Developing and managing products презентация

by Charlie Cook

11

Part Three Product Decisions

how companies manage existing products through line extensions and product modifications
To describe how businesses develop a product idea into a commercial product
To understand the importance of product differentiation and the elements that differentiate one product from another
To explore how products are positioned and repositioned in the customer’s mind
To understand how product deletion is used to improve product mixes
To describe organizational structures used for managing products

a Line Extension
Development of a product that is closely related to existing products in the line but meets different customer needs
Why do a Line Extension
Is a less expensive, low risk alternative
May focus on the same or a new segment
Can be used to counter competing products
Many “new products” are really line extensions.

“Cheerios”

“Honey-Nut Cheerios”

Modifications
A change in one or more characteristics of the product and the elimination of the original product from the product line.
Product must be modifiable.
Customer must be able to perceive modification has been made.
Modified product more closely satisfies customers’ needs.

New and Improved

material or production processes related to a product’s dependability and durability
Reducing quality to offer a lower price to customers
Increasing quality to gain a competitive advantage

1st

affecting a product’s versatility, effectiveness, convenience, or safety; usually requiring redesign of the product
Aesthetic Modifications
Changes to the sensory appeal of a product such as altering taste, texture, sound, smell, or appearance

mix
Increases depth in product line
Attracts new customers
Increases market and customer share
Risks
Expensive to develop
Creates risk of market failure
Loss of market share without new products

11.1

Development (cont’d)

Idea Generation
Seeking product ideas to achieve objectives
Internal sources: marketing managers, researchers, sales personnel, and engineers
External sources: customers, competitors, advertising agencies, consultants, and new-product alliances
What about your businesses? New business and new product? List ideas here
Focus on unmet needs
Group activity 4 minutes Brainstorming session? 10 good ideas

Development (cont’d)

Screening
Choosing the most promising ideas for further review
What criteria do you base you decision on? (Goto WP)
Concerns about cannibalization of existing products
Company capabilities to produce and market the product
Nature and wants of buyers
Concerns about whether it fits in the mission
In a group, screen out 5 Tell me about 1 you screened out

Development (cont’d)

Concept Testing
Seeking potential buyers’ responses to a product idea
Low cost determination of initial reaction to product idea
Identification of important product attributes and benefits
Interview, observation or focus group (Chap 6)

Tick and Flea Control Product

FIGURE 11.2

Development (cont’d)

Business Analysis
Assessing the potential of a product idea for the firm’s sales, costs, and profits
Does product fit in with existing product mix?
Is demand strong enough to enter the market?
How will introducing the product change the market?
Is the firm capable of developing the product?
What are the costs for developing and marketing? USE EXCEL link

Development (cont’d)

Product Development
Determining if producing a product is feasible and cost effective
Construction of a prototype, or working model
Testing of the prototype’s overall functionality
Determining the level of product quality
Branding, packaging, labeling, pricing, and promotion decisions

Development (cont’d)

Test Marketing
Introducing a product on a limited basis to measure the extent to which potential customers will actually buy it
Sample launch of entire marketing mix
Lessens risk of larger market failure
Is expensive; simulated test marketing is an alternative
NO TIME FOR YOUR PRODUCTS

Development (cont’d)

Commercialization
Deciding on full-scale manufacturing and marketing plans and preparing budgets
Modifications indicated by test marketing are incorporated into the production design.
Marketing, distribution, and servicing plans are finalized.
Product roll-out occurs in stages to lessen the risks of introducing the new product.

a National Market During Commercialization

FIGURE 11.3

Source: Adapted from Herbert G. Hicks, William M. Pride, and James D. Powell, Business: An Involvement Approach. Copyright © 1975. Reproduced with permission of The McGraw-Hill Companies.

Design, and Support Services

Product Differentiation
Creating and designing products so that customers perceive them as different from competing products
Perceived differences in product quality, product design and features, and product support services
Branding—a crucial way to differentiate a product

Sunkist

characteristics of a product that allow it to perform as expected in satisfying customer needs
Level of quality is the relative amount of quality a product possesses.
Consistency of quality is the degree to which a product has the same level of quality over time.

and Features
Product design
How a product is conceived, planned, and produced
Good design provides a strong competitive advantage.
Customers typically desire products with good designs and that function well.
Styling is the physical appearance of a product
Product features include specific design characteristics that allow a product to perform certain tasks

Services
Customer services
Human or mechanical efforts or activities that add value to a product
Delivery and installation, financing, customer training, warranties and guarantees, repairs, online product information
A competitive advantage when all other product features are equally matched by competitors

Positioning
Creating and maintaining a certain concept of a product in customers’ minds
A product’s position results from customers’ perceptions of a product’s attributes relative to those of competing products.
Marketers emphasize characteristics most desired by the target market (or segment) in advertising.

Pain Relievers

FIGURE 11.4

Perceptual maps show marketers how closely products are conceptually positioned by consumers to “ideal points,” to their own products, and to competitors’ products.

List characteristics why people would buy (tangible or perceived)
2. For the group of people you are targeting (consider the competition), which are the two most important?
Write a positioning statement
Succinct statement of target market for which the product is intended
Product category in which it competes
Unique one or two benefits (not features) the product offers
Please spare me the vague or ambiguous platitudes about high quality or excellent service—only mention price if you are truly the low cost provider

(cont’d)

Repositioning a Product
Adjusting a product’s present position can strengthen/ increase its market share and profitability.
Repositioning is accomplished by changing the product’s features, price, distribution, or image.
Adding new products to the line may necessitate the repositioning of older products.

Mary Kay Cosmetics adds distribution through retail stores and online sales

Avon Link

of eliminating a product from the product mix
Reasons to remove a product:
Slow sales create higher unit-production costs, inventory costs, and distribution costs.
To prevent negative feelings from affecting the company’s other products.

Martin L. Bell, Marketing: Concepts and Strategy, 3rd ed., p. 267; copyright 1979, Houghton Mifflin Company; used by permission of Mrs. Martin L. Bell.

Manage Products

Product/Brand Manager Approach
Product manager
The person 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

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
Understand the importance of product differentiation and the elements that differentiate one product from another
Know how products are positioned and repositioned in the customer’s mind
Understand how product deletion is used to improve product mixes
Be able to describe organizational structures used for managing products

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a product that is closely related to existing products in the line but meets different customer needs
Product Modifications
A change in one or more characteristics of the product and the elimination of the original product from the product line.
Quality Modifications
Changes in material or production processes related to a product’s dependability and durability

a product’s versatility, effectiveness, convenience, or safety; usually requiring redesign of the product
Aesthetic Modifications
Changes to the sensory appeal of a product such as altering taste, texture, sound, smell, or appearance
Idea Generation
Seeking product ideas to achieve objectives
Screening
Choosing the most promising ideas for further review

buyers’ responses to a product idea
Business Analysis
Assessing the potential of a product idea for the firm’s sales, costs, and profits
Product Development
Determining if producing a product is feasible and cost effective
Test Marketing
Introducing a product on a limited basis to measure the extent to which potential customers will actually buy it

manufacturing and marketing plans and preparing budgets
Product Differentiation
Creating and designing products so that customers perceive them as different from competing products
Product Quality
The overall characteristics of a product that allow it to perform as expected in satisfying customer needs
Product design
How a product is conceived, planned, and produced

of a product
Product Positioning
Creating and maintaining a certain concept of a product in customers’ minds
Repositioning a Product
Adjusting a product’s present position to strengthen/ increase its market share and profitability by changing the product’s features, price, distribution, or image
Product Deletion
The process of eliminating a product from the product mix

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

Brands

Brands