1. In your opinion, what was the most important product ever invented? Why?

2. Product Development

3. BMI3C Unit 5 Slide 3 Product Development market research  customer wants  business opportunities  businesses decide whether or not to provide product/service to satisfy customers’ wants/needs

4. BMI3C Unit 5 Slide 4 Product Development Two important questions: can we produce it? can we sell it? To answer them...

5. BMI3C Unit 5 Slide 5 Product Development The production & design team says if a product can be produced based on info gathered during market research. do they have the facilities and technology to create product costs Helps marketing department set price.

6. BMI3C Unit 5 Slide 6 Product Development Marketing department answers “can we sell it”: production data helps set price research competition develop positioning strategies, distribution, promotion

7. BMI3C Unit 5 Slide 7 Product Development Marketing department answers “can we sell it”: consumer testing give results to production and design team

8. BMI3C Unit 5 Slide 8 Product Development All businesses need to engage product development at the beginning of a new venture. It is an ongoing, major activity. The cooperation between the marketing and production is complex and constant.

9. BMI3C Unit 5 Slide 9 Product Development To start, a company does a feasibility study to determine if a business opportunity is possible, practical, and viable. All businesses perform feasibility studies, some more formal and complex than others.

10. BMI3C Unit 5 Slide 10 Product Development Invention or Innovation? Invention is the creation of a completely new product, method, or device. Businesses use inventions to create original solutions to meet consumer needs.

11. BMI3C Unit 5 Slide 11 Product Development Invention or Innovation? Innovation is the change of an existing product to use new technology, items or processes. There are more innovators than inventors. Innovators look at ways to improve on existing products, methods or devices.

12. BMI3C Unit 5 Slide 12

13. BMI3C Unit 5 Slide 13 Product Development Stages of Product Development Marketers use innovations and inventions to make profit. Inventors usually sell or license ideas to others.

14. BMI3C Unit 5 Slide 14 Product Development Stages of Product Development Innovators are usually marketers; they are motivated by profit: better product = competitive advantage

15. BMI3C Unit 5 Slide 15 Product Development Stages of Product Development 1. Idea Generation Market research reveals consumers want a new or modified product. Or, marketers ask “how can we improve our product to improve sales?”

16. BMI3C Unit 5 Slide 16 Product Development Stages of Product Development 2. Idea screening Not all ideas are good—need to see consumer reaction to the new idea, and look at competition. Many factors need to be taken into account.

17. BMI3C Unit 5 Slide 17 Product Development Stages of Product Development 3. Concept development A prototype is made: a sample of what the product will look like and how it operates: Does it work? Consumers like it? Cost?

18. BMI3C Unit 5 Slide 18 Product Development Stages of Product Development 4. Market strategy Use market research to establish primary and secondary market. Develop marketing strategy and marketing plan to target primary market.

19. BMI3C Unit 5 Slide 19 Product Development Stages of Product Development 5. Feasibility study Often done at same time as steps 4 and 6. Can it be made and sold so that it is: affordable for the consumer, and profitable for the company?

20. BMI3C Unit 5 Slide 20 Product Development Stages of Product Development 6. Product design Use preferences of primary market. This includes features such as warranty, instruction manual, packaging, service information.

21. BMI3C Unit 5 Slide 21 Product Development Stages of Product Development 7. Test marketing Get the product into the hands of people who fit your primary market profile. Have them use it for a period of time, complete survey to make suggestions.

22. BMI3C Unit 5 Slide 22 Product Development Stages of Product Development 8. Market entry Start of product life cycle, product is introduced to the market.

23. BMI3C Unit 5 Slide 23 Product Development BRAINSTORM Go through the PD Stages to come up with improvements for the product on your table

24. BMI3C Unit 5 Slide 24 Product Development & Utility Most businesses focus on product innovation. By making modifications to an existing product, the value equation is influenced by adding utility to an item.

25. BMI3C Unit 5 Slide 25 Product Development & Utility UTILITY what is added to the product to make it more valuable affects the value equation by providing the customer with something they didn’t have before

26. BMI3C Unit 5 Slide 26 Product Development & Utility UTILITY could be: benefit (ie. easier to use) difference (ie. new flavour) information on use (ie. baking soda not just for baking)

27. BMI3C Unit 5 Slide 27 Product Development & Utility Form Utility a relationship between the product’s form and function form - what it looks like function - what it should do

28. BMI3C Unit 5 Slide 28 Product Development & Utility Form Utility form follows function—what the product does dictates what it looks like innovations in production and technology effect form

29. BMI3C Unit 5 Slide 29 Product Development & Utility Form Utility can add value by making a product more attractive also takes into consideration material, scent, flavour, colour, design, packaging

30. BMI3C Unit 5 Slide 30 Product Development & Utility Information Utility provide the consumer with instructions, directions, manuals examples: service reps, internet sites, 24-hour hotlines also provided through advertising, on packaging

31. BMI3C Unit 5 Slide 31 Product Development & Utility Place Utility putting the product where the consumer can purchase it the easier, the more place utility examples: web sites with on-line ordering, home delivery

32. BMI3C Unit 5 Slide 32 Product Development & Utility Time Utility Providing product or service when the consumer wants it examples: internet shopping and banking, 24 hour stores, extended hours

33. BMI3C Unit 5 Slide 33 Product Development & Utility Possession Utility making it easy for the consumer to purchase the product examples: installment payment plans, credit cards, discounts on cash purchases, loans, lower costs, etc.

