Marketing

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Anonymous
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117717
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Marketing
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2011-11-18 13:04:47
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Chapter Create Product
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Chapter 8 Create the Product
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  1. The Value Preposition
    • Value preposition: the consumer’s perception of the benefits she will receive if she buys a good or service
    • 1. To create better value than what’s out there
    • 2. Convince customers that this is true
    • Good: tangible product, something that we can see, touch, smell, hear, taste, posses
    • Intangible products, services ideas, people, places, products that we can’t always see touch, taste, smell, or possess
  2. Layers of the Product Concept
    • The Core Product
    • The Actual Product
    • The Augmented Product
  3. The Core Product
    • All the benefits the product will provide for consumers or business customers
    • (Benefits- an outcome that the customer receives from owning or using product)
    • Marketing is about supplying benefits, not products.
  4. The Actual Product
    • The physical good or the delivered service that supplies the desired benefit
    • Includes the unique features of the product, such as its appearance or styling, the package and the brand name
  5. The Augmented Product
    The actual product plus other supporting features such as warranty, credit, delivery, installation, and repair service after the sale.
  6. Durable goods
    • consumer products that provide benefits over a period of months, years, or even decades
    • Under conditions of high involvement
    • Understand different product benefits and importance of warranties, service, and customer support.
  7. Nondurable goods
    • consumer products that provide benefits for a short time because they are consumed (food) or are no longer useful (newspapers).
    • Under conditions of low involvement
    • Whatever brand is available and reasonably priced
    • Base their decisions largely on past experience
  8. Convenience Products
    • Nondurable good or service that consumers purchase frequently with a minimum of comparison and effort
    • Low priced and widely available
    • Results of habitual consumer decision-making
    • STAPLES: basic or necessary items that are available almost everywhere
    • Don’t perceive big differences among brands
    • Consistently meets their expectations
    • Available at a price comparable to the competition’s pieces
    • IMPULSE PRODUCT: Products or services people often buy on the spur of the moment
    • Create a product or package design that is enticing and highly visible
  9. Emergency Products
    • Dire need
    • Price and sometimes product quality may be irrelevant to our decision to purchase
    • Challenges to marketers:
    • Meet customer needs
    • Offered in the sizes customers want
    • Making emergency products available when and where an emergency is likely to occur
  10. Shopping Products
    • Goods of services for which consumers will spend time and effort gathering information on price, product attributes, and product quality
    • Moderately brand loyal / will switch whenever a different brand offers new or better benefits.
    • Designing successful shopping products:
    • Attributes that customers want
    • Product packaging that points out the features consumers need to know about to make the right decision
    • Attribute base shopping products: spend time and energy finding the best possible product selection
    • Price-based shopping products: will visit numerous stores in hopes of saving additional money
    • Intelligent agents: shopbots – computer programs that find sites selling a particular product
  11. Specialty Products
    • Good or service that has unique characteristics and is important to the buyer and for which she will devote significant effort to acquire
    • Usually know a good deal about
    • Tend to be loyal to specific brands
    • Need to create marketing strategies that make their product stand apart
    • ONSOUGHT PRODUCTS: Consumer has little awareness or interest until a need arises
  12. Innovation:
    • a product that consumers perceive to be new and different from existing product
    • “New Product” -> (1) product must be entirely new or changed significantly
    • (2) product may be called new for only 6 months
  13. HOW INNIVATIONS WORK
    • Need to understand the process by which innovations succeed for 2 reasons
    • 1. Technology advances today at a dizzying pace (constant new products introduced)
    • 2. High cost of developing new products and the even higher cost of new products that fail
    • 3. New products contribute to society
  14. Types of Innovations
    • Continuous Innovation
    • Dynamically Continuous Innovation
    • Discontinuous Innovation
  15. CONTINUOUS INNOVATION
    • A modification to an existing product that sets one brand apart from its competitors
    • Consumer doesn’t have to learn anything new to use a continuous innovation
    • Marketers perspective: easy to convince consumers to adopt this kind of new product
    • Knockoff: a new product that copies, with slight modification, the design of an original product
  16. DYNAMICALLY CONTINUOUS INNOVATIONS
    • Pronounced modification to an existing product that requires a modest amount of learning or change in behavior to use it
    • These changes required us to learn how to learn how to operate new equipment; we were willing to buy the new products because of the improvements in the core product benefit.
