in your opinion, what was the most important product ever invented? why?
TRANSCRIPT
In your In your opinion, what opinion, what was the most was the most
important important product ever product ever
invented? invented? Why?Why?
Product DevelopmentProduct Development
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Product DevelopmentProduct Developmentmarket research
customer wants
business opportunities
businesses decide whether or not
to provide product/service to satisfy customers’ wants/needs
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Product DevelopmentProduct DevelopmentTwo important questions:
•can we produce it?•can we sell it?
To answer them...
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Product DevelopmentProduct DevelopmentThe production & design team says if a product can be produced based on info gathered during market research.
•do they have the facilities and technology to create product
•costsHelps marketing department set price.
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Product DevelopmentProduct DevelopmentMarketing department answers “can we sell it”:
•production data helps set price
•research competition•develop positioning strategies, distribution, promotion
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Product DevelopmentProduct Development
Marketing department answers “can we sell it”:
•consumer testing•give results to production and design team
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Product DevelopmentProduct DevelopmentAll businesses need to
engage product development at the beginning of a new venture. It is an ongoing, major activity.
The cooperation between the marketing and production is complex and constant.
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Product DevelopmentProduct DevelopmentTo start, a company does a
feasibility study to determine if a business opportunity is possible, practical, and viable.
All businesses perform feasibility studies, some more formal and complex than others.
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Product DevelopmentProduct Development
Invention or Innovation?Invention is the creation
of a completely new product, method, or device. Businesses use inventions to create original solutions to meet consumer needs.
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Product DevelopmentProduct Development
Invention or Innovation?Innovation is the change
of an existing product to use new technology, items or processes.
There are more innovators than inventors. Innovators look at ways to improve on existing products, methods or devices.
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Product DevelopmentProduct Development
Stages of Product Development
Marketers use innovations and inventions to make profit. Inventors usually sell or license ideas to others.
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Product DevelopmentProduct Development
Stages of Product Development
Innovators are usually marketers; they are motivated by profit:
better product=
competitive advantage
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Product DevelopmentProduct Development
Stages of Product Development1. Idea Generation
Market research reveals consumers want a new or modified product. Or, marketers ask “how can we improve our product to improve sales?”
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Product DevelopmentProduct Development
Stages of Product Development2. Idea screening
Not all ideas are good—need to see consumer reaction to the new idea, and look at competition. Many factors need to be taken into account.
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Product DevelopmentProduct Development
Stages of Product Development3. Concept development
A prototype is made: a sample of what the product will look like and how it operates: Does it work? Consumers like it? Cost?
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Product DevelopmentProduct Development
Stages of Product Development4. Market strategy
Use market research to establish primary and secondary market. Develop marketing strategy and marketing plan to target primary market.
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Product DevelopmentProduct Development
Stages of Product Development5. Feasibility study
Often done at same time as steps 4 and 6. Can it be made and sold so that it is:
•affordable for the consumer, and
•profitable for the company?
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Product DevelopmentProduct Development
Stages of Product Development6. Product design
Use preferences of primary market. This includes features such as warranty, instruction manual, packaging, service information.
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Product DevelopmentProduct Development
Stages of Product Development7. Test marketing
Get the product into the hands of people who fit your primary market profile. Have them use it for a period of time, complete survey to make suggestions.
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Product DevelopmentProduct Development
Stages of Product Development8. Market entry
Start of product life cycle, product is introduced to the market.
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Product DevelopmentProduct Development
BRAINSTORM
Go through the PD Stages to come up with
improvements for the product on your table
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Product Development & UtilityProduct Development & Utility
Most businesses focus on product innovation. By making modifications to an existing product, the value equation is influenced by adding utility to an item.
