Transcript Objectives - Cameron School of Business
Chapter 10:
Developing and Managing Goods and Services
Pride/Ferrell
Foundations of Marketing
Fourth Edition Prepared by Milton Pressley University of New Orleans © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Objectives
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Understand how companies manage existing products through line extensions and product modifications.
Describe how businesses develop a product idea into a commercial product.
Know the importance of product differentiation and the elements that differentiate one product from another.
Explain product positioning and repositioning.
Understand how product deletion is used to improve product mixes.
Understand the characteristics of services and how these characteristics present challenges when developing marketing mixes for service products.
Be familiar with organizational structures used for managing products.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Managing Existing Products
An organization can benefit by capitalizing on its existing products Line Extensions Aesthetic Modifications Managing Existing Products Product Modifications Functional Modifications Quality Modifications
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Line Extension
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Development of a product that is closely related to existing products in the line but meets different customer needs Line Extension Chocolate-flavored Chex Mix is a line extension.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Product Modifications
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Change in one or more characteristics of a product Product Modification Automobile companies employ quality, functional, and aesthetic modifications.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Quality, Functional, and Aesthetic Modifications
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Quality modifications
– Changes relating to a product’s dependability and durability •
Functional modifications
– Changes affecting a product’s versatility, effectiveness, convenience or safety •
Aesthetic modifications
– Changes to the sensory appeal of a product © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Developing New Products
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The term “new product” can have more than one meaning
– Offering innovative benefits – Different and distinctly better than existing products – Never been sold by any organization – One a specific firm is currently launching even though other firms are already producing and marketing similar products – It is brought to one or more markets from another market © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 10.1 Phases of New-Product Development
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Phases of New Product Development
Idea generation
– Seeking product ideas to achieve objectives
Screening
– Choosing the most promising ideas for further review
Concept testing
– Seeking potential buyers’ responses to a product idea
Business analysis
– Evaluating the potential contribution of a product idea to the firm’s sales, costs and profits
Product development
– Determining if producing a product is technically feasible and cost effective © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Test Marketing
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Introducing a product on a limited basis to measure the extent to which potential customers will actually buy it
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Commercialization
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Deciding on full-scale manufacturing and marketing plans and preparing budgets Stages of Expansion into a National Market During Commercialization
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Product Differentiation
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Creating and designing products so that customers perceive them as different from competing products
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Product Quality
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Characteristics of a product that allow it to perform as expected in satisfying customer needs Every product possesses a certain level of quality Products are judged by consistency of quality over time Product Quality Selected products are designed to have a very high quality and to use quality as a major competitive tool.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Product Design and Features
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Product Design
– How a product is conceived, planned, or produced •
Styling
– The physical appearance of a product •
Product Features
– Specific design characteristics that allow a product to perform certain tasks © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Product Support Services
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Often referred to as customer services, these services include any human or mechanical efforts or activities a company provides that add value to a product Product Support Services CORT Furniture provides product support services that some other office furniture manufactures do not.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Product Positioning
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Creating and maintaining a certain concept of a product in customers’ minds Product Positioning The makers of Dockers position their products as being comfortable, flexible, and a reasonable value.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Perceptual Mapping
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Created by questioning a sample of consumers about their perceptions of products, brands, and organizations with respect to two or more dimensions
– Respondents are asked about their preferences for product features to establish “ideal points” “ideal clusters” or • Represent a consensus about what a specific group of customers desires in terms of product features © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Hypothetical Perceptual Map for Pain Relievers
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Bases For Positioning
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Use competitors
– Head-to-head competition – Avoiding competition
Price Quality level Benefits provided by the product
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Repositioning
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A brand’s market share and profitability may be strengthened by repositioning
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Can be accomplished by:
– physically changing the product – changing the price – changing distribution – changing image through promotional efforts – aiming product at a different target market © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1.
2.
3.
4.
5.
6.
7.
After Reviewing This Chapter You Should:
Understand how companies manage existing products through line extensions and product modifications.
Be able to describe how businesses develop a product idea into a commercial product.
Know the importance of product differentiation and the elements that differentiate one product from another.
Be able to explain product positioning and repositioning.
Understand how product deletion is used to improve product mixes.
Understand the characteristics of services and how these characteristics present challenges when developing marketing mixes for service products.
Be familiar with organizational structures used for managing products.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• • • • • • • • • • • • • • • •
Line extension Product modification Quality modifications
Key Concepts
Functional modifications Aesthetic modifications New-product development process Idea generation Screening Concept testing Business analysis Product development Test marketing Commercialization Product differentiation Quality Level of quality
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Consistency of quality Product design Styling Product features Customer services Product positioning Product deletion Intangibility Inseparability Perishability Heterogeneity Client-based relationships Product manager Brand manager Market manager Venture team
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.