© south-western publishing develop a new product 10.1 10.1 what is a product? 10.2 10.2 components...

© South-Western Publishing

DEVELOP A DEVELOP A NEW PRODUCTNEW PRODUCT

10.110.1 What Is a Product?10.210.2 Components of a New Product10.310.3 Product Market Classifications10.410.4 Developing Successful New Products


WHAT IS A PRODUCT?WHAT IS A PRODUCT?

GOALSGOALS for Lesson 10.1Explain 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.


More Than Just a Tangible More Than Just a Tangible ObjectObjectProduct – 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)


Product Development as a Product Development as a Marketing FunctionsMarketing Functions “5 out of every 10 new product ideas will

be unsuccessful”

The role of marketing Marketing activities in product

developmentThe product planning function


The role of marketingThe role of marketing

Businesses must understand and apply the marketing conceptProducts that meet customer needs vs.

Products that do not meet customer needsEasier to sell, increase brand image, return

customersTough for sale people, consumers not happy,

consumers will not buy your companies products


Marketing activities in Marketing activities in product developmentproduct 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 planningTypes 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


The product planning The product planning functionfunctionMarketers need to work cooperatively

with the individuals in product development in order to meet the needs of the consumers.


Marketing Supports Marketing Supports Product DevelopmentProduct Development

Gathering Information

Designing Effective

Marketing Strategies

Testing Marketing Mixes

Customers Companies

Product Development


COMPONENTS OF A COMPONENTS OF A NEW PRODUCTNEW PRODUCTGOALSGOALS for Lesson 10.2Show 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.


Parts of the Product Mix Parts of the Product Mix ElementElement

Basic productFeaturesOptionsServices

Brand namePackagingGuaranteeUses

Example – Tooth Brush


Designing a ProductDesigning a ProductBasic 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


Product Mix ComponentsProduct Mix ComponentsProduct 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)


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.

Levels of Brand RecognitionLevels of Brand Recognition


PRODUCT MARKET PRODUCT MARKET CLASSIFICATIONSCLASSIFICATIONSGOALSGOALS for Lesson 10.3Define 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.


The Product/Service The Product/Service Classification SystemClassification SystemThe system is based on two factors:The importance of the purchase to the

consumerThe willingness of the consumer to

shop and compare products before making the purchase


Classifying Products for Classifying Products for the Consumer Marketsthe Consumer MarketsConvenience goods – staple, impulse,

emergencyShopping goods – price, attributeUnsought goodsSpecialty goods

Direct Demand – quantity of a product needed to meet the needs of the consumer


Classifying Products for Classifying Products for the Consumer Marketthe Consumer MarketConvenience 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


Business MarketsBusiness MarketsCapital equipment – land, buildings, large pieces of

equipmentOperating equipment – tools, small machines,

furnitureSupplies – office supplies, parts for repairsRaw materials – unprocessed material used in

productionComponent 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.


Planning Products for Planning Products for Consumer and Consumer and Business MarketsBusiness MarketsNeed to know if the customer is the

final consumer or a business consumerSome products are sold to both

consumer markets and business markets


DEVELOPING SUCCESSFUL DEVELOPING SUCCESSFUL NEW PRODUCTSNEW PRODUCTS

GOALSGOALS for Lesson 10.4Understand what businesses mean by

“new” products.Describe the six steps in new product

development.


What Is a New Product?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 waySix-month time limit


The Steps in New Product The Steps in New Product DevelopmentDevelopmentIdea development

Gathering information from consumersOrganizing panelsRegular meetings with employeesIdentifying problems that consumers haveBrainstorming, creative thinking exercises


The Steps in New Product The Steps in New Product DevelopmentDevelopmentIdea 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?


The Steps in New Product The Steps in New Product DevelopmentDevelopmentStrategy 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)


The Steps in New Product The Steps in New Product DevelopmentDevelopmentFinancial Analysis

Cost of production and marketingSales projections for the target marketCalculations of profitsScenario analysis (worst case vs. best

case)


The Steps in New Product The Steps in New Product DevelopmentDevelopmentProduct Development and Testing

Designing the production processObtaining the needed equipment and

materialsTraining the production staffIdentifying a producer or manufacturerDesign a prototype to be tested

quality and cost / used in the test market


The Steps in New Product The Steps in New Product DevelopmentDevelopmentProduct Marketing

Introduction into the marketCooperating companies must be involved

(wholesalers, retailers, transportation companies, ad agencies

Production levels must be high enoughAll activities must be coordinated


Introduction StageIntroduction Stagecompeting against older, established

productsbusinesses need to identify those that are

dissatisfied with the current problemsproduct should be basic and not too

complicatedguarantees and warrantiesnot widely distributed – test marketsprice usually highpromotion needs to inform the customer


Distribution, Price, and Distribution, Price, and PromotionPromotion Distribution Distribution is the marketing mix element that

facilitates the physical exchange of products and services between businesses and their customers

PricePrice 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.

PromotionPromotion includes the methods and information communicated to customers to encourage purchases and increase their satisfaction.


DistributionDistribution

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?


PricePrice

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?


PromotionPromotionWill 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?

© south-western publishing develop a new product 10.1 10.1 what is a product? 10.2 10.2 components...

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