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Chapter 8: Product Strategy and new-Product Development (product (Product…
Chapter 8:
Product Strategy and new-Product Development
product
Product experience
•
core of delivering value
to the customer
:red_cross: product, :+1::skin-tone-3: promo/ price/ dist. can't save it.
Definition
• Anything that
delivers value
to
satisfy a need or want
• E.g.: physical merchandise, services, events, people, places, organizations, information, or ideas
Product
and
Product Item
Product
• A brand
• E.g Tides detergent
Product item
• Specific version of a product which represents unique size/ features/ price (distinct offerings)
• E.g: Tide powder detergent offers 12 "scents"
Characteristics
Core product
:airplane:
• Translate the essential benefit into
physical, tangible elements
• E.g.: Airline
Enhanced product
:massage::skin-tone-2:
• Additional features, designs, and innovation that exceed expectations
Essential benefit
:globe_with_meridians:
•
Fundamental need
met by the product
• E.g.: Get from point A to B
Product
classifications
By nature of the products
Tangibility
• Physical aspects
Durability
• Length of product usage
By who consumes it
Consumers goods
Shopping goods
• Require further research and comparison across product dimensions (color, size, features, price)
Specialty goods
• A unique purchase made based on a defining characteristic for the consumer
Convenience goods
• Frequently purchased, low-cost, low-involvement
Unsought goods
• Products not seek out and would rather not purchase it
Business goods
• Businesses
buy a vast array of products
that can be classified into three broad areas based on two dimensions: (1) whether or not they are used in the manufacturing process and (2) cost.
•
Materials/ Parts
: Goods incorporated into a finished product
• Companies also
purchase a number of P&S to support business operations
. These can generally be placed on a continuum from low-cost/frequent purchases to very high-cost/infrequent purchases.
• Maintenance, repair, and operating supplies (MRO)
Product
Discrimination
: Create a point of Differentiation
Conformance Quality
product’s ability to deliver on promised features and performance characteristics
Durability
projected lifetime
Performance Quality
build products to the expected performance quality level
Reliability
% of time the product works without failure
Features
Repairability
ease of fixing
Form
size, shape, color
Style
Product Mix
•
All
of the company's
products
• Mix everything
Product Line
• A
subset
of the product mix
• E.g.: 3M has all sorts of post-it products, but there are smaller categories for students/ teachers to browse according to their usage
Product Decisions affect other marketing mix elements
Pricing
•
Pricing individual goods
in a product line
• Different pricing will attempt to target specific markets with unique features following the "good, better, best"
product line strategy
Marketing Communications
•
Degree of communicating a single product item or the brand
• E.g.: 3M communicates its product lines, emphasizing the brand// Häagen-Dazs communicates specific products (ice cream/ yogurt) and product (chocolate/ almond flavor)
•
Allocation of budget
. Popular product or new products?
Width
:
number of product lines
Depth
:
product variations
Consistency
:
how closely related are the product lines
(dist., supply chain etc.)
Product Life Cycle (PLC)
Growth
•
Obj
: Differentiate from competitors
•
Profitability
: Rapid :arrow_up: in sales, healthy profits
•
Mkt Segment
: Established new segments
•
Targeted Consumers
: Early Adopters to majority
•
Competitive Environment
: Many competitors
Introduction
•
Obj
: Build awareness & trial purchase
•
Profitability
: Low sales, high failure rate, high cost
•
Mkt Segment
: nonexistent
•
Targeted Consumers
: Innovators & early adopters
•
Competitive Environment
: :arrow_down: competitors
Maturity
•
Obj
: Transition produc from :arrow_up: growth to sales stability
•
Profitability
: :arrow_up: sales at a decreasing rate
•
Mkt Segment
: Mkt approaching saturation (peak)
•
Targeted Consumers
: Majority
•
Competitive Environment
: Marginal competitors drop out
Decline
•
Obj
: Determine product's future
•
Profitability
: LR :arrow_down: in sales, dramatic reduction in profit margins
•
Mkt Segment
: :small_red_triangle: tastes and substitute products erode share
•
Targeted Consumers
: Laggards (those who fell behind others)
•
Competitive Environment
: Failing demand forces many out of mkt
New Product Development Process
1. Identify product opportunities
• Generate new ideas
• Evaluate Ideas
• Prioritize ideas
2. Define the product opportunity
• Define & test the product concept
• Create a marketing strategy
• Analyze the product's business case
3. Develop the product opportunity
• Product testing: alpha and beta
• Test the market (Consumer product market tests/ • Business product market tests)
• Product launch
Materials
(Natural/ Farm materials)
Parts
(equipment: fully assembled/ in smaller pieces)
MRO Supplies
(low-cost/frequent purchases )
Capital Goods
•
high-cost/infrequent purchases
•
major purchases in support of a significant business function.
whether or not they are used in the manufacturing process
Cost
•
Product
: high-quality, innovative design
•
Price
: Skimming/ Penetration
•
Communications
: Inform & educate. Promotion: create awareness & demand
•
Distribution
: Wide distribution network w/ limited product availability
•
Product
: + features and better design, diversification of products (+ complementary P&S)
•
Price
: Skimming+Penetration (:arrow_down: old models; :arrow_up: new models)
•
Promotion
: Link key product features and differentiation between competitors
•
Distribution
: broaden distribution network
•
Product
: widen/ extend product lines
•
Price
: Skimming (:arrow_up: at high-end mkt), Penetration (if :red_cross: well-differentiated)
•
Promotion
: Decide between ST sales promotion/ invest more in brand
•
Distribution
: Reached maximum dist.
•
Product
: Consider product expense in terms of ROI
•
Price
: Penetration (stipulate demand), Skimming (pressure from competitors & consumers)
•
Promotion
: Cost :red_cross: justified by conditions
•
Distribution
: Reduce channels
Internal sources
R&D, Manufacturing
external sources
Indirect connections
Customers
Customers' input
Distributors
Linked to both parties
Generate new ideas