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Product Development & UtilityProduct Development & Utility
UTILITY•what is added to the product to make it more valuable
•affects the value equation by providing the customer with something they didn’t have before
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Product Development & UtilityProduct Development & Utility
UTILITYcould be:•benefit (ie. easier to use)•difference (ie. new flavour)
•information on use (ie. baking soda not just for baking)
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Product Development & UtilityProduct Development & Utility
Form Utility•a relationship between the
product’s form and function
form - what it looks likefunction - what it should do
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Product Development & UtilityProduct Development & Utility
Form Utility• form follows function—
what the product does dictates what it looks like
• innovations in production and technology effect form
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Product Development & UtilityProduct Development & Utility
Form Utility•can add value by making
a product more attractive•also takes into
consideration material, scent, flavour, colour, design, packaging
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Product Development & UtilityProduct Development & Utility
Information Utility• provide the consumer with
instructions, directions, manuals
• examples: service reps, internet sites, 24-hour hotlines
• also provided through advertising, on packaging
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Product Development & UtilityProduct Development & Utility
Place Utility• putting the product where
the consumer can purchase it
• the easier, the more place utility
• examples: web sites with on-line ordering, home delivery
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Product Development & UtilityProduct Development & Utility
Time Utility• Providing product or service
when the consumer wants it• examples: internet shopping
and banking, 24 hour stores, extended hours
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Product Development & UtilityProduct Development & Utility
Possession Utility• making it easy for the
consumer to purchase the product
• examples: installment payment plans, credit cards, discounts on cash purchases, loans, lower costs, etc.
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Product Development & UtilityProduct Development & Utility
Tell me one thing about one of the utilities:
•form utility•information utility•place utility•time utility•possession utility
Product Development Product Development and the Marketing and the Marketing
ConceptConcept
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
Marketing Concept:•consumers and
competitors should be considered in every important business decision.
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
Product Mappingmarketer will research:
•what is already on the market
•what do consumers like/dislike about products
•what is missing from the market
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
Process• Consumers group items by
factors using their perception• place products on product
mapSee chart on page 193
• ask consumers about importance of factors
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
• if there is a void in factors, or product is lacking, the manufacturer may improve that
• process is not important to show what the product is, it’s used to show what it’s not
• goal: find what the product lacks, innovate and improve it
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Product MappingProduct Mappingunhealthy healthy
sweet not sweet
inexpensive expensive
Crush Orange Store OJ RealJuice
Crush Orange RealJuice Store OJ
Crush Orange Store OJ RealJuice
Put into correct order…Put into correct order…Concept developmentProduct designMarket entryIdea generationMarket strategyTest marketingFeasibility studyIdea screening
36814752
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
Marketing Opportunity Analysis
•also called situational analysis
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
Part I: Overall Market• identify category
•broad, includes every type of product in the category
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
Part II: Indirect competition
• group competitive brands by features
• classifications are further simplified to create direct and indirect competition categories
• only addressed after all direct competition opportunities exhausted
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
Part III: Direct competition
• identify competitive brands which compete for the same market
• examine for gaps, identify if the market is
•not big enough for another brand
•an opportunity
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
• decide whether or not to enter a market based on market potential.
• Overall market potential = number of possible buyers times average price of product times number bought per year
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
MP = N x P x Q
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
MP = N x P x QMP for potato chips in CambridgeNumber of customers: 30,000Avg price of product: 1.50Avg quantity bought/year: 50Market potential: $2,250,000
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
MP = N x P x QMP for hockey sticks in CanadaNumber of customers: 2,000,000Avg price of product: 50.00Avg quantity bought/year: 1Market potential: $100,000,000
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Prod. Dev’ment & the Mktg ConceptProd. Dev’ment & the Mktg Concept
MP = N x P x QMP for Benny’s uniformNumber of customers: 1,600Avg price of product: 40.00Avg quantity bought/year: 8Market potential: $512,000
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Let’s see what you Let’s see what you know...know...
Pick a product you’re familiar with. On a separate sheet of paper create a chart like the one on pg. 202 to explain how the producer provides: form, place, information, time and possession utility (where applicable). Leave space for a column for benefit analysis (today’s topic).
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Benefit AnalysisBenefit AnalysisAlong with adding utility, a
feature should create a benefit. Products need to satisfy consumer needs/wants and add to the value equation.
A feature-benefit analysis connects each factor to the utility and benefit created for the consumer.
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Benefit AnalysisBenefit Analysis
Once this is completed, the data can be used in a cost-benefit analysis: estimated cost of feature
in comparison to the
benefit it gives.
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Benefit AnalysisBenefit Analysis
Information is contributed by marketing, finance, production, and research departments to see if a benefit to the consumer is worth the cost to the company.
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Benefit AnalysisBenefit AnalysisFOR THE REST OF PERIOD• Finish reading to end of pg. 197• Complete activity from start of
class by completing benefit analysis column (see pg. 202)
• Answer reflection question at end of pg. 201
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