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DEVELOP A DEVELOP A NEW PRODUCTNEW PRODUCT
10.110.1 What Is a Product?10.210.2 Components of a New Product10.310.3 Product Market Classifications10.410.4 Developing Successful New Products
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WHAT IS A PRODUCT?WHAT IS A PRODUCT?
GOALSGOALS for Lesson 10.1Explain that, for consumers, products
are more than just the tangible objects that are offered for sale.
Describe the role of marketing in keeping the focus on consumers during product development.
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More Than Just a Tangible More Than Just a Tangible ObjectObjectProduct – anything tangible offered to a
market by the business to satisfy needs.“More than an item” – physical
characteristics (durable, attractive, safe), must be useful and meet needs
“Consumers know best” – business people vs. consumers interest (car example)
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Product Development as a Product Development as a Marketing FunctionsMarketing Functions “5 out of every 10 new product ideas will
be unsuccessful”
The role of marketing Marketing activities in product
developmentThe product planning function
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The role of marketingThe role of marketing
Businesses must understand and apply the marketing conceptProducts that meet customer needs vs.
Products that do not meet customer needsEasier to sell, increase brand image, return
customersTough for sale people, consumers not happy,
consumers will not buy your companies products
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Marketing activities in Marketing activities in product developmentproduct development
“Marketing is the eyes, ears, and mouth of the customer in a business”
Gathering information – study the results and use it to assist with planningTypes of information, ways of collecting info
Designing strategies – different strategies will apply to different products or situations
Testing marketing mixes – test marketing, focus groups, panels
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The product planning The product planning functionfunctionMarketers need to work cooperatively
with the individuals in product development in order to meet the needs of the consumers.
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Marketing Supports Marketing Supports Product DevelopmentProduct Development
Gathering Information
Designing Effective
Marketing Strategies
Testing Marketing Mixes
Customers Companies
Product Development
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COMPONENTS OF A COMPONENTS OF A NEW PRODUCTNEW PRODUCTGOALSGOALS for Lesson 10.2Show how even a very simple product
can be a complex mix of a basic item with assorted features.
Describe the three steps of the product design process.
Explain the importance of product lines, packaging, and brand development.
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Parts of the Product Mix Parts of the Product Mix ElementElement
Basic productFeaturesOptionsServices
Brand namePackagingGuaranteeUses
Example – Tooth Brush
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Designing a ProductDesigning a ProductBasic product – readily identifiable
product in its simplest form, able to easily see the need, similar to competitors (computer, shampoo, bike)
Enhanced product – features, options, colors, quality, brand names, packaging
Extended product – services, guarantees, information on effective use, additional products to improve the product
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Product Mix ComponentsProduct Mix ComponentsProduct line – a group of
similar products with slight variations in the marketing mix to satisfy different needs in a market Variation in quantity Variation in quality Product Assortments –
complete set of all products a business has to offer
Packaging Ease of use Safety Attraction Handling Environment
Brand development Brand – name, symbol Trademark – legal Licensed Brand – selling
(Disney, sports)
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Non-recognition
Consumers are unable to identify the brand.Rejection
Consumers will not purchase the product because of the brand.Recognition
Consumers can recall brand name but it has little influence on purchases. They reject other brands.
Preference
Consumers view the brand as valuable and will chose it if available.Insistence
Consumers value the brand to the extent that they reject other brands.
Levels of Brand RecognitionLevels of Brand Recognition
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PRODUCT MARKET PRODUCT MARKET CLASSIFICATIONSCLASSIFICATIONSGOALSGOALS for Lesson 10.3Define consumer markets and describe
what is meant by direct demand.Define business markets and explain
the business product classification system.
Understand the importance of product classifications for product planning.