    • Convergence: the coming together of two or more technologies to create a new system with greater benefits that its separate parts (phone, organizer, camera)
  17. DISCONTINUOUS INNOVATIONS
    • Creates major changes in the way we live
    • Must learn a great deal to use this innovation because no similar product has ever been on the market (personal computer, car).
    • Offer a free product trial or place heavier emphasis on a personal selling strategy to convince them that the new product offers benefits worth the hassle.
  18. New Product Development
    • PHASE 1: IDEA GENERATION
    • PHASE 2: PRODUCT CONCEPT DEVELOPMENT AND SCREENING
    • PHASE 3: MARKETING STRATEGY DEVELOPMENT
    • PHASE 4: BUSINESS ANALYSIS
    • PHASE 5: TECHNICAL DEVELOPMENT
    • PHASE 6: TEST MARKETING
    • PHASE 7: COMMERCIALIZATION
  19. PHASE 1: IDEA GENERATION
    • Phase of product development, marketers use a variety of sources to come with great new product ideas that provide customer benefits and that are compatible with the company mission
    • Sometimes ideas come from customers, salespeople, service providers, and others with direct customer contact.
  20. PHASE 2: PRODUCT CONCEPT DEVELOPMENT AND SCREENING
    • Marketers to expand these ideas into more-complete product concepts- describe what features the product should have and the benefits those features will proved for consumers
    • Technical success: when decide whether the new product is technologically feasible
    • Commercial success: decide whether anyone is likely to buy the product
    • “do what they need to do – but look good while doing it (incorporating design into products)
  21. PHASE 3: MARKETING STRATEGY DEVELOPMENT
    • To introduce the product to the marketplace marketers must identify:
    • Target market
    • Estimate its size
    • Determine how they can effectively position the product to address the target market’s needs
    • Also includes planning for pricing, distribution, and promotion expenditures both for the introduction of the product and for the long run
    • Green Marketing: the development of marketing strategies that support environmental stewardship by creating an environmentally-founded differential benefit in the minds of consumers
  22. PHASE 4: BUSINESS ANALYSIS
    • The step in the product development process in which marketers assess a product’s commercial viability
    • Assessing how the new product will fit into firm’s total product mix
    • Will the new product increase sales?
    • Improve visibility and the image of both?
    • Marketing cost likely to be?
  23. PHASE 5: TECHNICAL DEVELOPMENT
    • Firm’s engineers work with marketers to refine the design and production process
    • The better a firm understands how costumers will react to a new product, the better its chances of commercial success
    • Prototypes: test versions of a proposed product
    • Prospective customers may evaluate these mockups in focus groups or in the field trials at home
    • Useful for people within the firm – must determine which parts of a finished good the company will make and which ones will buy from other suppliers
    • Requires the company to apply for a patent because legally prevent competitors from producing or selling the invention, may reduce or eliminate competition in a market for many years
  24. PHASE 6: TEST MARKETING
    • Firm tries our the complete marketing plan in a small geographic area that is similar to the larger market it hopes to enter
    • Distribution
    • Advertising
    • Sales promotion
    • Extremely expensive!
    • Gives the competition a free look at the new product, its introductory price, and the intended promotional strategy
    • Marketers can evaluate and improve the marketing program
    • Use special computer software to conduct simulated tests that imitate the introduction of a product into the marketplace
    • Process entails gathering basic research data on consumers’ perceptions of the product concept, the physical product, the advertising, and other promotional activity
  25. PHASE 7: COMMERCIALIZATION
    • The launching of a new product, and it requires full scale production, distribution, advertising, sales promotion
    • Requires planning and careful preparation
    • Marketers must implement trade promotion plans that offer special incentives to encourage dealers, retailers or other members of the channel to stock the new product so that customers will find it on the stores shelves the very first time they look
    • Develop customer sales promotions, such as coupons
    • If product is complex, customer service employees must receive extensive training and preparation.
