designing and managing product
TRANSCRIPT
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DESIGNING AND MANAGING PRODUCT
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A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, places, organizations and ideas
DEFINITION
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PRODUCT LEVELS
1 •CORE PRODUCTS
2 •FACILITATING PRODUCTS
3 •SUPPORTING PRODUCTS
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The most basic level is core product.
Marketer must uncover the core benefit to the consumer of every product and sell these benefits rather than merely selling features.
CORE PRODUCTS
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FACILITATING PRODUCTS
Facilitating products are services or goods that must be present for the guest to use the core product.
A first-class corporate hotel must have check in and check out services, telephones, a restaurant and valet.
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One important aspect of facilitating products is accessibility.Product design requires an understanding of the target markets and the facilitating services that they require.
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SUPPORTING PRODUCTS
Core products require facilitating products but do not require supporting products.
Supporting products are extra products offered to add value to the core product and help to differentiate it from the competition.
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Ideally, firms should choose supporting products that are not easily matched by the competition.
They should also be able to deliver supporting services in a professional manner.
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THEAUGMENTED
PRODUCT
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From managerial standpoint, the core product provides a focus for the business; it is the reason for being.Facilitating products are those that are essential for providing the core product to the target market.
Supporting products can help position a product
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CUSTOMER INTERACTION WITH THE SERVICE DELIVERY SYSTEM
CUSTOMER COPRODUCTION
CUSTOMER INTERACTION WITH OTHER CUSTOMERS
THE AUGMENT
ED PRODUCT
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ATMOSPHERE: THE PHYSICAL ENVIRONMENT
Atmosphere is a critical element in services. It can be the customer’s reason for choosing to do business with an establishment.
The main sensory channels for atmosphere are sight, sound, scent and touch.
The Augmented Product
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The main VISUAL dimension of atmosphere are color, brightness, size and shape. the main AURAL dimension of atmosphere are volume and pitch The main OLFACTORY dimensions of atmosphere are scent and freshness The main TACTILE dimensions of atmosphere are softness
The Augmented Product
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Atmosphere can affect purchase behavior in at least 4 ways Atmosphere may serve as
an attention-creating medium. Atmosphere may serve as a message-creating medium. Atmosphere may serve as an effect-creating medium. Atmosphere may serve as an mood-creating medium.
The Augmented Product
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Atmosphere must be considered when creating hospitality products.
As marketer we should understand what the customer wants from the buying experience and what atmospheric variables will fortify the beliefs and emotional reaction that the buyers are seeking or, in some cases, escaping
The Augmented Product
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CUSTOMER INTERACTION WITH THE SERVICE DELIVERY SYSTEM
Joining
Consumption
Detachment
The Augmented Product
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JOINING STAGEThe Augmented Product
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CONSUMPTION PHASEThe Augmented Product
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DETACHMENT PHASE
When the customer is through using a product and departs
Eg: hotel guests may need a bell person to help with the bags, acquire transportation to the airport, directions, road conditions etc.Tourism promotion should include training policies and procedures to assist visitors.
The Augmented Product
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CUSTOMER INTERACTION WITH OTHER CUSTOMER
The Augmented Product
An area that is drawing the interest of hospitality researches is the interaction of customers with each other.
Hospitality organizations must manage the interaction of customers to ensure that some do not negatively affect the experience of others.
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The Augmented Product
CUSTOMER COPRODUCTION
Involving the guest in service delivery can increase capacity, improve customer satisfaction and reduce cost.
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BRAND DECISION
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BRANDIs a name, term, sign, symbol, design or a combination of these elements that is intended to identify the goods or services of a seller and differentiate them from competitors.A brand name is the part of brand that can be vocalized
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5 CONDITIONS CONTRIBUTE TO THE BRANDING DECISION
1) The product is easy to identify by brand or trademark
2) The product is perceived as the best value for the price
3) Quality and standards are easy to maintain
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4) The demand for the general product class is large enough to support a regional, national or international chain. Developing a critical mass to support advertising and administrative overhead is important
5) There are economies of scale
5 CONDITIONS CONTRIBUTE TO THE BRANDING DECISION
THE DESIRABLE CHARACTERISTICS OF
A BRAND NAME
1)It should suggest something about the product’s benefits and equalities
2) It should be easy to pronounce, recognize and remember. Short names help
3) It should be distinctive26
4) For larger firms looking at future expansion into foreign markets, the name should translate easily into foreign language. Some companies have found that their names have a negative meaning when translated into another language.
5) It should be capable of registration and legal protection 27
Sometimes a company will outgrow its original name. Name changes by major chains include Hilton Hotels to Hilton Hotels and Resorts. Companies may wish to change their image through their logos without changing their name. Once a name has been chosen, it must be protected
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THE PRODUCT IS PERCEIVED
AS THE BEST VALUE
FOR THE PRICE
A brand name derives its value from consumer perceptions.
Brands attract customers by developing a perception of good quality and value.
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As tourist destination, Cancun and Palm Spring have developed strong reputations, consumer perceptions and expectations.
People who promote and develop tourist destinations must assume responsibility for enhancing and ensuring favorable brand images.
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QUALITY AND STANDARDS ARE EASY TO MAINTAIN
To be successful, large multiunit brand such as Pizza Hut and Holiday Inn Express must develop system wide standards to meet customer expectations
If the brand is successful in developing an image of quality, customers will expect quality in all outlets carrying the same brand name.
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Inconsistent standards and policies will detract from the value of the brand.
Consistency and standardization are critical factors.