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The Product/Service The Product/Service Classification SystemClassification SystemThe system is based on two factors:The importance of the purchase to the
consumerThe willingness of the consumer to
shop and compare products before making the purchase
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Classifying Products for Classifying Products for the Consumer Marketsthe Consumer MarketsConvenience goods – staple, impulse,
emergencyShopping goods – price, attributeUnsought goodsSpecialty goods
Direct Demand – quantity of a product needed to meet the needs of the consumer
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Classifying Products for Classifying Products for the Consumer Marketthe Consumer MarketConvenience Goods
Staple goods – bread, milk, snacks
Impulse goods – unplanned purchases
Emergency goods – repairs, medical services
Shopping Goods Attribute / Qualities -based
goods Price-based goods
Specialty Goods – brand loyalty, well known, delay purchase
Unsought Goods – life insurance, preparing a will
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Business MarketsBusiness MarketsCapital equipment – land, buildings, large pieces of
equipmentOperating equipment – tools, small machines,
furnitureSupplies – office supplies, parts for repairsRaw materials – unprocessed material used in
productionComponent parts – partially or totally processed parts
Derived Demand – the quantity of a product or needed by a business in order to operate at a level that will meet the demand of its customers.
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Planning Products for Planning Products for Consumer and Consumer and Business MarketsBusiness MarketsNeed to know if the customer is the
final consumer or a business consumerSome products are sold to both
consumer markets and business markets
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DEVELOPING SUCCESSFUL DEVELOPING SUCCESSFUL NEW PRODUCTSNEW PRODUCTS
GOALSGOALS for Lesson 10.4Understand what businesses mean by
“new” products.Describe the six steps in new product
development.
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What Is a New Product?What Is a New Product?
Is it really new?Federal Trade Commission regulates
the use of the term “new.”Entirely new or changed in an important
and noticeable waySix-month time limit
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The Steps in New Product The Steps in New Product DevelopmentDevelopmentIdea development
Gathering information from consumersOrganizing panelsRegular meetings with employeesIdentifying problems that consumers haveBrainstorming, creative thinking exercises
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The Steps in New Product The Steps in New Product DevelopmentDevelopmentIdea Screening – evaluate ideas
Is there an identified market for the product?Is the competition in the market reasonable?Do we have or can we obtain the resources
to produce the product?Is the product legal and safe?Can we produce a quality product at a
reasonable cost?
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The Steps in New Product The Steps in New Product DevelopmentDevelopmentStrategy Development –
1. Create and test a sample marketing strategy (research to clearly identify an appropriate target market and insure that customers exists)2. Marketing mix is planned and analyzed (product, distribution, price, promotion)
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The Steps in New Product The Steps in New Product DevelopmentDevelopmentFinancial Analysis
Cost of production and marketingSales projections for the target marketCalculations of profitsScenario analysis (worst case vs. best
case)
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The Steps in New Product The Steps in New Product DevelopmentDevelopmentProduct Development and Testing
Designing the production processObtaining the needed equipment and
materialsTraining the production staffIdentifying a producer or manufacturerDesign a prototype to be tested
quality and cost / used in the test market
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The Steps in New Product The Steps in New Product DevelopmentDevelopmentProduct Marketing
Introduction into the marketCooperating companies must be involved
(wholesalers, retailers, transportation companies, ad agencies
Production levels must be high enoughAll activities must be coordinated
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Introduction StageIntroduction Stagecompeting against older, established
productsbusinesses need to identify those that are
dissatisfied with the current problemsproduct should be basic and not too
complicatedguarantees and warrantiesnot widely distributed – test marketsprice usually highpromotion needs to inform the customer
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Distribution, Price, and Distribution, Price, and PromotionPromotion Distribution Distribution is the marketing mix element that
facilitates the physical exchange of products and services between businesses and their customers
PricePrice as a marketing mix element is defined as the amount a buyer pays as well as the methods of increasing the value of the product to the customers.
PromotionPromotion includes the methods and information communicated to customers to encourage purchases and increase their satisfaction.
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DistributionDistribution
Where will the customer be best able to obtain the product?
Where will the customer use the product?Are there special requirements to
transport, store or display the product?When should distribution occur?Who should be responsible for each type
of distribution activity?
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PricePrice
Does the business want to increase sales, increase profits, or enhance image of the product?
Should price be based on cost, what customers are willing to pay, or what competitors are charging?
Will there be one price for all customers, negotiation, discounts?
Will the price be clearly communicated?Are there things that clearly satisfy the customer
and make the product better and more valuable than alternatives?
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PromotionPromotionWill the audience for the promotion be a general
market or specific segment?Is the specific goal of promotion to increase
knowledge, to change attitudes, or influence behavior?
What specific information does the audience need?What means of promotion will be most effective?How much money is needed for effective
marketing?What information does the business need from
consumers?
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