Product is a good, service, or an idea that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a want or need Core product represents the basic need of a customer, consists of the fundamental utility or main benefit Symbolic and Experiential benefits: Product = symbolic Process like shopping = experiential Buyers purchase the benefits and satisfaction they think the product will provide.
Convenience products: - Are relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort. - Widespread distribution - Readily available (placed conveniently in stores)
Shopping products: - Items for which buyers are willing to expend considerable effort in planning and making purchases. - More extensive search - Available substitutes - Less frequent purchase - Higher than convenience good pricing - Selective distribution - Personal selling, advertising Specialty products: - Are items with unique characteristics that buyers are willing to expend considerable effort to obtain. - Require extensive search - Are generally higher price points - Have no ready substitutes - Exclusive distribution - Carefully targeted promotions Unsought products: - Are products purchased to solve a sudden problem, products of which customers are unaware, and products that people do not necessarily think of buying. - No search - Price not important - Aggressive advertising and personal selling
Product Line and Product Mix
Product Item - A specific version of a product Product Line - A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations Product Mix - The total group of products that an organization makes available to customers - Width of Product Mix - The number of product lines a company offers - Depth of Product Mix - The average number of different products in each product line
Product Life Cycle
The progression of a product through four stages: introduction, growth, maturity and decline.
Introduction Stage - The initial stage of a product’s life cycle - Its first appearance in the marketplace when sales start at zero and profits are negative Strategic Implications: - High risk of failure - Buyers must be made aware of: - Features - Uses - Advantages - Sellers lack - Resources - Technological knowledge - Marketing know-how Growth Stage
- The product life cycle stage when sales rise rapidly, profits reach a peak, and then they start to decline.
Strategic Implications:
- Stress brand benefits to encourage brand loyalty
- Intensify segmentation - Strengthen market share - Promotion costs drop as a percentage of sales - Prices may be lowered - Analyze production position - Efficient distribution system Maturity Stage - The stage of the a product’s life cycle when the sales curve peaks and starts to decline and profits continue to fall. Strategic Implications: - Advertising and dealer oriented promotions are typical. - May expand distribution to global markets - Customers have high knowledge. - Products may require adaptation. Objectives to Pursue During Maturity: - Generate Cash Flow - Maintain Share of Market - Increase Share of Customer Decline Stage - The stage of a product’s life cycle when sales fall rapidly. Strategic Implications: - Eliminate/reposition items - Cut promotion - Eliminate marginal distributors - Plan for phase out - Approaches: - Harvesting - Divesting The Five-Stage Process of Product Adoption: 1.Awareness ● Buyer becomes aware of the product. 2.Interest ● Buyer seeks information and is receptive to learning about the product. 3.Evaluation ● Buyer considers product’s benefits and decides whether to try it. 4.Trial ● Buyer examines, tests, or tries the product to determine if it meets his or her needs. 5.Adoption ● Buyer purchases the product and is expected to use it again whenever the need for this general type of product arises. Adopter Categories Innovators - First to adopt new product. Early Adopters - Choose new products carefully, help spread word-of-mouth. Early Majority - Adopt just prior to average person. Late Majority - Skeptics who adopt new products when they feel it is necessary. Laggards - Last to adopt a new product.
Week 6-2: New Product Development
Definition of New Products: - Offering innovative benefits - Different and distinctly better than existing - Never been sold by any organization - Never sold before by that firm or in that market Three factors that determine outcomes: - Doing (implementation) - Deciding (the thinking and decision process) - Chance (luck)
Phases of new product development:
Screening: - Choosing the most promising ideas for further review - Concerns about cannibalization of existing products - Company capabilities to produce and market the product - Nature and wants of buyers R-W-W Screening Framework: - Is it real? - Can we win? - Is it worth doing? Concept Testing - Seeking potential buyers’ responses to a product idea - Low cost determination of initial reaction to product idea - Identification of important product attributes and benefits Business Analysis - Assessing the potential of a product idea for the firm’s sales, costs, and profits - Does product fit in with existing product mix? - Is demand strong enough to enter the market? - How will introducing the product change the market? - Is the firm capable of developing the product? - What are the costs for developing and marketing? Product Development - Determining if producing a product is technically feasible and cost effective. - A prototype is often used to reveal the tangible and intangible attributes of the product. - A lengthy and expensive part of process - Few product ideas make it to this stage. Test Marketing - A limited introduction of a product in geographic areas chosen to represent the intended market. - Benefits: - Exposes the product to the marketing environment and assess its sales performance potential - Identifies weaknesses in the product or the marketing mix - Allows for experiments with variations in the marketing mix - Reduces the risk of failure Standard Test Marketing - Marketing program implemented in limited but carefully selected parts of the market - Small number of representative cities - Goal - To gain information and experience with the marketing program before making a total commitment to it - Drawback: - Competition has access to your product Controlled test markets - Same as Standard - But instead of launching in representative cities, you launch in a few participating stores - Consumer behavior can be followed through panel data - Less expensive than standard test markets - Faster than standard test markets - Competitors gain access to the new product Commercialisation - Refining and finalizing plans and budgets for full-scale manufacturing and marketing of a product.