34. BMI3C Unit 5 Slide 34 Product Development & Utility Tell me one thing about one of the utilities: form utility information utility place utility time utility possession utility

35. Product Development and the Marketing Concept

36. BMI3C Unit 5 Slide 36 Prod. Dev’ment & the Mktg Concept Marketing Concept: consumers and competitors should be considered in every important business decision.

37. BMI3C Unit 5 Slide 37 Prod. Dev’ment & the Mktg Concept Product Mapping marketer will research: what is already on the market what do consumers like/dislike about products what is missing from the market

38. BMI3C Unit 5 Slide 38 Prod. Dev’ment & the Mktg Concept Process Consumers group items by factors using their perception place products on product map See chart on page 193 ask consumers about importance of factors

39. BMI3C Unit 5 Slide 39 Prod. Dev’ment & the Mktg Concept if there is a void in factors, or product is lacking, the manufacturer may improve that process is not important to show what the product is, it’s used to show what it’s not goal: find what the product lacks, innovate and improve it

40. BMI3C Unit 5 Slide 40 Product Mapping unhealthy healthy sweet not sweet inexpensive expensive Crush Orange Store OJ RealJuice Crush Orange RealJuice Store OJ Crush Orange Store OJ RealJuice

41. Put into correct order… Concept development Product design Market entry Idea generation Market strategy Test marketing Feasibility study Idea screening 3 6 8 1 4 7 5 2 BMI3 C Unit 5 Slide 41

42. BMI3C Unit 5 Slide 42 Prod. Dev’ment & the Mktg Concept Marketing Opportunity Analysis also called situational analysis

43. BMI3C Unit 5 Slide 43 Prod. Dev’ment & the Mktg Concept Part I: Overall Market identify category broad, includes every type of product in the category

44. BMI3C Unit 5 Slide 44 Prod. Dev’ment & the Mktg Concept Part II: Indirect competition group competitive brands by features classifications are further simplified to create direct and indirect competition categories only addressed after all direct competition opportunities exhausted

45. BMI3C Unit 5 Slide 45 Prod. Dev’ment & the Mktg Concept Part III: Direct competition identify competitive brands which compete for the same market examine for gaps, identify if the market is not big enough for another brand an opportunity

46. BMI3C Unit 5 Slide 46 Prod. Dev’ment & the Mktg Concept decide whether or not to enter a market based on market potential. Overall market potential = number of possible buyers times average price of product times number bought per year

47. BMI3C Unit 5 Slide 47 Prod. Dev’ment & the Mktg Concept MP = N x P x Q

48. BMI3C Unit 5 Slide 48 Prod. Dev’ment & the Mktg Concept MP = N x P x Q MP for potato chips in Cambridge Number of customers:30,000 Avg price of product:1.50 Avg quantity bought/year: 50 Market potential:$2,250,000

49. BMI3C Unit 5 Slide 49 Prod. Dev’ment & the Mktg Concept MP = N x P x Q MP for hockey sticks in Canada Number of customers:2,000,000 Avg price of product:50.00 Avg quantity bought/year: 1 Market potential:$100,000,000

50. BMI3C Unit 5 Slide 50 Prod. Dev’ment & the Mktg Concept MP = N x P x Q MP for Benny’s uniform Number of customers:1,600 Avg price of product:40.00 Avg quantity bought/year: 8 Market potential:$512,000

51. BMI3C Unit 5 Slide 51 Let’s see what you know... Pick a product you’re familiar with. On a separate sheet of paper create a chart like the one on pg. 202 to explain how the producer provides: form, place, information, time and possession utility (where applicable). Leave space for a column for benefit analysis (today’s topic).

52. BMI3C Unit 5 Slide 52 Benefit Analysis Along with adding utility, a feature should create a benefit. Products need to satisfy consumer needs/wants and add to the value equation. A feature-benefit analysis connects each factor to the utility and benefit created for the consumer.

53. BMI3C Unit 5 Slide 53 Benefit Analysis Once this is completed, the data can be used in a cost- benefit analysis: estimated cost of feature in comparison to the benefit it gives.

54. BMI3C Unit 5 Slide 54 Benefit Analysis Information is contributed by marketing, finance, production, and research departments to see if a benefit to the consumer is worth the cost to the company.

55. BMI3C Unit 5 Slide 55 Benefit Analysis FOR THE REST OF PERIOD Finish reading to end of pg. 197 Complete activity from start of class by completing benefit analysis column (see pg. 202) Answer reflection question at end of pg. 201 HAND IN TODAY