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Transcript of SM 2 08 06 06
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Chapter 9:Chapter 9:
Designing and ManagingDesigning and Managing
ProductsProducts
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What is a Product?What is a Product?
A Product is anything that can be offered to aA Product is anything that can be offered to amarket for attention, acquisition, use, ormarket for attention, acquisition, use, orconsumption and that might satisfy a want or need.consumption and that might satisfy a want or need.
Includes:Includes:
Physical ObjectsPhysical Objects ServicesServices
EventsEvents
PersonsPersons
PlacesPlaces
OrganizationsOrganizations
IdeasIdeas
Combinations of the aboveCombinations of the above
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Core ProductCore Product
Facilitating ProductsFacilitating Products--must be present for the guest to use the coremust be present for the guest to use the core
serviceservice
Supporting ProductsSupporting Products
--Add value to the core productAdd value to the core product
Augmented ProductAugmented Product--physical environment, accessibility,physical environment, accessibility,
interactions, physical environmentinteractions, physical environment
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Chapter 9: Figure
9-1: Product
levels
Source: Gronroos,Developing the
Service Offering -
A source of
Competituive
Advantage, in
Add Value to YourService, C.
Suprenant, ed.,
Chicago:
American
Marketing
Association.
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Elements that enhance positioningElements that enhance positioning
and create augmented productsand create augmented products
AtmosphereAtmosphere
Customer interaction with serviceCustomer interaction with service
delivery systemdelivery system
Customer interaction with otherCustomer interaction with other
customerscustomers
Customer coCustomer co--productionproduction
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BrandBrand
Brands are among a companys mostBrands are among a companys most
valuable assetsvaluable assets
A Brand represents what the company is andA Brand represents what the company is and
what it stands forwhat it stands for
A Brand implies trust , consistency, and aA Brand implies trust , consistency, and a
defined set of expectationsdefined set of expectations
The strongest brands own a place in theThe strongest brands own a place in thecustomers mindcustomers mind
From Scott Davis,From Scott Davis, Brand Asset ManagementBrand Asset Management
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AdvantagesofBrand Names
Brand
Equity
Strong Brand
Association
Attributes
Quality & ValueConsistency
Identification
Perceived QualityName Awareness
High BrandLoyalty
BrandingBranding
This Land-O-Lakes ad shows the depth of the brand.
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Conditions That SupportB
randingConditions That SupportB
randingProduct is easy to identifyProduct is easy to identify
Product is perceived to be the best valueProduct is perceived to be the best value
for the pricefor the price
Quality and standards are easy toQuality and standards are easy tomaintainmaintain
Demand is enough to support brandingDemand is enough to support brandingefforteffort
There are economies of scaleThere are economies of scale
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New Product Development ProcessNew Product Development Process
IdeaIdeaGenerationGeneration
ConceptConceptDevelopmentDevelopment
and Testingand Testing
MarketingMarketingStrategyStrategy
DevelopmentDevelopment
IdeaIdeaScreeningScreening
BusinessBusinessAnalysisAnalysis
ProductProduct
DevelopmentDevelopment
MarketMarketTestingTesting
CommercializationCommercialization
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Customers Competitors Distributors Suppliers
Idea Generation is the Systematic Search for NewProduct Ideas Obtained Internally From Employees
and Also From:
New Product DevelopmentNew Product Development
ProcessProcess Step 1. Idea GenerationStep 1. Idea Generation
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New Product DevelopmentNew Product Development
ProcessProcess Step2. Idea ScreeningStep2. Idea Screening
Process to spot good ideas and drop poor ones as soonProcess to spot good ideas and drop poor ones as soonas possible.as possible.
Many companies have systems for rating and screeningMany companies have systems for rating and screeningideas which estimate:ideas which estimate:
Market SizeMarket Size
Product PriceProduct Price
Development Time & CostsDevelopment Time & Costs
Unit CostsUnit Costs
Rate of ReturnRate of Return
Then, the idea is evaluated against a set of generalThen, the idea is evaluated against a set of generalcompany criteria.company criteria.
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1. Develop New Product Ideasinto Alternative Detailed
Product Concepts
2. Concept Testing - Test theNew Product Concepts withGroups of Target Customers
3. Choose the One That Has theStrongest Appeal to Target
Customers
New Product Development ProcessNew Product Development Process
Step 3. Concept DevelopmentStep 3. Concept Development
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Part Three Describes Long-Term:Sales & Profit Goals
Marketing Mix Strategy
Part Two Describes First-Year:Products Planned Price
DistributionMarketing Budget
Part One Describes Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
New Product DevelopmentNew Product Development
ProcessProcess Step 4. Marketing StrategyStep 4. Marketing Strategy
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If No, Eliminate
Product Concept
Business AnalysisReview of Product Sales, Costs,and Profits Projections to See ifThey Meet Company Objectives
Step 5. Business AnalysisStep 5. Business AnalysisStep 6. Product DevelopmentStep 6. Product Development
If Yes, Move toProduct Development
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Advertising
Atmosphere
ProductBudget Levels
Positioning
LocationPricing
Branding
Elements thatMay be Test
Marketed by a
Company
Test Marketing is the Stage Where the Product andMarketing Program are Introduced into More Realistic MarketSettings.
Product Development ProcessProduct Development ProcessStep 7. Test MarketingStep 7. Test Marketing
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When is theRight Time to
IntroduceProduct?
Where toLaunch a
NewProduct?
Commercialization is the Introduction ofthe New Product into the Marketplace.
New Product Development ProcessNew Product Development Process
Step 8. CommercializationStep 8. Commercialization
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Product Development throughProduct Development through
AcquisitionAcquisition
Large companies will sometimes buy aLarge companies will sometimes buy a
small companies rather than develop theirsmall companies rather than develop their
own new companies.own new companies.
Sometimes, companies purchase distressedSometimes, companies purchase distressed
chains to turn them around. For example,chains to turn them around. For example,
Pepsico purchased KFC and Taco Bell.Pepsico purchased KFC and Taco Bell.
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Time
ProductDevelop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments ($)
Sales andProfits ($)
Sales and Profits Over the Products Life From Inception toDemise
Product Life CycleProduct Life Cycle
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Source: Martin Bell, Marketing Concepts and Strategy, 3rd ed., p.267, 1979, Houghton Mifflin Company;
used by permission, Mrs.. Marcellette (Bell) Chapman.
Product Deletion Process