Chapter 1

 A product is a good or a service  Product Planning comprised of two elements  Product development  Conceive, develop, produce, and test  Product management  Commercialized, sustained, eventually withdrawn  These two elements combine for a “cradle to grave” cycle of products  Same basic cycle for consumer products and services and commercial products and services

 Resource Allocation  All companies are resource-constrained  People, time, money  Product Mix coordination  Optimal mix of products to fill market targets  Marketing Program support  Information about product performance  Product Portfolio evaluation  Cash, profitability, market position, strategic value

 Inventions versus innovations  Inventions are not products; they are technical devices  Innovations are inventions with a marketing program  Continuous innovation – “new and improved”  Discontinuous innovation – “new category”

 Core benefit surrounded by attribute layers Expected Product Generic Product Core Benefit Expected Product Augmented Product Potential Product Potential – All future features And capabilities of the product Augmented – Differentiated features and capabilities Expected – Base set of buyer’s expectations about product Generic – very basic form of product Core – fundamental service being acquired

 Core Benefit – shelter  Generic product – YMCA or youth hostel  Expected product – Motel 6  Augmented product – Hilton with concierge, mini-bar, flat screen HD TV  Potential product – Disney arranges air transport, airport shuttle, baggage transfer, pleasant bungalow with kitchen, meals, laundry service – all the comforts of home while on vacation

 Companies can provide product for each layer  Marriott portfolio  Generic – Fairfield Inn  Expected – Courtyard, Residence  Augmented – Marriott Hotels, Marriott Suites  Potential – Marriott Resorts  Product line – a group of closely related product items  Internal resource maximization  Positioning signals to consumers  Product mix – combination of product lines  Pillsbury example page 13

 Cost Improvements  possibly same item with cost reductions (different than price reduction)  Product Improvements  New and improved features  Line Extensions  Tartar control toothpaste, whitening toothpaste  Market Extensions  Arm and Hammer toothpaste, laundry detergent  New Category Entries  Kodak selling batteries  New-to-the-World Products  Cell phone, DVD player, etc.

 One-third of a companies sales come from products introduced in the past 5 years  Over 90% of product concepts fail during product development process  Of the ones that make it to market, about a third fail  31 % of commercial products, 46% of consumer products  27% of product line extensions fail  31% of new brands in existing categories fail  46% of new products in new categories fail

 Not listening in Product Management class!  Lack of marketing orientation – listening to customers  Driven by engineering – the better mousetrap  Rushed or incomplete product development process  Lack of a defined product development process  Not doing proper market/competitor surveillance

 Chapters 2-4 – envisioning process  Chapters conceptualizing steps  Chapter 7 – developing and producing steps  Chapters 8-9 – developing and testing steps  Chapter 10 – sustaining and disposing  Chapter 11 – special topics area  Chapter 12 – best practices and key learnings  We’ll go through a competition simulation as well