Transcript PF_FM_4e_Ch10.ppt

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
1. Understand how companies manage existing products
through line extensions and product modifications.
2. Describe how businesses develop a product idea into a
commercial product.
3. Know the importance of product differentiation and the
elements that differentiate one product from another.
4. Explain product positioning and repositioning.
5. Understand how product deletion is used to improve product
mixes.
6. Understand the characteristics of services and how these
characteristics present challenges when developing
marketing mixes for service products.
7. 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
Aesthetic
Modifications
Functional
Modifications
Line
Extensions
Managing
Existing
Products
Product
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
• 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
• 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.
Discussion Question
• When Apple introduced the 3G iPhone, was
it a line extension or a product
modification?
• When Apple introduced the 3GS iPhone,
was it a line extension or a product
modification?
© 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
• 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.
Discussion Question
• Click on the TV below to watch a Windows
7 Promotional Video. After viewing it, and
using your personal knowledge of Windows
7, discuss whether you think Windows 7 is a
quality, functional, or aesthetic
modification.
© 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
• 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.
Discussion Question
• Some marketers
would consider this
to be a new product,
while others would
view it as a line
extension. Which do
you think it is?
© 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.
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
• 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
• 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
• 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
• 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
• 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
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Product Support Services
• 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
• 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
• 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” or
“ideal clusters”
• 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
• 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
• A brand’s market share and profitability
may be strengthened by repositioning
• 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.
Discussion Question
• Click on the TV below and watch the
commercial. What base(s) for product
positioning do you think was used in this
commercial?
© 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 Deletion Process
• Eliminating a product from the product mix, usually
because it no longer satisfies a sufficient number of
customers
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Services As Products
• Services, like products, must be marketed.
• Those marketing services must understand
their unique characteristics:
• Intangibility
• Inseparability of production and consumption
• Perishability
• Heterogeneity (variation in quality)
• Client-based relationships (resulting in repeated
use of the service)
• Customer contact
© 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.
Customer Contact
• The level of interaction between provider and
customer needed to deliver the service
Level of Customer Contact
There is a high level of customer contact associated with medical services.
© 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.
Service Characteristics and
Marketing Challenges
© 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.
Creating Marketing Mixes for
Services
• Development of services
• Core service
• Supplementary service
• Pricing of services
• Most revenues brought in during peak demand
• Distribution of services
• Many firms have changed a high-contact service into a
low-contact one
• Promotion of services
• Typically includes tangible cues that symbolize the
service
© 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.
Distribution of Services
Distribution
FedEx mainly provides its
services through retail stores,
as well as pickup and delivery
at customers’ homes or
offices.
© 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.
Organizing to Develop
and Manage Products
• Product manager
– The person within an organization responsible for a
product, a product line, or several distinct products
that make up a group
• Brand manager
– The person responsible for a single brand
• Market manager
– The person responsible for managing the marketing
activities that serve a particular group of customers
• Venture team
– A cross-functional group that creates entirely new
products that may be aimed at new markets
© 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.
After Reviewing This Chapter
You Should:
1.
2.
3.
4.
5.
6.
7.
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.
Key Concepts
•
Line extension
•
Consistency of quality
•
Product modification
•
Product design
•
Quality modifications
•
Styling
•
Functional modifications
•
Product features
•
Aesthetic modifications
•
Customer services
•
New-product development process
•
Product positioning
•
Idea generation
•
Product deletion
•
Screening
•
Intangibility
•
Concept testing
•
Inseparability
•
Business analysis
•
Perishability
•
Product development
•
Heterogeneity
•
Test marketing
•
Client-based relationships
•
Commercialization
•
Product manager
•
Product differentiation
•
Brand manager
•
Quality
•
Market manager
•
Level of quality
•
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.