1. DEVELOP A NEW PRODUCT 10.1 What Is a Product?
CHAPTER 10
4/23/2017
DEVELOP A NEW PRODUCT
10.1 What Is a Product?
10.2 Components of a New Product
10.3 Product Market Classifications
10.4 Developing Successful New Products
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MARKETING

2. WHAT IS A PRODUCT? GOALS for Lesson 10.1
Explain that, for consumers, products are more than just the tangible objects that are offered for sale.
Describe the role of marketing in keeping the focus on consumers during product development.
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3. More Than Just a Tangible Object
Product – anything tangible offered to a market by the business to satisfy needs.
“More than an item” – physical characteristics (durable, attractive, safe), must be useful and meet needs
“Consumers know best” – business people vs. consumers interest (car example)
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4. Product Development as a Marketing Functions
“5 out of every 10 new product ideas will be unsuccessful”
The role of marketing
Marketing activities in product development
The product planning function
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5. The role of marketing
Businesses must understand and apply the marketing concept
Products that meet customer needs vs. Products that do not meet customer needs
Easier to sell, increase brand image, return customers
Tough for sale people, consumers not happy, consumers will not buy your companies products
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6. Marketing activities in product development
“Marketing is the eyes, ears, and mouth of the customer in a business”
Gathering information – study the results and use it to assist with planning
Types of information, ways of collecting info
Designing strategies – different strategies will apply to different products or situations
Testing marketing mixes – test marketing, focus groups, panels
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7. The product planning function
Marketers need to work cooperatively with the individuals in product development in order to meet the needs of the consumers.
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8. Marketing Supports Product Development
Gathering Information
Designing Effective Marketing Strategies
Testing Marketing Mixes
Customers
Companies
Product Development
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9. COMPONENTS OF A NEW PRODUCT
GOALS for Lesson 10.2
Show how even a very simple product can be a complex mix of a basic item with assorted features.
Describe the three steps of the product design process.
Explain the importance of product lines, packaging, and brand development.
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10. Parts of the Product Mix Element
Basic product
Features
Options
Services
Brand name
Packaging
Guarantee
Uses
Example – Tooth Brush
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11. Designing a Product
Basic product – readily identifiable product in its simplest form, able to easily see the need, similar to competitors (computer, shampoo, bike)
Enhanced product – features, options, colors, quality, brand names, packaging
Extended product – services, guarantees, information on effective use, additional products to improve the product
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12. Product Mix Components
Product line – a group of similar products with slight variations in the marketing mix to satisfy different needs in a market
Variation in quantity
Variation in quality
Product Assortments – complete set of all products a business has to offer
Packaging
Ease of use
Safety
Attraction
Handling
Environment
Brand development
Brand – name, symbol
Trademark – legal
Licensed Brand – selling (Disney, sports)
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13. Levels of Brand Recognition
Non-recognition
Consumers are unable to identify the brand.
Rejection
Consumers will not purchase the product because of the brand.
Recognition
Consumers can recall brand name but it has little influence on purchases. They reject other brands.
Preference
Consumers view the brand as valuable and will chose it if available.
Insistence
Consumers value the brand to the extent that they reject other brands.
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14. PRODUCT MARKET CLASSIFICATIONS
GOALS for Lesson 10.3
Define consumer markets and describe what is meant by direct demand.
Define business markets and explain the business product classification system.
Understand the importance of product classifications for product planning.
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15. The Product/Service Classification System
The system is based on two factors:
The importance of the purchase to the consumer
The willingness of the consumer to shop and compare products before making the purchase
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16. Classifying Products for the Consumer Markets
Convenience goods – staple, impulse, emergency
Shopping goods – price, attribute
Unsought goods
Specialty goods
Direct Demand – quantity of a product needed to meet the needs of the consumer
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17. Classifying Products for the Consumer Market
Convenience Goods
Staple goods – bread, milk, snacks
Impulse goods – unplanned purchases
Emergency goods – repairs, medical services
Shopping Goods
Attribute / Qualities -based goods
Price-based goods
Specialty Goods – brand loyalty, well known, delay purchase
Unsought Goods – life insurance, preparing a will
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18. Business Markets
Capital equipment – land, buildings, large pieces of equipment
Operating equipment – tools, small machines, furniture
Supplies – office supplies, parts for repairs
Raw materials – unprocessed material used in production
Component parts – partially or totally processed parts
Derived Demand – the quantity of a product or needed by a business in order to operate at a level that will meet the demand of its customers.
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19. Planning Products for Consumer and Business Markets
Need to know if the customer is the final consumer or a business consumer
Some products are sold to both consumer markets and business markets
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20. DEVELOPING SUCCESSFUL NEW PRODUCTS
GOALS for Lesson 10.4
Understand what businesses mean by “new” products.
Describe the six steps in new product development.
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21. What Is a New Product? Is it really new?
Federal Trade Commission regulates the use of the term “new.”
Entirely new or changed in an important and noticeable way
Six-month time limit
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22. The Steps in New Product Development
Idea development
Gathering information from consumers
Organizing panels
Regular meetings with employees
Identifying problems that consumers have
Brainstorming, creative thinking exercises
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23. The Steps in New Product Development
Idea Screening – evaluate ideas
Is there an identified market for the product?
Is the competition in the market reasonable?
Do we have or can we obtain the resources to produce the product?
Is the product legal and safe?
Can we produce a quality product at a reasonable cost?
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24. The Steps in New Product Development
Strategy Development –
1. Create and test a sample marketing strategy (research to clearly identify an appropriate target market and insure that customers exists)
2. Marketing mix is planned and analyzed (product, distribution, price, promotion)
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25. The Steps in New Product Development
Financial Analysis
Cost of production and marketing
Sales projections for the target market
Calculations of profits
Scenario analysis (worst case vs. best case)
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26. The Steps in New Product Development
Product Development and Testing
Designing the production process
Obtaining the needed equipment and materials
Training the production staff
Identifying a producer or manufacturer
Design a prototype to be tested
quality and cost / used in the test market
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27. The Steps in New Product Development
Product Marketing
Introduction into the market
Cooperating companies must be involved (wholesalers, retailers, transportation companies, ad agencies
Production levels must be high enough
All activities must be coordinated
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28. Introduction Stage competing against older, established products
businesses need to identify those that are dissatisfied with the current problems
product should be basic and not too complicated
guarantees and warranties
not widely distributed – test markets
price usually high
promotion needs to inform the customer
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29. Distribution, Price, and Promotion
Distribution is the marketing mix element that facilitates the physical exchange of products and services between businesses and their customers
Price as a marketing mix element is defined as the amount a buyer pays as well as the methods of increasing the value of the product to the customers.
Promotion includes the methods and information communicated to customers to encourage purchases and increase their satisfaction.
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30. Distribution
Where will the customer be best able to obtain the product?
Where will the customer use the product?
Are there special requirements to transport, store or display the product?
When should distribution occur?
Who should be responsible for each type of distribution activity?
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31. Price
Does the business want to increase sales, increase profits, or enhance image of the product?
Should price be based on cost, what customers are willing to pay, or what competitors are charging?
Will there be one price for all customers, negotiation, discounts?
Will the price be clearly communicated?
Are there things that clearly satisfy the customer and make the product better and more valuable than alternatives?
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32. Promotion
Will the audience for the promotion be a general market or specific segment?
Is the specific goal of promotion to increase knowledge, to change attitudes, or influence behavior?
What specific information does the audience need?
What means of promotion will be most effective?
How much money is needed for effective marketing?
What information does the business need from consumers?
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