Create the Product

What is a Product?

Physical Objects Services Events Persons Places Organizations Ideas Combinations of above

Anything that can be acquired, used, consumed, adopted or enjoyed to satisfy a want or need

The starting point of the Marketing Mix

Build a Better Mousetrap

Value proposition: Benefits consumers receive when buying a good or serviceTangible vs. intangibleDurable vs. nondurable

BrandName

QualityLevel

Packaging

Design

Features

Delivery& Credit

Installation

Warranty

After-Sale

Service

CoreBenefit or

Service

CoreBenefit or

Service

Actual ProductActual Product Core ProductCore Product

Augmented ProductAugmented Product

Product Layers

Unsought ProductsUnsought Products

New innovations Little interest until need arises Much advertising & personal selling

Product Classifications

Specialty ProductsSpecialty Products

Special purchase efforts High $/unique characteristics Brand identification Few purchase locations

Shopping ProductsShopping Products

Buy less frequently Higher price Fewer purchase locations Comparison shop

Convenience ProductsConvenience Products

Buy frequently & immediately Low priced Mass advertising Many purchase locations

Product Group Activity

Unsought products often call to mind situations that a consumer would like to ignore.

Break into small groups and select an example of an unsought product.

Suggest a Marketing approach to get consumers interested in, and ultimately purchase, such a product?

How does ethics factor in to promoting this product?

Business-to-Business Products

Classified by how organizations use them

Equipment Maintenance, repair &

operating (MRO) Raw materials Processed materials Specialized services Component parts

“New and Improved”

Innovation: A product that customers perceive to be new & different from existing products

The Federal Trade Commission says: A product must be entirely new or changed

significantly to be called “new” andMay be called “new” for only six months

New products are expensive to develop & even more costly if they fail

Causes of New Product Failures

As many as 80% of new consumer products fail Only 40% are around 5 years after introduction Why?

Overestimation of market sizeProduct design problemsProduct incorrectly positioned, priced, advertisedLaunched despite poor M/R findingsCompetitive actions

Continuous Innovation

A modification to an existing product Most common form of innovation Learning & change are minimal Examples: brand extensions, line extensions Knockoffs copy (with slight modification)

the design of an original product

Dynamically Continuous Innovation

A pronounced modification to an existing product

Requires a modest amount of learning or behavior change

Convergence: The coming together of 2 or more technologies to create a new system with greater benefits than its parts

Discontinuous Innovation

A totally new product Creates major changes in the way we live Significant new learning required Examples: microwave ovens, cell phones

Innovation Individual Activity

Think about 5 new products introduced over the last year.

Classify each as a continuous, dynamically continuous or discontinuous innovation.

Why did you select those classifications?

New Product Development

Continuous search for entirely new products or ways to make existing products better

Successfully new product introduction is becoming more difficultR&D costs are enormousProducts become obsolete fasterSlotting fees are high

Product Development Phases

Phase 1: Idea generation Brainstorm about & systematically search for new

products compatible with the firm’s mission Phase 2: Concept development & screening

Test ideas for technical & commercial success Choose one(s) with strongest appeal & potential

Phase 3: Marketing strategy developmentObjectives & tactics

Product Development Phases

Phase 4: Business analysisAssess the product’s commercial viability

Phase 5: Technical development Refine & perfect the new productDesign prototypes or test versions of the

proposed product

Product Development Phases

Phase 6: Test marketingTest marketing mix in a small geographic area

Phase 7: Commercialization Launch the new productBegin full-scale production, distribution,

advertising & sales promotion

Adoption & Diffusion

Product adoptionConsumers or businesses begin to buy & use a

new product Diffusion

Product use spreads throughout a populationThe tipping point

Adoption Pyramid

Product Adoption Stages

1. Awareness: Mass advertising generates product awareness

2. Interest: Prospective adopters open to product infoTeaser ads used to stimulate interest

3. Evaluation: Consumers weigh costs/benefits or may even

make impulse purchases

Product Adoption Stages

4. Trial: Sales promotions & product demos critical

5. Adoption: Goes beyond trial use

6. Confirmation: Consumer weighs expected vs. actual benefits &

costsReinforce consumer choice via reminder IMC

Categories of Product Adopters

Innovation & Adoption

Relative AdvantageRelative Advantage

CompatibilityCompatibility

ComplexityComplexity

TrialabiltyTrialabilty

Factors Affecting Consumer Adoption

ObservabilityObservability

B2B Product Adoption

Innovators New, smaller or younger firms

Early-adopter firms Market-share leaders

Late-majority firms Prefer status quo & have large investments in existing

production technology

Laggard firms Already losing money

Improving New Product Success

A successful new product should offer:A superior product (one with higher

quality, features & value in use)A well-defined concept (an identified

target market, product requirements & benefits)

New Product Class Discussion

Not all new products are perceived to benefit consumers or society.

What are some examples of new products that have made our lives better? Why?

Give some examples of products that are harmful to consumers or society. Why?

Should there be a way to monitor or police new products that may be harmful?

Key Concepts Review

Product Core Product Actual Product Augmented product Convenience Product Shopping Product Specialty Product Unsought Product

“New” Product Types of Innovations Product Adoption Product Diffusion Adoption Categories Test Marketing