8-Product & Services

7/28/2019 8-Product & Services

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2012 Teguh Budiarto 2

Marketing Management


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Jul-13 Teguh Budiarto

1. Product Definition & Classification

2. New Product Development

3. Product Strategy


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product is:

anything creation of producers ability tomeet the consumers needs and wants


Product is the first and most importantelement of the marketing mix.


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Product

Unsought Product

Product Definition Concept

Market Needs

No Market Needs



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The Customer Value

Hierarchy

1. the core benefit,2. the basic product,3. the expected product,

4. the augmented product, and5. the potential product


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The Customer Value Hierarchy

Potential product

Augmented product

Expected product

Basic product

Core product

Core product adalah manfaat yang

dibutuhkan konsumen untuk mengatasi

masalahnya

Generic product adalah produk dasar

atau secara fisik mampu memberikan

manfaat fungsional

Expected product adalah produk

standar yang diharapkan dapat

dikonsumsi secara layak (normal)oleh masyarakat umum

Augmented product adalah produk

tambahan sebagai pelengkap

produk utama, sebenarnya bukan

fungsinal tetapi mampu

memberikan tambahan banyak

kepuasan.

Potential product adalah

produk pelengkap yang

memberikan peluang

pengembangan di masa

depan



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ProductProduct character

Goods Services Personal

Place Organisation Idea

Durability & tangibility Durables Non Durables Services



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Industrials goods

Consumers goods

Consumer

Product processing Raw material Working in process

Finished goods

Distribution Slow Moving Goods

Fast Moving Goods



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Final consumers

Intermediate consumers

SUPERMARKET

RESTAURANT

PRODUCT



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Consumers Goods:

Convenience Goods Staples

Impulse

Emergency

Shopping Goods Homogeneous

Heterogeneous

Specialty Goods



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Industrials Goods:

Material and parts Raw Farm product

Raw Natural product

Manufactured component material

Manufactured component part

Capital item Installations

Factory & office equipmentsSupplies and services



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Product attributes:

BrandPackagingLabel


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SERVICEis an activity

which has some element of intangibility

associated with it,

which involves some interaction with

customers or with property in theirpossesion,

and does not result in

a transfer of ownership.

Adrian Payne (1993)



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Product has a life cycle:

Products have limited life

Product sales pass through

distinct stages

Profits rise and fall at different

stages

Products require different

strategies in each life-cyclestage



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Product Life Cycle


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Product Mix


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Idea ScreeningA company should motivate its employees to

submit new ideas to an idea manager.

Ideas should be written down and reviewed eachweek by an idea committee.

The company then sorts the proposed ideas intothree groups:

1. Promising ideas.2. Marginal ideas.3. Rejects


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Creativity techniques:

Attribute listing. Forced relationships. Morphological analysis. Reverse assumption analysis. New contexts. Mind-mapping. Lateral marketing.


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A DROP-error occurs when the companydismisses an otherwise good idea.

A GO-error occurs when the company permitsa poor idea to move into development andcommercialization.

1. An absolute product failureloses money,because its sales do not cover variable costs.

2. Apartial product failureloses money, but itssales cover all its variable costs and some of its

fixed costs.3. Arelative product failureyields a profit that is

less than the companys target rate of return.


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The purpose of screening is to drop poor ideas asearly as possible.

The rationale is that product-development costsrise substantially with each successive developmentstage.

1. Most companies require new-product ideas to bedescribed on a standard form that can be reviewed by anew-product committee.

2. The executive committee then reviews each idea againsta set of criteria.

3. The surviving ideas can be rated using a weighted-indexmethod.


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The products overallprobability of success estimation:

Overall Probability Probability of Probability ofProbability = of technical X commercialization X economic

of Success completion given technical success givencompletioncommercialization


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Concept Development and Testing

A product idea can be turned into several concepts.

Questions to ask include: Who will use this product?

What primary benefit should this productprovide?

When will people consume this product?


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Concept TestingConcept testing involves presenting the product concept to target consumers andgetting their reactions. The concepts can be presented symbolically or physically.

1. In the past, creating physical prototypes was costly and time-consuming.2. Today firms can use rapid prototyping to design products.3. Companies are also using virtual reality to test product concepts.4. Concept testing entails presenting consumers with an elaborated version of

the concept.5. After receiving information, researchers measure product dimensions by

having consumers respond to the following: Communicability and believability. Need level. Gap level. Perceived value.

Purchase intention. User targets, purchase occasions, purchasing frequency.6. The respondents answers indicate whether the concept has:

A broad consumer appeal. What products this new product competes against. Which consumers are the best targets.


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Conjoint Analysis

Consumers preferences for alternative product concepts

can be measured through conjoint analysis, a methodfor deriving the utility values that consumers attach tovarying levels of a products attributes.

Respondents are shown different hypothetical offers

formed by combining varying levels of the attributes,then asked to rank the various offers.

Management can identify the most appealing offerand the estimated market share and profit the

company might realize.


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Development To CommercializationAt this stage, the company will determine if the product

idea can be translated into a technically and commerciallyfeasible product.

The job of translating target customer requirements into a working

prototype is helped by a set of methods known as quality functiondeployment (QFD).

This methodology takes the list of desired customer attributes(CAs) and turns them into: A list of engineering attributes (EAs). A major contribution of QFD is that it improves communication

between marketers, engineers, and the manufacturing people.

Product Development


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At this stage, the company willdetermine if the product idea can betranslated into a technically andcommercially feasible product.

Development To Commercialization


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Product Development

The job of translating target customerrequirements into a working prototype is helpedby a set of methods known as quality functiondeployment (QFD).

This methodology takes the list of desiredcustomer attributes (CAs) and turns them into: A list of engineering attributes (EAs).

