Upload
abigayle-stafford
View
214
Download
0
Tags:
Embed Size (px)
Citation preview
8-11
Chapter 8: Creating the Product
“Build it and they will come!” (NOT) Value proposition
– A statement capturing why a person should buy the product (benefits she will receive) compared to competitors’ products
Product: – Tangible good or intangible service that satisfies
customer needs• We can see, touch, smell, hear, taste, or possess tangible goods
– Intangible products • services, ideas, people, places
8-38-3
The Core Product= Benefits
Consists of all the benefits the product will provide for consumers or business customers
A customer purchases a 1/2” drill bit. What does s/he want? – A 1/2” hole!
Marketing is about supplying benefits, not products. It’s not about the product – it’s what the product DOES for the consumer.
8-48-4
The Actual Product
Consists of the physical good or delivered service that supplies the desired benefit
Example:– A washing machine’s core product is the ability to get
clothes clean, but the actual product is a large, square, metal apparatus
Actual product also includes appearance, styling, packaging, and the brand
8-58-5
The Augmented Product
Consists of the actual product plus other supporting features such as warranty, credit, delivery, installation, and repair service after the sale– A key way to differentiate many products– Consistent with long-term customer
relationships
8-68-6
Classifying Consumer Products
By how long they last
– Durable
– Nondurable
By how consumers buy them
– Convenience
– Shopping
– Specialty
– Unsought
8-78-7
Durable vs. Nondurable Durable
– Benefits accrue to consumer over period of months, years, decades
– High involvement – Understand
augmented product issues
– FAQ
Nondurable– The good is
consumed in the short-run
– Low involvement– Focus on brand/price/ distribution – Decision made based
on past experience
8-88
Classifying Goods: How Do Consumers Buy the Product?
Convenience product: frequently purchased with minimum of comparison and effort– Staples (milk)– Impulse products (candy bar)– Emergency products (drain opener)
Marketing implications?
8-9
Classifying Goods: (cont’d)
Shopping product: purchased with considerable time and effort considering price, attributes, quality – Use of multi-attribute model
Narrow choices and tend to compare alternatives – Evoked set
Marketing implications?
9
8-1010
Classifying Goods: (cont’d)
Specialty products: have unique characteristics important to some buyers at any price
Consumers may be highly brand loyal– But only consumer who place value on that product
Consumers may not be willing to accept substitutes– Rolex watches / Land Rover / Dooney & Burke
Marketing implications?
8-11
Classifying Goods: (cont’d)
Unsought products: those in which consumers have little interest until a need arises– Renter’s insurance, retirement plans, disability
insurance
Requires a good deal of advertising or personal selling
May also require a good deal of education
11
8-1212
The Process of Innovation: Creating New Products
The FTC says :– A product must be entirely new or changed
significantly to be called new, and– A product may be called new for only six months.
Customer perspective: Innovation is anything that customers perceive as new and different
8-1313
It’s Important to Understand How Innovations Work
Technology is advancing at a dizzying pace. New products are expensive to develop and
even more costly if they fail. Failure rate is very high. New products can contribute to society.
8-148-14
Innovation Continuum
Continuous Dynamically Discontinuous Continuous
Little to no change in CB Extreme changes
8-158-15
Innovation Continuum
Continuous Dynamically Discontinuous Continuous
Little to no change in CB Extreme changes
Latest Blackberry Droid new to market Smart phones introduced
8-16
Continuous Innovations
Continuous innovations– Offer slight modifications to an existing product
Most common form of innovation– Consumers don’t need to learn anything new; change is minimal – New flavors, new sizes, new styling—all are
considered continuous innovations– Examples: brand extensions, line extensions – Knockoffs copy (with slight modification) the design
of an original product
8-17
Dynamically Continuous Innovation
Dynamically continuous innovation:– A pronounced modification to an existing product – Requires a *moderate* amount of learning or
behavior change – Convergence:
• The coming together of two or more technologies to create a new system with greater benefits than its parts
8-18
Discontinuous Innovations Discontinuous innovation:
– A totally new product– Radical/breakthrough/disruptive– Creates major changes in the way we live– Consumers must engage in a great deal of new
learning– May radically alter lifestyles
• Microwave ovens in the 70s
• PCs in 80s
• Cell phones in early 90s
• Tablet technology
8-19
Developing New Products
New-product development – continuous process of looking for entirely new
products or for ways to make an existing product better
Successfully introducing new products is becoming more difficult– R&D costs are enormous– Products become obsolete faster– Slotting fees are high
8-208-20
New Product Development Process: “Stage Gate” (Funnel)
Idea Generation Product Concept Development / Screening Marketing Strategy Development Business Analysis Technical Development Market Testing Commercialization
8-21
Steps in the New-Product Development Process
Phase 1: Idea generation – Brainstorm products that provide customer benefits and which are compatible with the firm’s mission
• Customers (Example: Sensual Edible line)• Salespeople• Service providers• Anyone with direct customer contact
– Research: trend-spotters, lead users, etc.
Phase 2: Product-concept development / screening– Expand product concepts – Test for technical and commercial success
• Test markets
8-23
Steps in New-Product Development
Phase 3: Marketing strategy development– Developing a strategy to introduce the product to the
marketplace– Identify the target market– Estimate its size– Determine how the product can be positioned– Plan pricing, distribution, and promotion expenditures
necessary for roll-out– May involve green marketing
8-24
Phases in New-Product Development
Phase 4: Business analysis– The product’s commercial viability is assessed in this
phase• **Develop pro-forma statements, compute
payback periods, NPV, and ROI– Assess how the new product will fit into the firm’s total
product mix• Cannibalization (Ch. 9)
8-25
Phases in New-Product Development
Phase 5: Technical development – Firm engineers refine and perfect the new product– Develop one or more prototypes or test versions of
proposed product (in R&D department).– Evaluate prototypes with prospective customers– If applicable, apply for a patent
8-26
Phases in New-Product Development
Phase 6: Test marketing– The complete marketing plan is tested in a small
geographic area similar to the larger market
Phase 7: Commercialization – The new product is launched into the market– Full-scale production, distribution, advertising, and
sales promotion are begun
8-278-27
Adoption and Diffusion Processes
Adoption: process by which a customer begins to buy and use a new good, service, or idea
Diffusion: describes how the use of a product spreads throughout a population– How an innovation is communicated and adopted
throughout the marketplace– “The Tipping Point”
8-298-29
Innovators 2.5% – the first to accept a new idea or product Venturesome and willing to take risks Well educated; younger; affluent They like to be first!
– Willing to pay more – not price sensitive
Cosmopolites: willing to seek social relationships outside of their local peer group
Rely heavily on impersonal information sources
8-308-30
Early Adopters
13.5% – the second to adopt an innovation Heavy media users Tend to be concerned with social acceptance Opinion leaders primarily come from the early
adopter group
8-318-31
Early Majority
34% adopt the product prior to the mean time of adoption
Deliberate and cautious Spend more time in the innovation decision
process Middle class: Slightly above average in
education and social status
8-328-32
Late Majority 34% in this adoption category Older, more conservative Peers are the primary source of new ideas Below average in education, income, and
social status Wait to purchase until product has become a
necessity and/or peers pressure to adopt
8-338-33
Laggards
16% – last to adopt an innovation Lower in social class than other categories Bound by tradition Product may have already been replaced by
another innovation
8-348-34
5 Factors Affecting the Rate of Adoption
Relative Advantage: – Benefits of the new innovation relative to its costs
Compatibility: – Consistent with existing behaviors and practices, as
well as cultural norms
Complexity: – Difficulty in using/learning to use the new innovation