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The major benefit of branding comes from the development of loyal customers.
They purchase a brand whenever it is available; the greater the availability, the greater power of the brand name.
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THE DEMAND FOR THE GENERAL PRODUCT CLASS IS
LARGE ENOUGH TO SUPPORT A REGIONAL, NATIONAL OR INTERNATIONAL CHAIN
New products are generally developed to serve a particular market niche. Later, the product may be expanded to encompass multi niches, or the original niche may grow in market size until it is a huge market-share product
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THERE ARE ECONOMIES OF SCALE
Branding costs money. The company promoting a brand name has to develop standards, systems and quality assurance programs. The brand name must be promoted.
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LEVERAGING BRAND EQUITY
Brand equity can be leveraged through cobranding and partnerships. In some cases companies that have common ownership offer their brands under one roof. Eg : KFC and Pizza Hut
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NEW PRODUCT
DEVELOPMENT
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A company has to be good at developing new products. It also has to be good at managing them in the face of changing tastes, technologies and competition.All hospitality companies and tourist
destinations must continuously be alert to trends and ready to try new products. Every company needs a new product development program.
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IDEA GENERATI
ON
IDEA
SCREENING
CONCEPT DEVELOPMENT & TESTING
MARKETING
STRATEGY
BUSINESS
ANALYSIS
PRODUCT DEVELOP
MENT
TEST MARKETI
NG
COMMERCIALIZATI
ON
NEW PRODUCT DEVELOPMENT
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IDEA GENERATION
New product development starts with idea generation, the systematic search for new ideas.
A company typically has to generate many ideas to find a few good ones.
The search for new product ideas should be systematic rather than haphazard
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The co. should carefully define the new product development strategy. The strategy should start with what products and markets to emphasize.
It should also state what the co. wants from its new product, whether it is high cash flow, market share etc
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Internal Sources
Customers
Competitors
Distributions & Suppliers
Other sources
IDEA GENERATIONNEW PRODUCT DEVELOPMENT
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INTERNAL
SOURCES
FORMAL RESEARCH & DEV.
BRAINSTORMING SESSION
SALESPEOPLE
GUEST-CONTACT EMPLOYEE
MANAGER VISIT CUSTOMER
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Watching & listen to customer
Consumers needs and wants can be examined through consumer surveysThe company can analyze customer questions and complaints to find new products that better solve consumer problem
CUSTOMERS
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COMPETITORS
About 27% of new product ideas come from analyzing competitors’ products.
Many companies buy competing new products, see how they are made, analyze their sales, & decide whether they should bring out new products of their own.A company can also watch competitors’ ads & other communications to obtain clues about new products.
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DISTRIBUTORS & SUPPLIERS
Distributors are close to the market & can pass along information about consumer problems and new product possibilities.Suppliers can tell the co. about new concepts, techniques, & materials that can be used to develop new products.
They can also tell which food products are moving in competitive restaurants & new products ordered by hotels.
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OTHER SOURCES
Other idea sources include trade magazines, shows & seminars, government agencies, new product consultants, advertising agencies, marketing research firms, university & commercial laboratories & inventors
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IDEA SCREENING
The purpose of screening is to spot good ideas and drop poor ones as quickly as possible.
Product development costs rise greatly in later stages, so the company wants to proceed only with ideas that will turn into profitable products.
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CONCEPT DEVELOPMENT & TESTING
Concept Development
Concept Testing
Planning Guest Rooms
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MARKETING STRATEGY
Designing an initial marketing strategy for introducing the product into the market.
The marketing strategy statement consist of 3 parts.
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MARKETING STRATEGY1) Describes the target market, the planned product positioning, and the sales, market share and profit goals for the first few years.
2) Outlines the product’s planned price, distribution and marketing budget for the first year
3) Describes the planned long-run sales, profit goals and marketing mix strategy
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BUSINESS ANALYSISOnce management decides on the product concept and marketing strategy, it can evaluate the business attractiveness of the proposal.
Business analysis involves a review of the sales, costs and profit projections to determine whether they satisfy the company’s objectives.If they do, the product can move to the product-development stage.
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PRODUCT DEVELOPMENT
If the product concept passes the business test, it moves into product development & into a prototype.
Developing a successful prototype can take days, weeks, months or even years.
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One problem with developing a prototype is that the prototype is often limited to the core product.
Many as the intangible aspects of the product, such as performance of the employees cannot be included
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TEST MARKETING
If the product passes functional & consumer tests, the next step is market testing which the product & marketing program are introduced into realistic market settings.
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Market test allows the marketer to gain experience in marketing the product, to find potential problems & to learn where more information is needed before the co. goes to the great expense of full introduction.
Market testing evaluates the product & the entire marketing program in real market situations.
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The products, its positioning strategy, advertising, distribution, pricing, branding, packaging & budget levels are evaluated during market testing.
Market testing result can be used to make better sales & profit forecast.
The amount of market testing needed varies with each new product. Market testing costs can be enormous & market testing takes time, during which competitors may gain an advantage.
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COMMERCIALIZATION
Marketing testing gives management the information it needs to make a final decision about whether to launch a new product.
If the co. goes ahead with commercialization, it will face high costs.
In launching a new product the co. must make four decision: when, where, to whom and how
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PRODUCTLIFE-CYCLESTRATEGIES
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PRODUCT LINE
REVIEW
DELETION ANALYSIS
DELETION DECISION
RETURN TO LINE
DELETE
PHASE-OUT
RUN-OUT
IMMIDIATE DROP