1. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–17–1 Chapter 7 Product Planning and Development

2. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–27–2 What is a product? A set of tangible or intangible attributes in an identifiable form, which can be identified by a descriptive name, and communicates the idea of a solution to a problem. A product is a set of tangible and intangible attributes including packaging, colour, price, quality and brand, plus the services and reputation of the seller.

3. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–37–3 What are the benefits of this product? Insert Fig 7.1 p 200

4. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–47–4 Classification of products Two product categories: 1Consumer products – Intended for household consumer, non- business use. 2Business products – Intended primarily for producing other products or providing services in a business.

5. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–57–5 Classification of consumer goods Four types of consumer goods: 1Convenience goods. 2Shopping goods. 3Specialty goods. 4Unsought goods.

6. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–67–6 Convenience goods Consumer is familiar with and buys with minimum effort. Typically have a low unit price. Products purchased frequently. Readily accessible and widely distributed. Retailers usually carry several brands, E.g. tobacco, toothpaste batteries.

7. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–77–7 Shopping goods Consumers usually compare price, quality and style. Buying habits affect distribution and promotional strategies. Manufacturers work closely with retailers. Retail stores often buy shopping goods in large quantities and distribution direct from manufacturers to the retailer is common. E.g. appliances, furniture.

8. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–87–8 Specialty goods Consumer: – Has strong brand preference. – Is willing to forgo more accessible substitutes. – Is willing to invest time and effort in product search. – Fewer store outlets. – E.g. sound equipment.

9. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–97–9 Unsought goods Consumer goods that are not yet known or that are not yet needed. Seller must place emphasis on demonstrating that consumers might have a need for this product.

10. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–10 Classification of business goods Five categories: 1Raw materials—goods in their natural state. 2Fabricated materials and parts—they become part of the product. 3Installations—manufactured business products. 4Accessory equipment—used in the production operations of a business. 5Operating supplies—aid in the firm’s operation.

11. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–11 Services A clear definition is difficult, although services are invariably marketed together with physical goods. Insert Fig 7.2 p 210

12. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–12 Classification of services Several categories exist: – Consumer services. – Business services. – Delivery method. – Customer involvement.

13. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–13 Things to know about services Services can be classified according to whether they are delivered mechanically or by people. E.g. ATM vs bank teller. A consistent delivery standard should apply. Security, reliability and location of the mechanical service. Training, motivation and ability of customer service staff. The extent to which a customer is involved in the delivery of the service, e.g. self-serve.

14. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–14 Product innovation Product innovation is becoming increasingly important owing to rapid advancements in technology and successful product copying by competitors.

15. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–15 The importance of product innovation Need for growth—products, like people, go through life cycles. Increased consumer selectivity—not spending as freely. Resources and environmental considerations— environmental factors will influence product decisions.

16. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–16 It has been said that nothing happens in business until somebody sells something. First there must be something to sell! Development of new products

17. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–17 What is a ‘new’ product? Products that are truly innovative. – E.g. cure for cancer. – Products that have no existing substitutes. Innovative replacements for existing products. – Product is significantly different from existing products. – E.g. digital HDTV. Imitative products that are new to a particular company. – Imitation products are new to that company, not to the market.

18. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–18 New product strategy Defending market share position. Maintaining the company’s position as a product innovator. Meeting a specific ROI goal. Establishing a position in a new market.

19. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–19 Stages in the new product development process Insert Fig 7.3 p 214

20. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–20 Adding a new product! Do enough people really want this product? DEMAND Is there a FINANCIAL fit for the firm? Will it create environmental issues? What is the present marketing structure?

21. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–21 New product adoption and diffusion Adoption process. A set of successive decisions an individual or organisation makes before accepting an innovation. Stages in adoption process: Awareness  Interest  Evaluation  Trial  Adoption  Post-adoption confirmation. Diffusion: The process by which an innovation is spread through a social system over time.

22. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–22 Adopter categories Researchers have identified five categories of individual adopters for new products: 1Innovators — 3% of the market. 2Early adopters — 13% of market. 3Early majority — 34% of market. 4Late majority — 34% of market. 5Laggards — 16% of market. Non-adopters never accept the innovation.

23. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–23 The product life cycle (PLC) Profit Sales Volume INTRODUCTIONGROWTHMATURITYDECLINE Insert Fig 7.4 p 221

24. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–24 The product life cycle  Definition—The stages that a product moves through from its introduction to the market to its disappearance from the market.  Used for product planning.  Product’s profit and sales.  There are four stages of the PLC.

25. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–25 PLC  INTRODUCTION STAGE  Profits are non-existent.  No awareness.  Large amounts of advertising.  The most critical stage.

26. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–26 PLC  GROWTH STAGE  Trial of the product.  Increase in distribution.  Competitors enter the market.  Profits increase.

27. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–27 PLC  MATURITY STAGE  Prospect of saturation of competition.  Lower prices owing to competition.  Persuasive promotion takes place.

28. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–28 PLC  DECLINE STAGE  New products replace old.  Sales and profits decline.  Products withdrawn from the market.

29. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 7–29 Planned obsolescence The objective is to make an existing product out of date, thus increasing the market for replacement products. Some firms plan obsolescence as part of their strategic marketing plan.