1 Chapter 5 Product Development

2 In your opinion, what was the greatest invention ever? If anything could be invented, what product or service would you like to see invented? Explain

3 Marketing Research reveals what the consumer wants and/or needs and points the way toward business opportunities. Before a new product/service is developed two questions must be asked: “Can we produce it?” and “Can we sell it?” The marketing department, through consumer research, will decide whether or not the product can be sold then it is up to the Production Department.

4 Production Department decides if the product can be produced (does the company have the facilities) outlines the costs of making the new product (helps the marketing dept. to come up with a price) If a company does not have it’s own production department, then they can hire one.

5 Section 5.2..Innovation or Invention Innovation ~ a product or service that uses new technology, items or processes to change existing products. Innovation Video Popular Mechanics Invention ~ new devices, methods, or processes developed from study and experimentation. Businesses use inventions/innovations to create original solutions to meet consumer needs. Best Inventions Of Popular Science

6 Section 5.3 ~ The Stages of Product Development

7 Idea Generation Idea Screening ~ test new ideas with consumers and see if anyone else is already making this product/service Concept Development ~ design a prototype (sample), see if it will work and market test it. (Testing Consumer Products)Testing Consumer Products Market Strategy ~ find out how to reach your target market Feasibility Study ~ a study to determine how well a potential product or service would work (Designing Toys) The product must be one that the company can make and sell, that consumers want and at a price they will pay, and that will produce a profit for the company.(Designing Toys) Product Design ~ takes into consideration the preferences of the primary market Test Marketing Market Entry ~ product enters the product life cycle

Developing a New Bottled Water Idea generation: How do we make this product better? New package Add flavours Develop a new mineral spring Idea screening Do consumers want any of these new features? Are any other companies making this product this way? Consumers like the package as it is. Consumers are very interested in the flavours. Perrier has lemon and lime flavours in Canada, but that is the only competition. New mineral spring would be too difficult to find and consumers like the water we have.

Concept development for flavoured water Prototype 1 Unsweetened, carbonated raspberry Prototype 2 Unsweetened, carbonated peach Prototype 3 Sweetened, Carbonated kiwi Test marketing reveals consumers love the unsweetened, carbonated raspberry drink.

Market Strategy: Primary Market As the drink has no calories and lots of flavour, it appeals to male or female, into fitness, single, between 18 and 25, who hate being bored. Test Marketing Significantly more males than females like the drink. Shift primary target to males, secondary target to females. Wide acceptance of product taste. Package design a bit feminine. Change to match the new primary target market. Feasibility Study Raspberry flavour available, costs competitive, promotional costs high, distribution channels available. Product Design Highly carbonated, strong raspberry flavour, sharp, not sweet. Raspberry-coloured bottle with label design of raspberries exploding from bubbly spring. Product Launch

11 Section 5.4 Product Development and Utility

12 Product development can add utility to a product. (Utility – what is added to a product to make it valuable on the market.) Types of Utility; 1. Form 2. Information 3. Place 4. Time 5. Possession 6. Service

13 Form Utility – relationship between a product or service’s form and its function. Form refers to the products “look” or the type of service. Video Products are:  D deep  I intelligent  C complete  E elegant  Eemotive

14 Types of Form Utility: Material- e.g. Columbia and other companies are always coming up with new materials Scent Flavour Color – many consumers are influenced by color (Coffee Cans Design – most important part of form utility. (Ergonomic designs; comfortable, easy to use etc. Aesthetics is also important, people will pay a lot for attractive cars, furniture etc.) Aliant video Packaging – an innovative package can create a whole industry Videohttp:// 0EvsecMxbc&feature=relatedhttp:// 0EvsecMxbc&feature=related

15 Utility Continued Information Utility –providing knowledge, facts, instructions, and technical support for a product that adds value to the product. E.g. 24 hr. help line Place Utility – making the product accessible for the consumer adds value to the product. E.g. available over the internet & in many stores Time Utility – providing the product in the marketplace when the consumer needs it adds value to the product. E.g. open 24 hours Possession Utility – making a product easy to purchase adds value to the product. E.g. provide credit Service Utility – Providing fast, friendly service during and after the sale and by teaching customers how to best use products over time

16 Section 5.5 Product Development & the Marketing Concept

17 Marketing Concept Today Every business must consider both its potential customers and its competitors in every important business decision. Consumers now realize their power in the market place and demand things; safer cars, healthier choices, better quality etc.

18 Product Development & the Marketing Concept To properly study the consumer’s & competition’s place in product development process, a business might use one or all of the following analytical tools: 1. Product Mapping 2. Market Potential Analysis 3. Benefit Analysis

19 Product Mapping classifying/grouping products together based on various criteria to create competitive segments and using those segments to create a market for a specific product. Can demonstrate individual product attributes that consumers like or dislike.

20 Product Map for Frozen Novelties Easy to eat Ice cream sandwich Popsicle Frozen juice bars Healthy Frozen juice bars Frozen Yogurt Most interesting flavour Packaged ice cream cones Frozen juice bars Least expensive Ice cream sandwich Popsicle Messy Easy to eat Ice cream bar packaged ice cream cone frozen yogurt ice cream sandwich frozen juice bar popsicle Unhealthy/fattening Healthy/low fat Packaged ice cream cone ice cream sandwich ice cream bar Popsicle frozen juice frozen juice bar Boring/traditionalFun/interesting flavours Expensive Inexpensive Popsicle ice cream bar ice cream sandwich frozen yogurt frozen juice bar packaged ice cream cone Packaged ice cream cone frozen juice bar ice cream sandwich frozen yogurt ice cream bar Popsicle

21 Market Opportunity Analysis analysis of where in the market a product could fit. MOA is composed of three distinct parts:  Overall Market –looking at the category your product/service fits into and analyzing every product/service in that category.  Indirect Competition – grouping competitive brands by features. (Frozen desserts – cakes, cookies, pies, ice cream, pudding etc.)  Direct Competition – identifying all competitive brands that compete for a share of the same market.

22 Market Potential Analysis MOA can help determine market potential. (A figure calculated to find out how many people might buy the product being marketed.  MP = N x P x Q  N = number of possible buyers; P = selling price;  Q = the average number of the item that each buyer purchases in a year.

23 Benefit Analysis any feature of a product/service should add utility and provide benefit to the consumer. (Two types)  Feature-Benefit Analysis – looking at each feature and finding the utility and benefit it adds to the product.  Cost-Benefit Analysis – comparison of the estimated costs of an action with the estimated benefits it is likely or intended to produce. (Is it worth changing or producing.)