Chapter 9: Designing and Managing Products Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

What is a Product? A Product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Includes: Physical Objects Services Events Persons Places Organizations Ideas Combinations of the above Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

Facilitating Products Core Product Facilitating Products -must be present for the gust to use the core service Supporting Products -Add value to the core product Augmented Product -physical environment, accessibility, interactions, physical environment Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

Chapter 9: Figure 9-1: Product levels Source: Gronroos, “Developing the Service Offering - A source of Competituive Advantage,” in Add Value to Your Service, C. Suprenant, ed., Chicago: American Marketing Association. Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

Elements that enhance positioning and create augmented products Atmosphere Customer interaction with service delivery system Customer interaction with other customers Customer co-production Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

Brand Brands are among a company’s most valuable assets A Brand represent what the is and stands for A Brand implies trust , consistency, and a defined set of expectations The strongest brands own a place in the customer’s mind From Scott Davis, Brand Asset Management Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

Branding Advantages of Brand Names Brand Equity Consistency Quality & Value Attributes Identification Advantages of Brand Names Brand Equity High Brand Loyalty Strong Brand Association Name Awareness Perceived Quality Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

Conditions That Support Branding Product is easy to identify Product is perceived to be the best value for the price Quality and standards are easy to maintain Demand is enough to support branding effort There are economies of scale Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

New Product Development Process Marketing Strategy Development Business Analysis Product Development Concept Development and Testing Market Testing Idea Screening Commercialization Idea Generation Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

New Product Development Process Step 1. Idea Generation Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From: Customers Competitors Distributors Suppliers Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

New Product Development Process Step 2. Idea Screening Process to spot good ideas and drop poor ones as soon as possible. Many companies have systems for rating and screening ideas which estimate: Market Size Product Price Development Time & Costs Unit Costs Rate of Return Then, the idea is evaluated against a set of general company criteria. Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

New Product Development Process Step 3. Concept Development 1. Develop New Product Ideas into Alternative Detailed Product Concepts New Product Development Process Step 3. Concept Development 2. Concept Testing - Test the New Product Concepts with Groups of Target Customers 3. Choose the One That Has the Strongest Appeal to Target Customers Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

New Product Development Process Step 4. Marketing Strategy Part One Describes Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two Describes First-Year: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Term: Sales & Profit Goals Marketing Mix Strategy Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

Step 5. Business Analysis Step 6. Product Development Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives Step 5. Business Analysis Step 6. Product Development If No, Eliminate Product Concept If Yes, Move to Product Development Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

Product Development Process Step 7. Test Marketing Budget Levels Product Test Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings. Atmosphere Positioning Branding Advertising Elements that May be Test Marketed by a Company Pricing Location Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

New Product Development Process Step 8. Commercialization Commercialization is the Introduction of the New Product into the Marketplace. When is the Right Time to Introduce Product? Where to Launch a New Product? Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

Product Development through Acquisition Large companies will sometimes buy a small companies rather than develop their own new companies. Sometimes, companies purchase distressed chains to turn them around. For example, Pepsico purchased KFC and Taco Bell. Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

Sales and Profits Over the Product’s Life From Inception to Demise Product Life Cycle Sales and Profits Over the Product’s Life From Inception to Demise Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($) Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 Product Policy HOA380 Chapters 10 and 12

Product Deletion Process Source: Martin Bell, Marketing Concepts and Strategy, 3rd ed., p.267, 1979, Houghton Mifflin Company; used by permission, Mrs.. Marcellette (Bell) Chapman. Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458