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CHP 8: Product I

by: haemily

CHP 8: Product I MKTG 2101


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About this Document

innovation + new product development
marketing management
Craig Atwater
Class Notes
Marketing, Temple University, business
25 ?




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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 


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