Product Flashcards
8 steps to sequential new product development?
Idea generation (systematic search for new ideas both internal and external)
idea screening (spot good, drop bad through Real need, Win vs others, Worth profit)
concept development and testing (detailed version of the idea to choose the most attractive concept via symbolic or physical tests)
marketing strategy development ( initial strategy has 3 parts: target market, value proposition + budget, sales/market share/profit goals)
business analysis (review sales, costs, profit objectives, can look at sales history of similar products and estimate min/max and risk)
product development (can it turn into a workable market offering?)
test marketing (tested in realistic marketing settings, timing varies per product and costs can be high, but potentially huge cost savers)
commercialization (introducing a new product into the market. Priorities: timing, location–>rollout vs. immediate launch)
Major considerations in managing new product development:
Customer-centered (new ways to solve customer problems and more satisfying experiences)
Team-based (team from various company departments work together, overlapping steps to save time and increase effectiveness)
Systematic (innovation management to collect, review, evaluate, manage new product ideas and yields two outcomes: culture of innovation, more ideas)
5 PLC stages:
Product development (sales 0, costs increase)
Introduction (sales slowly grow, profits close to 0)
Create awareness and do well on trial: offer basic product, use cost-plus, selective distribution, product awareness, heavy sales promotion
Growth (sales increase rapidly, profits increase)
New competitors enter here, increase in distribution, promotion stays high or slightly increases
Max market share: price penetration, build distribution, build awareness, offer product extensions
Maturity (sales slow, profits level off or decline)
Max profit and defend market share: diversify, price wars, more intense distribution, stress differentiation, increase brand switching
Decline (sales fall, profits drop)
Possible reasons: tech advances, shifts in consumer tastes, increased competition
Milk the brand: maintain/harvest (reduce resources to boost profits)/drop each product
3 PLC life cycles:
Fashion (currently accepted or popular style, one hump that declines in the end)
Fad (temporary period of unusually high sales driven by popularity and immediate enthusiasm, pointy and fast graph)
Style (basic, distinctive mode of expression, two humps over time)
Define product and define service.
Product: anything that can be offered to a market for attention, acquisition, use, consumption that may satisfy a want or need
Service: activity, benefit, satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything
3 levels of product
Core customer value: freedom? Hope?…etc.
Actual: brand name, features, design, packaging, quality level
Augmented: delivery and credit, product support, warranty, after-sale service
4 consumer product classifications (bought by final consumer for personal consumption):
Convenience (frequent, immediate, minimum comparison and buying effort)
Low price, widespread and convenient distribution, mass promo
Toothpaste
Shopping (compare suitability, quality, prices, style)
Higher price, selective outlets, advert and personal selling by both producer and reseller
TVs and clothes
Specialty (unique characteristics, special purchase effort)
High price, exclusive distribution, targeted promo
Rolex watch
Unsought (normally not bought, may or may not know about it)
Varies price and distribution, aggressive advertising and personal selling
Blood donation, life insurance
3 groups of industrial products: bought by individuals and organizations for further processing or use in conducting a business.
Materials and parts (raw, natural or component materials/parts). Price and services > branding and advertising.
Capital items (aid in production or operations, such as installations and trucks)
Supplies and services (window cleaning, operating supplies, business advisory such as consulting)
5 market offerings that are not products/services
Organization marketing: create, maintain, change attitudes and behavior of target consumers toward an organization
Person marketing: create, maintain, change attitude and behavior toward people (ie. rachael ray, Obama)
Place marketing: “” to a place
Idea marketing:”” to an idea
Social marketing: use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of society
Product and service decisions are made at 3 levels in order to create core customer value.
individual products, product lines, product mix.
Individual Product Decision: 5 considerations
Product attributes (quality, features, style, design)
Branding (name, term, symbol or design that differentiate it)
Packaging (designing and producing the container or wrapper for a product)
Labeling (activities of designing and producing the container or wrapper for a product)
Product support services (customer service)
Product line decisions have 2 directions
Product line: closely related products functioning in a similar manner Length: number of items (periodically assess sales and profits) Either fill (add more items in present range) or stretch (add beyond range). To go up is to add prestige, to go down is to be more economical.
Product mix (or portfolio, a set of product lines and items that a particular seller offers) decisions have 4 dimensions:
Width: # different product lines the company carries
Length: # items within those product lines
Depth: # versions per product in any line
Consistency: how closely related the various product lines are in end use/requirements
4 characteristics of a service:
Intangibility: cannot be seen, heard, tasted, felt, smelled before purchase
Variability: quality of services depends on who provides them and when, where, how
Inseparability: cannot be separated from their providers
Perishability: cannot be stored for later sale or use
5 links of a service profit chain (links profits to employee/customer satisfaction)
Internal service quality (quality work environment)
Satisfied and productive service employees
Greater service value
Satisfied and loyal customers
Healthy service profits and growth
3 types of service marketing
Internal (employee-company): orient and motivate customer-contact employees to work as a team
External (company-customers)
Interactive (employee-customers): training service employees to interact and satisfy customer needs
3 major service marketing tasks
Differentiation: price competition, more reliable service people, symbols/branding image, offering well beyond stock averages
Quality: consistently higher quality such as fewer defects and no late deliveries. Good service recovery.
Productivity: train current employees better or hire new ones, standardize production, new tech, etc.
Brand strength (high brand equity) and 4 consumer perception dimensions
Brand equity: differential effect that knowing the brand name has on customer response to the product or its marketing
Differentiation: what makes it stand out
Relevance: how consumers feel it meet their needs
Knowledge: how much consumes know about the brand
Esteem: how highly consumers regard and respect the brand
Brand valuation: financial valuation of brand
4 major brand strategy decisions
Brand positioning (attributes, benefits, beliefs+values) -attributes at lowest level, benefits such as health/safety, beliefs and values such as life relationships
Brand name selection (selections, protection)
-Suggest something about qualities and benefits, be easy to pronounce, distinctive, extendable to other categories, translate to foreign languages, capable of registration and legal protection)
Brand sponsorship (manufacturer's brand, private brand, licensing, co-branding) -national vs. store or private brand (created and owned by resellers), licensing names and symbols of previous manufacturers for instant and proven brand name, or combining names to co-brand such as Nike+iPod
Brand development (line extensions, brand extensions, multibrands, new brands)
- line extension: existing product, existing brand
- brand extension: new product, existing brand
- multibrands: existing product, new brands
- new brands: new product, new brand
Managing the brand:
continuous communication and brand experiences
internal brand building and employee enthusiasm
periodically audit strengths/weaknesses
Product mix (or portfolio, a set of product lines and items that a particular seller offers) decisions have 4 dimensions:
Width: # different product lines the company carries
Length: # items within those product lines
Depth: # versions per product in any line
Consistency: how closely related the various product lines are in end use/requirements
