Chapter 1

A product is a good or a service Product Planning comprised of two elements

Product development Conceive, develop, produce, and test

Product management Commercialized, sustained, eventually withdrawn

These two elements combine for a “cradle to grave” cycle of products

Same basic cycle for consumer products and services and commercial products and services

Resource Allocation All companies are resource-constrained People, time, money

Product Mix coordination Optimal mix of products to fill market targets

Marketing Program support Information about product performance

Product Portfolio evaluation Cash, profitability, market position, strategic

value

Inventions versus innovations Inventions are not products; they are technical

devices Innovations are inventions with a marketing

program Continuous innovation – “new and improved” Discontinuous innovation – “new category”

Core benefit surrounded by attribute layers

Expected Product

Generic Product

Core Benefi

t

Expected Product

Augmented Product

Potential Product Potential – All future features

And capabilities of the product

Augmented – Differentiatedfeatures and capabilities

Expected – Base set of buyer’sexpectations about product

Generic – very basic form of product

Core – fundamental service being acquired

Core Benefit – shelter Generic product – YMCA or youth hostel Expected product – Motel 6 Augmented product – Hilton with

concierge, mini-bar, flat screen HD TV Potential product – Disney arranges air

transport, airport shuttle, baggage transfer, pleasant bungalow with kitchen, meals, laundry service – all the comforts of home while on vacation

Companies can provide product for each layer Marriott portfolio

Generic – Fairfield Inn Expected – Courtyard, Residence Augmented – Marriott Hotels, Marriott Suites Potential – Marriott Resorts

Product line – a group of closely related product items Internal resource maximization Positioning signals to consumers

Product mix – combination of product lines Pillsbury example page 13

Cost Improvements possibly same item with cost reductions (different

than price reduction) Product Improvements

New and improved features Line Extensions

Tartar control toothpaste, whitening toothpaste Market Extensions

Arm and Hammer toothpaste, laundry detergent New Category Entries

Kodak selling batteries New-to-the-World Products

Cell phone, DVD player, etc.

One-third of a companies sales come from products introduced in the past 5 years

Over 90% of product concepts fail during product development process

Of the ones that make it to market, about a third fail 31% of commercial products, 46% of consumer

products 27% of product line extensions fail 31% of new brands in existing categories

fail 46% of new products in new categories fail

Not listening in Product Management class! Lack of marketing orientation – listening to

customers Driven by engineering – the better

mousetrap Rushed or incomplete product development

process Lack of a defined product development

process Not doing proper market/competitor

surveillance

Chapters 2-4 – envisioning process Chapters 5-6 - conceptualizing steps Chapter 7 – developing and producing steps Chapters 8-9 – developing and testing steps Chapter 10 – sustaining and disposing Chapter 11 – special topics area Chapter 12 – best practices and key learnings We’ll go through a competition simulation as

well