Chapter 5 Product Development Mr. Raposo King City Secondary School

Game Plan  Presentations (retail websites)  Its not easy being green! Its not easy being green! Its not easy being green!  Natureanthem Natureanthem  Toyota Prius-HybridSynergy Drive Toyota Prius-HybridSynergy Drive Toyota Prius-HybridSynergy Drive  Chapter 5.1 handout  Bombardier-discussion & question #2  Chapter 5 PowerPoint

Chapter Overview  5.1 Marketing and Product Development  5.2 Invention of Innovation?  5.3 The Stages of Product Development  5.4 Product Development & Utility  5.5 Product Development & the Marketing Concept

5.1 Marketing and Product Development  2 questions asked before developing a product:  “Can we produce it?” (Production) and “Can we sell it?” (Marketing)  Marketers use the production data to develop a price strategy, then research the competitive market to develop positioning strategies, distribution channels and promotional plans  Product development is ongoing and major marketing activity  Feasibility study – a study used to determine if any business opportunity is possible, practical, and viable  All businesses use a feasibility study before developing a new product or a new business venture

5.2 Invention of Innovation?  Invention – new devices, methods or processes developed from study and experimentation, done to meet consumer needs  Innovation – is a product or service that uses new technology, items, or processes to change the methods used to produce products or to change the ways used to distribute them  - Inventors tend to sell or license their ideas to others who how to develop products for the marketplace

5.3 The Stages of Product Development 1. Idea Generation – brainstorming whether an innovation or invention is to be done 2. Idea Screening – Not all ideas good, need to look at each idea to see if it is worthwhile 3. Concept Development – Designing of a prototype (sample of what the product might look like), market tested 4. Market Strategy – Use previous observations or conducting new market research 5. Feasibility Study – Looking at the features and design of the product that the consumers want, materials determine the price, and calculate costs to determine products 6. Product Design – Looks at market preferences, versatility, and the extras that are needed 7. Test Marketing – Test acceptance of the product, if positive will launch product, if not, will make the necessary changes 8. Market Entry – Product enters the product life cycle, and the consumer determines how long the product lasts on the market

MarketEntryTestMarketing Product Design Feasibility Study Market Strategy Concept Development Idea Screening Idea Generation 5.3 The Stages of Product Development

5.4 Product Development & Utility  Product Development and Utility  Utility – What is added to a product to make it valuable to the market, and which influences the value equation

5.4 Product Development & Utility  Form Utility – relationship between a product or services form and its function, referring to the look, the function, scent, flavour, colour, design and packaging  Function – what product is intended to do, form follows function since what the product is meant to do will often dictate what it looks like  Information Utility – provides consumers with instructions, directions, and user manuals, usually delivered by advertising and from others  Place Utility – makes it possible for the consumer to purchase the product, the easier the product is to find, the more place utility it has. (I.e. having a ski shop near a ski resort)  Time Utility – when the product or service is available when the consumer wants it (i.e. having pumpkins for Thanksgiving and Halloween)  Possession Utility – easy to purchase, fairly reasonable in price (i.e. providing credit to consumers, ease of use to purchase the product)

5.5 Product Development & the Marketing Concept  The marketing concept is the idea that consumes and competitors should be considered in every important business decision  Product Mapping – conducting research to see what consumers like and dislike about the existing products and what is missing. Usually involved is a group of products on a table and ask research participants to group the items using the most common factors that they perceive.

5.5 Product Development & the Marketing Concept  Marketing Opportunity Analysis (MOA) – situational analysis that defines opportunities or market situations for a specific brand, with three distinct parts.  Overall Market – what all competitors are  Indirect Competition - group the competitive brands by features  Direct Competition – identify all competitive brands that compete for a share of the same market  MP = N x P x Q (number of possible buyers X average selling price X average number of items that are purchased in a year)

5.5 Product Development & the Marketing Concept  - Need to do a cost-benefit analysis to compare the estimated costs of an action with the estimated benefits that are likely or intended to produce

Homework  Refer to website