Unit 6: Developing and Managing Products and Services Flashcards
There are a number of versions of liquid detergents marketed under the Tide brand, including detergents with and without fabric softener, with and without bleach, with various pleasing smells, and fragrance-free formulations. These detergents are an example of Tide’s:
product line.
A _______________________ demonstrates a straightforward mapping of a product to a customer’s willingness to pay.
good-better-best vertical differentiation strategy
a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer
cannibalization
Cannibalization is typically an issue in the case of a trade-down _________ (an extension to a less expensive version of an existing product), since such products typically offer a lower margin than the existing elements of the line.
product line extension
Theodore Levitt has described four different levels of products to be considered:
Generic product
Expected product
Augmented product
Potential product
Generic product
combination of elements required to participate in the market
Expected Product:
includes generic product plus the minimum that the customer normally expects from a product in the category
Augmented Product:
goes beyond expected product to include unexpected value-enhancing elements
Potential Product
extension to the augmented product that includes “everything that might be done to attract and hold customers” (goes beyond what most people might conceive of as possible)
As customers consider purchasing a product or service, they look at a number of factors beyond the product and service itself in order to understand which of the competing options will provide the greatest benefit and value in exchange for their money. Therefore, many aspects of the offering are important when communicating the core benefit to the customer; we call this the ________________.
“whole product” or “whole service” concept.
steps that are generally applicable to all development processes:
- New-product strategy
- Idea Generation
- Idea Screening
- Business Analysis
- Development
- Test Marketing
- Commercialization
Links the new-product development process with the objectives of the marketing department, business unit, and corporation.
New-Product Strategy
New product ideas come from many sources including customers, employees, distributors, competitors, research and development (R&D), consultants, and other experts.
Idea Generation
Eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason.
Idea Screening/Scoping
Preliminary figures for demand, cost, sales, and profitability are calculated for the new-product ideas that survive the initial screening.
Business Analysis (Building the Business Case)
R&D or engineering department may develop a prototype of the product (3D printing is becoming a more common tool in prototyping) and the firm starts sketching out a marketing strategy.
Development
Limited introduction of a product and a marketing program to determine reactions of potential customers in the market.
Test Marketing
Decision to market a product during the final stage of the new-product development process.
Commercialization (Launch)
Reinvent the crunchy taco and traditional Mexican cuisine
New-Product Strategy
All-day ideation sessions with employees pitching product concepts
Idea Generation
Rounds of testing with consumers
Illustrations and edible mock-up
Idea Screening
Plans for new manufacturing lines to meet potential demand
Business analysis
Experimenting with recipes to adjust seasoning and structural integrity
Collaborating with Frito-Lays technical teams
Development
Prototype released to select cities
Test marketing
Building a pilot plant, hiring and training new employees
Commercialization
The first stage of the new-product development process is:
establishing the new-product strategy
During which stage of the process does the marketer lead the preliminary analysis and calculations for demand, cost, sales, and profitability?
Developing a business analysis
_______ product goes beyond the expected product to include unexpected value-enhancing elements.
Augmented
During the business analysis stage, which is part of the new product development process, the marketer leads the analysis of and calculations for demand, cost, sales, and profitability. This analysis requires an understanding of how quickly the new product or service will be adopted (i.e., ____________) into the marketplace.
purchased regularly
marketers identify five categories of potential customers based on their willingness to adopt products and services:
innovators
early adopters
early majority
late majority
laggards
Those who are quick to try anything new and are willing to put up with the pain that sometimes goes with it are called __________.
Innovators
Those who are also fairly quick to try something new. They adopt new ideas early but carefully.
Early Adopters
These people tend to be more deliberate. They will adopt a new idea before the average person but are rarely the leaders. They tend to be very practical. If the technology will solve a problem for them, and it has been tested out and has well-established references, they will adopt.
Early Majority
These people tend to be skeptics. They will adopt an innovation only after a majority of people have tried it.
Late Majority
These people tend to be tradition-bound and suspicious of any change. They have no desire to have anything to do with any new technology.