  26. Adoption and Diffusion
    • Product adoption: is the process by which a consumer or business customer begins to buy and use a new good, service, or idea
    • Diffusion: how the use of a product spreads throughout a population
    • recover the costs of product development and launch
  27. Tipping point:
    Tipping point: in the context of product diffusion, the point when a product’s sales spike from a slow climb to an unprecedented new level, often accompanied by a steep price decline.Real challenge to firms is to get consumers to buy and use the product and to do so quickly so they can
  28. Stages in Consumers' Adoption of a New Product
    • Awareness
    • Interest
    • Evaluation
    • Trial
    • Adoption
    • Comfirmation
  29. Awareness
    • The innovation exists at al is the first step in the adoption process
    • To educate consumers about a new product, marketers may conduct a massive advertising campaign a media blitz
  30. Interest
    • Prospective adopter begins to see how a new product might satisfy an existing or newly-realized need
    • Consumers look for and are open to information about the innovation
    • Marketers design teaser advertisements that give prospective customers just enough information about the new product to make them curious and to stimulate their interest
  31. Evaluation
    • Weigh the costs and benefits of the new product (for complex, risky, or expensive products)
    • Impulse purchase: purchase made without any planning or search effort
    • Product must be eye-catching and appealing to get consumers to notice the product quickly
  32. Trial
    • Buyers will actually experience or use the product for the first time
    • They provide opportunities for consumers to sample the product
    • Some consumers just can’t stand to buy without first touching, holding, and using a product
  33. Adoption
    • Prospect actually buys the product
    • Means buying the product and learning how to use and maintain it
    • If an idea, individual agrees with the concept
    • Marketers need t provide follow-up contacts and communications with adopters to ensure they are satisfied and remain loyal to the new product over time
  34. Confirmation
    • Customer weighs expected versus actual benefits and costs
    • Favorable experiences make it more likely that she will become a loyal adopter
    • Provide advertisements, sales presentations, and other communications to reinforce a customer’s choice
  35. The Diffusion of Innovations
    • Innovators
    • Early Adopters
    • Early Majority
    • Late Majority
    • Laggards
  36. Innovators
    • Extremely adventurous and willing to take risks with new products
    • Typically well-educated, younger, better off financially than others in the population and worldly
  37. Early Adopters
    • Very concerned about social acceptance so they tend to gravitate toward products they believe will make others think they are cutting edge or fashionable
    • Heavy media users
    • Target them in their advertising and other communications efforts
  38. Early Majority
    • Avoid being either first or last to try an innovation
    • Middle class consumers and are deliberate and cautious
  39. Late Majority
    • Older, even more conservative, and typically have lower than average levels of education and income
    • Avoid trying a new product until its no longer risky
  40. Laggards
    • Last in the population to adopt a new product
    • Social class than other adopter categories and are bound by tradition
    • Understand these adopter categories, marketers can develop strategies that will speed the diffusion or widespread use of their products
  41. Product Factors that Affect the Rate of Adoption
    • Consumers did not perceive that the products satisfied a need better than competitive products already on the market
    • Between one-third and one-half of all the new products fail
    • Five characteristics that affect the rate of adoption:
    • Relative Advantage
    • Compatibility
    • Complexity
    • Trialability
    • Observability
  42. Relative Advantage
    The degree to which a consumer perceives that a new product provides superior benefits
  43. Compatibility
    • The extent to which a new product is consistent with existing cultural values, costumes, and practices
    • By anticipating compatibility issues early in the new product development stage, address such problems in planning communications programs, alter product designs to overcome some consumer objections
  44. COMPLEXITY
    Consumers find a new product or it use difficult to understand
  45. TRIALABILITY
    Ease sampling a new product and its benefits
  46. OBSERVABILITY
    How visible a new product and its benefits are to others who might adopt it

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