materials: products
created when firms transform raw
materials from their original state.
• Component parts:
manufactured goods or
subassemblies of finished items that
organizations need to complete their
own products.
• Magna International is a good
example of a successful Canadian
component manufacturer.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Understanding Innovations
• Innovation: a product that consumers perceive to be new and
different from existing products.
• Developing new products is important to an
organization for the following reasons:
– To remain competitive
– To keep up with new technology
– To follow changing consumer preferences
– To replace dying products
– To diversify its product offering and lower
risk
• Using new product development as a
marketing strategy can be a sustainable
competitive advantage, provided that the
company can maintain the pace.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Understanding Innovations (continued)
• We can classify innovations by the amount of learning required
of consumers, which will affect the new product’s rate of adoption.
• Continuous innovation: a
modification of an existing product that
sets one brand apart from its competitors.
• This is mostly incremental improvement
of an existing product, such as a adding an
extra set of heads to a video player for
better picture quality, or a microwaveable
version of Kraft Dinner.
• Knock-off: a new product that copies
with slight modification the design of an
original product.
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Marketing: Real People, Real Decisions
Understanding Innovations (continued)
• Dynamically continuous innovation: a change in an existing
product that requires a moderate amount of learning or behaviour
change.
• Getting customers to switch from VCR’s to
DVD technology would be an example.
• Discontinuous innovation: a totally
new product that creates major changes in
the way we live. This type of innovation
requires the most amount of learning on the
part of the consumer.
• The personal computer changed the way we
live and work, while asking men to remove
facial hair using a cream instead of shaving
would also be considered a discontinuous
innovation.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Phases in New Product Development
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Marketing: Real People, Real Decisions
Developing New Products
• Test marketing: testing the complete marketing plan in a small
geographic area that is similar to the larger market the firm hopes to
enter.
• Product adoption: the
process by which a consumer or
business customer begins to buy
and use a new good, service, or
idea.
• Diffusion: the process by
which the use of a product
spreads throughout a population.
• Not all consumers are willing to
risk buying a new product.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Diffusion of Innovation
• Innovators: the first segment (roughly 2.5%) of a population to
adopt a new product, usually those highly involved in the category.
• Early adopters: those who adopt an innovation early in the
diffusion process but later than the innovators.
• Early Majority:
those whose adoption of
a new product signals a
general acceptance of the
innovation.
• Each successive group is
larger in number than the
previous one, until the
curve peaks.
Figure 9.5
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Marketing: Real People, Real Decisions
Diffusion of Innovation (continued)
• Late majority: the adopters who are willing to try new products
when there is little or no risk associated with the purchase, when the
purchase becomes an economic necessity, or when there is social
pressure to purchase.
• Laggards: the last
consumers to adopt an
innovation. These people
are now buying those newfangled VCR’s.
• Marketers can use this
information to design
promotional strategies to
reach each successive
group.
©Copyright 2003 Pearson Education Canada Inc.
Figure 9.5
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Marketing: Real People, Real Decisions
Influences on Rate of Adoption
• The factors that influence the rate of adoption of innovations are:
• Relative advantage: perceived difference between
new product and existing alternative ways to satisfy the
same need. Need (at least) a just noticeable difference.
• Compatibility: the fit between the new product and
people’s present habits.
• Complexity: ease of understanding
• Divisibility: the risk of trying the product can be
reduced if it can be purchased and tried in stages.
• Communicability: is the product visible to others,
and can its usage be described?
• Other considerations: initial and ongoing costs,
risk, uncertainty, availability, and social approval.
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Marketing: Real People, Real Decisions
Famous Last Words…
• New product development
is important to an
organization because it
helps them remain
competitive in today’s fastpaced marketing
environments.
• New product development
is also highly risky, which
tends to discourage many
firms from attempting to
lead in this area.
©Copyright 2003 Pearson Education Canada Inc.
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