Laggards
adoption of products and services to the marketplace
diffusion
3D technology used for the screen and glasses
Auxiliary functions such as surround sound and ambient lighting
Screen resolution and brightness
Innovators & Early Adopters Approach
How attractive it can look in your living space
How the TV will create more family bonding time together
How it can make sporting events more immersive
Early Majority & Late Majority Customers Approach
early and late majority customers are often more interested in the ________ the product offers and how it fits into their current _______________.
benefits
lifestyle, habits, and preferences
The __________ represents the stages through which products and services diffuse through the marketplace. These stages include _______________.
product life cycle
introduction, growth, maturity, and decline
During the introductory stage the profit curve is generally below ________ because the firm is typically trying to cover _________ associated with the development and marketing of the product or service.
zero (negative), fixed costs
The steepest part of the curve occurs during the _________, which is when most of the market (i.e., the “mass market”) begins buying the product or service. This is when __________, the first large group of product adopters, enters the market
growth phase
the early majority
While not always true, it is common for the profit curve to ______ during the maturity stage as increased competition puts _________ pressure on prices that companies can charge in the marketplace.
decline, downward
In the adopter categories, the final 16 percent to adopt are similar to innovators in that they do not rely on the norms of the group but are independent because they are bound to tradition. They tend to have the lowest socioeconomic status, are suspicious of new products, and are alienated from a rapidly advancing society. They are called:
laggards.
All of the following are product characteristics influencing the rate of adoption EXCEPT:
distribution.
The “chasm” identified in the Technology Adoption Life Cycle concept exists between which two of the categories of product adopters?
Early Adopters and Early Majority
product characteristics influencing the rate of adoption:
complexity
trialability: ability to try out the product before purchase
relative advantage
compatibility
observability: how easily can customer observe other customers benefitting from it?
CTACO
There are, however, common characteristics of services which include:
intangibility, inseparability, heterogeneity (or inconsistency), and perishability
For example, consumers can pick up a mobile phone and play with the operating system to see if they like it. If it can be easily assessed before purchase, it is considered high in ___________.
search quality
On the other hand, if a consumer is only able to evaluate services after experiencing them, such as a haircut, it is considered high in _______________.
experience quality
If consumers are not able to evaluate the service effectively even through experience, such as car repair, it is considered high in _____________.
credence quality
intangibility:
search, experience, and credence quality
Services are usually __________ from the service provider and/or customer.
inseparable
Inseparability:
between service and provider
Services delivered by humans tend to be more _____________ with each service execution.
heterogeneous or inconsistent
For example, every time a customer orders a non-fat macchiato with soy milk and no foam, the creation of that drink, how the customer orders and receives the drink, and how they interact with the overall service environment can vary. Therefore, companies like Starbucks invest time in hiring skilled people and training them to execute based on precise and specific standards.
heterogeneity
One problem with services is that if a customer does not buy the service right when it is offered, the service cannot be stored. As such, services have a ___________ component that differs from products, which can be stored.
perishability
They can offer deals or reduced pricing during non-peak times. For instance, the use of annual park passes at amusement parks has been an especially successful approach. Annual pass holders typically enjoy the park during non-peak hours and spend more money on food and other items (all of which might be higher margin for the park) compared with single-day ticket holders.
overcome cost issue of perishability
Services tend to exhibit more search qualities than do tangible goods.
False
Tax return preparation
strong credence qualities
All products that an organization sells.
Product Mix
A group of closely-related product items.
Product Line
A specific version of a product that can be designated as a distinct offering among an organization’s products.
Product Item
A specific unit of inventory that is carried as a separate, identifiable unit.
Stock Keeping Unit
Product Mix Breadth
The variety & number of product lines an organization offers.
Diversifies risk
Capitalizes on established reputations
Establish relationships between product lines, if any
Product Line Depth
The number of product items in a product line.
Attracts buyers with different preferences
Increases sales/profits by further market segmentation
Capitalizes on economies of scale
Evens out seasonal sales patterns
Adding additional products to an existing product line in order to compete more broadly in the industry.
Product Line Extension
Product or Offering
Everything, both favorable and unfavorable, that a person receives in an exchange.
Tangible Good
Service
Idea
A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers.
Business Product
A product bought to satisfy an
individual’s personal needs or wants
Consumer Product
Types of Consumer Products:
Convenience Product
Shopping Product
Specialty Product
Unsought Product
A relatively inexpensive item that merits
little shopping effort
Convenience Product
A product that requires comparison shopping, because it is usually more expensive and found in fewer stores
Shopping Product
A particular item for which consumers search extensively and are reluctant to accept substitutes
Specialty Product
A product unknown to the potential buyer or a known product that the buyer does not actively seek
Unsought Product
The practice of modifying products so those that have already been sold become obsolete before they actually
need replacement.
Planned Obsolescence
