CHP 8: Product I
CHP 8: Product I MKTG 2101
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This 5 page Class Notes was uploaded by haemily on Sunday March 6, 2016. The Class Notes belongs to MKTG 2101 at Temple University taught by Craig Atwater in Fall 2015. Since its upload, it has received 74 views. For similar materials see marketing management in Marketing at Temple University.
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Date Created: 03/06/16
8: PRODUCT 1 INNOVATION AND NEW PRODUCT DEVELOPMENT 1. EXPLAIN HOW VALUE IS DERIVED THROUGH DIFF. PRODUCT LAYERS BUILD A BETTER MOUSETRAP + ADD VALUE ★ better product does not guarantee success // need to keep in mind consumer preferences, provide benefits people want ★ marketers task ○ create a better value than currently exists ○ convince customers your product is better ★ a product = a bundle of attributes ○ attributes: features, functions, benefits, + uses such as packaging and the brand ★ develop the value proposition by creating and marketing products innovatively ○ “If the product ain’t right, the rest don’t matter.” LAYERS OF THE PRODUCT CONCEPT ★ a product is like a gift // includes everything the customer receives such as presentation and packaging ★ 3 layers of product ○ core product: all the benefits the product will provide ■ “A marketer sells a drill, but a customer buys a hole” ← people buy the core product for its benefits, what it does ○ actual product: the physical good/service ■ ex: washing machine ● core = clean clothes ● actual = square, metal machine ■ includes unique features such as appearance, styling, package, and brand name ○ augmented product: actual + supporting features (warranty, credit, delivery, installation, repair) ■ helps a product stand out ★ task = how to satisfy/add value @ each of 3 layers 2. DESCRIBE HOW MARKETERS CLASSIFY PRODUCTS ★ product categories are based on differences in ○ how consumers feel ○ how consumers purchase HOW LONG DO PRODUCTS LAST? durable goods nondurable goods provide benefits over long periods of time provide benefits over short period of time ex: cars, furniture, appliances ex: food, newspapers← become high involvement decision making irrelevant low involvement decision making HOW DO CONSUMERS/BUSINESSES BUY PRODUCTS? CONSUMERS BIZ convenience products: nondurable, equipment: products org uses in daily purchased frequently, minimal effort // usuallyoperations, last a long time lowprice and widely available focus on brand awareness and obtainability TYPES OF CONVENIENCE PRODUCTS staples: basic/necessary, avail. everywhere consumer packaged good (CPG) / fast moving consume good (FMCG: inexpensive, used quickly, replaced frequently, more brandcentric than staples + used to build foot traffic, increasing impulse and shopping products impulse product: spur of the moment shopping products: considerable time and maintenance, repair, operating (MRO): effort spent gathering info + comparing consumed in short period of time ex: light bulbs, paper,. nuts + bolts speciality products: have unique raw materials: products of fishing, lumber, characteristics important to the buyer // high ag., and mining industries purch. by orgs to brand loyalty, extended problem solving make finished products unsought products: little awareness/interest processed materials + special services: until brought to consumer’s attention transformation of raw materials ex: lumber made into a deck component parts: manufactured goods orgs use to make their products ex: silicon chips for a computer 3. UNDERSTAND THE IMPORTANCE AND TYPES OF PRODUCT INNOVATIONS “NEW AND IMPROVED!” THE PROCESS OF INNOVATION ★ def. of a new product (FTC) ○ entirely new or changed significantly ○ 6 month period ★ innovation: anything customers perceive as new and different TYPES OF INNOVATION ★ continuous: modification of existing product that sets brand apart from competitors ○ easy to convince consumers to adopt product bc consumers don’t need to learn anything new ○ gives users added benefits ★ dynamically continuous: change that requires moderate amt of learning/behavior change ★ discontinuous: totally new, major changes in the way we live ○ ex: Wright Brothers → airplane ○ convergence: merge of 2+ technologies to create new system w/ greater benefits ★ Innovation Score Card measures innovation (pg 232) ○ firm strategy ○ firm culture ○ outcomes of innovation 4. SHOW HOW FIRMS DEVELOP NEW PRODUCTS NEW PRODUCT DEVELOPMENT ★ research and development (R&D): systematic approach to how a firm innovates. ★ 7 phases of new product development (NPD) PHASE 1: IDEA GENERATION (IDEATION) use sources to generate ideas that 1) provide benefits 2) compatible w/ company mission value cocreation/crowdsourcing focus groups PHASE 2: P. CONCEPT DEVEL. + product concept = features+benefits SCREENING failure more freq. than success screen p. for commercial AND technical value PHASE 3: MARKETING STRAT. + DEVEL. intro p. to marketplace identify ™ plan marketing mix elements PHASE 4: BIZ ANALYSIS is the p. profitable? measure potential demand sufficient resources to devel and intro? PHASE 5: TECHNICAL DEVEL. engineers + marketers refine design +production prototypes, sometimes patents PHASE 6: TEST MARKETING: testing the cons: expensive, gives competition info marketing plan in a small slice of the market pros: opp. to improve marketing, potential to is the similar to the larger market save $$ by pulling the plug on failures simulated test marketing: computer software to imitate test marketing w/ ability to see impact of price cuts + new packaging PHASE 7: COMMERCIALIZATION p. launch, fullscale production, dist., ad., promo., etc. 5. EXPLAIN THE PROCESS OF PRODUCT ADOPTION AND THE DIFFUSION OF INNOVATIONS ADOPTION + DIFFUSION OF NEW PRODUCTS ★ product adoption: consumers begin to buy + use p. ★ diffusion: the spread throughout a pop. ★ tipping point: point when sales spike, mass market acceptance STAGES IN CONSUMERS’ ADOPTION OF A NEW P. (6) ★ adoption pyramid: process from consumer awareness, interest, eval., trial, adoption, + confirmation (bottom up) ○ people drop out at every stage, people who end up using the innovation = fraction of those who were exposed to it CONFIRMATION weigh expected v. actual costs + benefits reinforce customer’s choice ADOPTION consumer buyers product, but is not yet a perm. customer marketers provide follow up communication to ensure cust. satisfaction + ensure loyalty TRIAL experience/use for first time samples, testdrives EVALUATION weight costs + benefits INTEREST how a p. satisfy existing/newly realized need consumers open to info about the innovation use of teaser ads AWARENESS media blitz: massive ad. campaign over short time frame ADOPTER CATEGORIES INNOVATORS EARLY EARLY LATE LAGGARDS 2.5% ADOPTERS MAJORITY MAJORITY 16% 13.5% 34% 34% adventurous concerned w/ want to avoid older low edu. + risktakers social being first/last conservative income well educated acceptance middleclass below average last to adopt young heavy users of cautious edu + income financially well p. category slightly above risk averse off critical to new p.average income peer pressure success bc + edu. others seek their purch. est. p. opinions P. FACTORS THAT AFFECT THE RATE OF ADOPTION ★ main reason products fail = p. did not satisfy needs better than competition ★ 5 characteristics of innovations that affect rate of adoption ○ relative advantage: degree to which p. provides superior benefits ○ compatibility: consistent w/ existing values, customs, + practices ○ complexity: degree to which p. is difficult to use ○ trialability: ease of sampling a new product ○ observability: visibility of product + its benefits to those who might adopt ■ social media