A major contribution of QFD is that itimproves communication between marketers,engineers, and the manufacturing people.


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The R&D department will develop one or morephysical versions of the product concept.

Its goal is to find a prototype that: Embodies the key attributes described in the

product-concept statement.

Performs safely under normal use andconditions.

Can be produced within the budgetedmanufacturing costs.


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Customer TestsWhen the prototypes are ready, they must be put

through rigorous functional tests and consumertests.

Alpha testing is a name given to testing the

product within the company.

Beta testing is testing the product with

customers.


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Consumer testing can take several forms: Bringing consumers into the laboratory. Give them samples to use in their homes.

Consumer preferences can be measured in severalways: The rank-ordermethod. Thepaired-comparisonmethod.

The monadic-ratingmethod.

Customer Tests


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Market Testing

The new product is ready to be introducedinto an authentic setting with a brand nameand packaging,to learn how large the market is, and

how consumers and dealers react to handling,using, andrepurchasing the product.


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When (Timing)

In commercializing a new product, market-entry

timing is critical.The company faces three choices: First entry. Parallel entry. Late entry.

The timing decision involves additionalconsiderations:

1. If the new product replaces an older product.2. If the product is seasonal.3. Waiting for a killer application to occur.

Where (Geographic Strategy)


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Where (Geographic Strategy)

The company must decide whether

to launch the new product in: a single locality, a region,

several regions, the national market, or the international market.

Most will develop a planned rolloutover time

To Whom


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To Whom(Target-Market Prospects)

Within the rollout markets, the company musttarget its initial distribution and promotion to thebest prospect groups.

Early adopters. Heavy users. Opinion leaders. Reached at a low cost.

The company should rate the various prospectgroups on these characteristics and target the bestgroup.


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How (Introductory Market Strategy)

The company must develop an action plan forintroducing the new product into the rollout markets.

To coordinate the many activities involved inlaunching a new product, management can usenetwork-planning techniques such as critical pathscheduling.

Critical path scheduling (CPS) calls for developing

a master chart showing the simultaneous andsequential activities that must take place to launchthe product.


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Adopters of new products have beenobserved to move through five stages: Awareness. Interest. Evaluation.

Trial Adoption.


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People can be classified into these adopter

categories: Innovators. Early adopters. Early majority. Late majority. Laggards.


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Five characteristics influence the rate of adoption ofan innovation: Relative advantagethe degree to which the

innovation appears superior to existing products. Compatibilitythe degree to which the innovation

matches the values and experiences of the

individuals. Complexitythe degree to which the innovationis relatively difficult to understand or use.

Divisibilitythe degree to which the innovation

can be tried on a limited basis. Communicabilitythe degree to which the

beneficial results of use are observable ordescribable to others.


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Product strategy

coordinated decisions on product mixes, product lines, brands, and packaging and labeling.

P d t M k ti Mi


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Product Marketing Mix

product

promotion pricecustomerservice

place

Jul-13

place

S i M k ti Mi


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Service Marketing Mix

product

promotion price

customerservice

place people

processes



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P d t Mi


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Product Mix


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Marketer f l t ff i t t t t


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Marketer formulate an offering to meet targetcustomers needs or wants.

The customer will judge the offering bythree basic elements:

1.product features,

2. services mix, and3.price.

Market leaders offerproducts and services of superior quality

than Competitors.


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How to market unsought product?

Identify &understanding

target market

Develop unmeetneeds

Synchronize

unsought withtarget market


The Customer Needs & Wants


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moresatisfied

satisfied

Potential product

Augmented product

Expected product

Generic product

Core product

Market wants

Market needs

The Customer Needs & Wants


The Product Strategy


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The Product Strategy

Diversification Strategy

Differentation Strategy

Generic product

Expected product

Core product

Augmented product

Potential product



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Product Differentiation Form:Many products can be differentiated in formthe size, shape, or

physical structure of a product. Features:Most products can be offered with varying features that

supplement its basic function. Performance quality:Most products are established at one of four

performance levels: low, average, high, or superior. Conformance quality:Buyers expect products to have a high

conformancequality that is the degree to which all the produced unitsare identical and meet the promised specifications.

Durability:A measure of the products expected operating life undernatural or stressful conditions

Reliability: Buyers normally will pay a premium for more reliable

products. Reliability is a measure of the probability that a product willnot malfunction or fail within a specified time period

Style:Describes the products look and feel to the buyer.

Marketing Strategy


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Marketing Strategy

Strategy plan for introducing the new product into the market.The plan consists of three parts:

1) The first part describes the: Target markets size. Structure. Behavior. Planned products positioning.

Sales. Market share. Profit goals in the first few years.

2) The second part outlines: Planned price. Distribution strategy.

Marketing budget for the first year.3) The third part describes the:

Long-run sales and profit goals. Marketing-mix strategy over time.


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Companies need to grow their revenueover time by developing new products and

expanding into new markets.

New product development shapes the

companys future: improved orreplacement products will maintain orbuild sales.

A company can add new products throughacquisition or development.


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The acquisition route can take three forms: The company can buy other

companies.

It can acquire patents from othercompanies.

It can buy a license or franchise from

another company.


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The development route can take two

forms: It can develop new products in its

own laboratories. It can contract with independent

researchers or new-productdevelopment firms to develop newproducts.


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Six categories of new products:

New-to-the-world products. New product lines. Additions to existing product lines.

Improvements and revisions ofexisting products.

Repositionings. Cost Reductions.


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Ideas for new products come from sources: customers, scientists, competitors,

employees, channel members, and top management.


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New-product ideas can also from:

Inventors. Patent attorneys. University and commercial

laboratories.

Industrial consultants. Advertising agencies. Marketing research firms. Industrial publications.


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Documents

8-Product & Services