Download Class 28 12-1 Products Power Point Presentation

Products:
Development & Distribution
Class 28
Thursday 12/6/11
Developing & Distributing
New Products
• New Idea Screening
• Product Development
• Business Analysis
• Test Marketing
• Distribution
• Commercialization [Advertising, PR,
Sales promotion, Personal Selling]
Types of Product Developments
1. New-to-the-market
2. New to the company
3. Improvement in an existing
product
4. Extend existing product line
When Is an Idea an Opportunity?
Sources of
New Product Ideas
 Entrepreneur = Creative
 Solicit people within the organization
•
•
•
•
•
Marketing
Sales
Research
Manufacturing
“Entrepreneurial” Units
 Outside
• Customers
• Competition
Classifying Products
• Consumer
Products
– Convenience
products
– Shopping
products
– Specialty
products
• Business
Products
– Raw materials
– Major equipment
– Accessory
equipment
– Component parts
– Processed
materials
– Industrial services
Product Line and Product Mix
• Product Line
– Closely related
products that
are treated as a
unit because of
similar
marketing
strategy,
production, or
end-use
considerations
• Product Mix
– All of the
products
offered by an
organization
Colgate-Palmolive’s Product Mix and
Product Lines
Source: “Our Products,” Colgate-Palmolive (n.d.), www.colgate.com/app/Colgate/US/Corp/Products.cvsp (accessed
June 5, 2004).
Business Analysis
Evaluate
• Segment Market
• Find Niche- Unmet need
Assess Competition
Understand Customer Needs
Forecast Demand
• Similar Businesses
• Potential Customers
• Published Industry Data
Assessing Competition
Industry sales growing/contracting?
Major competitors?
Product differ?
Opportunities/threats?
Recent changes/direction?
Technology?
Mature/new company success?
Reasonable profits?
When to Develop & Market a New Product
Breakeven Analysis
• “…total sales revenue must
exactly equal all your
expenses (both variable
and fixed).”
Breakeven Calculation
Selling Price
-Variable Cost per Unit
Contribution Margin
Fixed Cost
Contribution Margin
=
Breakeven (Units)
Risks to Product Development
Trade-Offs
Time Pressure
Economics
Development Process
• “…series of activities by which a
product idea is transformed into a
final product.”
The Product Development Process
Patent
Patent:
“…‘right to exclude others from making,
using, offering for sale, or selling’ the
invention in the U.S. for 20 years.”
Patent can be for a product idea or an
application
Website: http://www.uspto.gov
Identifying Products
• Branding
– The process of naming and identifying
products; can use a brand mark or trademark
• Packaging
– The external container that holds and
describes the product
• Labeling
– The presentation of important information on a
package
Trademark
Trademark:
A symbol, word, or words legally registered or established by use as
Representing a company or product.
Categories of Brands
• Manufacturer Brands
– Kellogg’s, Ford, Sony
• Private Distributor Brands
– Kenmore appliances (Sears)
• Generic Brands
– peanut butter, dog food, kitty litter
Packaging Functions
•
•
•
•
Protection
Economy
Convenience
Promotion
Did You Know?
While shopping, the average time a
consumer looks at a package is 2.5
seconds.
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
Labeling
• The content of labeling, often required by law,
may include:
–
–
–
–
–
–
–
Ingredients or content
Nutrition facts (calories, fat, etc.)
Care instructions
Suggestions or use (such as recipes)
The manufacturer’s address and toll-free number
Web site
Other useful information
Distribution Strategy
• Marketing Channels
– Retailers (Wal-Mart, Sears)
– Wholesalers (food brokers to
restaurants)
– E-tailers (Amazon.com)
Supply Chain Management
• Long-term partnerships among
channel members to reduce costs,
waste, and unnecessary movement
through the channel to satisfy
customers
Physical Distribution
• Physical distribution includes all the
activities necessary to move products
from producers to customers
–
–
–
–
Inventory control
Transportation
Warehousing
Materials handling
Importance of Distribution
in a Marketing Strategy
• Distribution decisions are the least
flexible marketing decisions
– Use committed resources
– Establish contractual relationships
– Are bound by time
The Promotion Mix
• A strong promotion program results from the
careful selection and blending of:
–
–
–
–
Advertising
Personal selling
Publicity
Sales promotion
• Integrated marketing communications
– The process of coordinating the promotion mix elements
and synchronizing promotion as a unified effort