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CHAPTER 8 Creating the Product

M A R K E T I N G. Real People, Real Choices. CHAPTER 8 Creating the Product. Chapter Objectives. Explain the layers of a product Describe the classifications of products Explain the importance of new products Describe how firms develop new products

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CHAPTER 8 Creating the Product

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  1. M A R K E T I N G Real People, Real Choices CHAPTER 8Creating the Product

  2. Chapter Objectives • Explain the layers of a product • Describe the classifications of products • Explain the importance of new products • Describe how firms develop new products • Explain the process of product adoption and the diffusion of innovations

  3. The Core Product • Consists of all the benefits the product will provide for consumers or business customers • A customer purchases a 1/2” drill bit. What does he want? • A 1/2” hole! • Marketing is about supplying benefits, not products

  4. The Actual Product • Consists of the physical good or delivered service that supplies the desired benefit • Example: • A washing machine’s core product is the ability to get clothes clean, but the actual product is a large, square, metal apparatus • Actual product also includes appearance, styling, packaging, & the brand

  5. The Augmented Product • Consists of the actual product plus other supporting features such as warranty, credit, delivery, installation, & service • Have you heard: “sell the sizzle not the steak?”

  6. By how long they last Durable Nondurable By how consumers buy them Convenience Shopping Specialty Unsought Classifying Consumer Products

  7. Classifying Business Products • By how products are used • Equipment • Maintenance, repair, operating • Raw materials • Processed materials • Specialized services • Component parts

  8. Convenience Products • Good or service that consumers purchase frequently with a minimum of comparison and effort • Types of convenience products • staples • impulse products • emergency products

  9. Shopping Products • Good or service for which consumers will spend time & effort gathering information on price, product attributes, & product quality • Consumers compare alternatives before purchase • Types of shopping products • attribute-based shopping products • price-based shopping products

  10. Specialty Products • Goods or services bought with much consumer effort in an extended problem-solving situation • Consumers insist upon a particular item and will not accept substitutes • Rolex Watch: real or fake?

  11. Unsought Products • Goods or services for which a consumer has little awareness or interest until a need arises • Require a good deal of advertising or personal selling to interest people 1-800-Metlife

  12. It’s New and Improved • What is a new product? • According to the FTC, a new product is one that is entirely new or changed significantly and that product may be called new for only sixmonths • From a marketing perspective, new is anything a customer perceives as new & different

  13. New Product Development • Idea Generation • Product Concept Development & Screening • Marketing Strategy Development • Business Analysis • Technical Development • Market Testing • Commercialization

  14. Step 1: Idea Generation • Sources of new ideas • customers • salespeople • service providers • anyone with direct customer contact

  15. Step 2: Product Concept Development • Expand ideas into more complete product concepts • Describe what features the product should have and benefits those features will provide for consumers • Evaluate the chance for technical and commercial success

  16. Step 3: Marketing Strategy Development • Develop a marketing strategy that can be used to introduce the product to the marketplace • Identify the target market • Estimate its size • Determine how the product can be positioned • Plan pricing, distribution, and promotion expenditures necessary for roll-out

  17. Step 4: Business Analysis • Assess how the new product will fit into the firm’s total product mix • Evaluate whether the product can be a profitable contribution for the organization’s product mix

  18. Step 5: Technical Development • Work with engineers to refine the design and production process • Develop one or more prototypes • Evaluate prototypes with prospective customers • If applicable, apply for a patent

  19. Market Testing • Try out the complete marketing plan (product, price, place, and promotion) in a small geographic area that is similar to larger target market • Traditional test marketing is expensive and gives competition a chance to evaluate the new product • Simulated test markets eliminate competitive viewing and cost less

  20. Commercialization • Launch the product! • Full scale production • Distribution • Advertising • Sales promotion • and more

  21. Issues for Discussion • Should knockoffs be illegal? Who is hurt by knockoffs? Is the marketing of knockoffs good or bad for consumers? • What are some new products that have made our lives better? That have been harmful to consumers or to society? Should there be a way to monitor new products that are introduced?

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