Chapter 10

Marketing and Product Development: Creating and

Positioning Goods and Services

© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.

McGraw-Hill/IrwinIntroduction to Business

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Learning Objectives

1. Explain how marketing, product development, and sales must coordinate their activities to align a company’s products with customer’s needs.

2. Describe how marketing research can identify customer needs.

3. Identify the four main elements of the marketing mix and discuss how the marketing mix is used to differentiate a company’s products.

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Learning Objectives

4. Describe how marketing research can identify the needs of different customer groups and market segments.

5. Differentiate between the three main approaches to market segmentation.

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What is Marketing?

• Marketing - an organizational function and a set of

processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders

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Marketing, Product Development, and Sales

• Customer needs - consumer needs that can be satisfied by

the qualities and features of a good or service

• Product development - the set of technical, scientific, and

engineering processes involved in creating new or improved products to better satisfy customer needs

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Question?

What is the use of techniques to inform customers about the value of a company’s products?

A. SalesB. RevenuesC. AdvertisingD. Promotion

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Marketing, Product Development, and Sales

• Sales - the development and use of techniques to

inform customers about the value of a company’s products in order to persuade them to buy them

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Marketing, Product Development, and Sales

• Customer relationship management - the process of tracking the demand and

satisfaction of customers in an effort to develop products they will want to buy on an ongoing basis

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How Marketing, Product Development, and Sales Cooperate to Get Products to Customers

Figure 10.1

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Marketing and the Business Vision, or Mission

• Business vision (business mission) - a brief statement of a company’s business

model that tells stakeholders why the firm is in business, how it intends to satisfy customer needs, and why it will satisfy their needs better than its competitors

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The Product Life Cycle

• Product life cycle - the typical sequence of changes in demand

for a product that occur over time

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A Product Life Cycle

Figure 10.2

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Marketing Research

• Marketing research - the systematic search for information that

uncovers met and unmet customer needs, the different needs of different customer groups, and whether or not a product’s marketing mix appeals to customers

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Identifying Customer Needs through Marketing Research

Figure 10.3

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Use Focus Groups

• Focus group - a group of people brought together to share

their thoughts and feelings about a particular product and why it may or may not meet their needs

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Adopt a Customer-Oriented Approach

• Focus on why existing products failed to meet customer needs as well as how future products should be designed

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Involve Leading Customers

• Leading customers - companies that improvise their own

solutions to business problems because no products currently exist that can do so

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Become a Leading Provider

• Leading providers - people or companies that believe their new

products will better satisfy customer needs even though they have no sure proof of this

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Question?

What is the process of examining the products of one’s competitors in depth in order to figure out what makes them successful?

A. Corporate espionageB. Competitive intelligenceC. Reverse engineeringD. Null engineering

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Reverse Engineer a Product

• Reverse engineering - the process of examining the products of

one’s competitors in depth in order to figure out what makes them successful

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Identifying Customer Groups and Segments

• Customer groups - groups of people who have a similar need

for a particular product because the product satisfies several different kinds of needs

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How Customer Groups and Market Segments Are Identified

• Primary product need• Price range• Other differentiating characteristics

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Identifying Customer Groups

Figure 10.4

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Toyota’s Product Lineup

Figure 10.5

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Choosing Markets to Serve

• Mass marketing - selling of a mass-produced product to all

customers• Multiple-segment marketing

- different models of a product are made and sold to different customer groups

• Focused marketing - developing products for customers in one

or two targeted market segments

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Three Approaches to Market Segmentation

Figure 10.6

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Dell’s Main Customer Groups

Figure 10.7

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Differentiating Products via the Marketing Mix

• Product differentiation - the process of setting a product apart from

its competitors by designing and marketing it to better satisfy customers’ needs

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Differentiating Products via the Marketing Mix

• Marketing mix - the combination of a product’s qualities and

features, its price, the way it is promoted and sold, and the places at which it is sold

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Components of the Marketing Mix

Figure 10.8

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Product Branding and the Marketing Message

• Marketing message - a product-related message the firm’s

marketing department sends to customers about how and why a product will better satisfy their needs

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Product Branding and the Marketing Message

• Product branding - using a unique name, design, symbol, or

other element to differentiate a product from its competitors

• Brand name - the specific name, sign, or symbol a

company uses to distinguish and legally protect the identity of its products

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Product Branding and the Marketing Message

• Brand loyalty - the tendency of customers to consistently

purchase a particular product over time because they believe it can best satisfy their needs

• Product positioning - the process of customizing or tailoring a

product to a specific market segment

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Products

• Creating real product differences• Creating perceived product differences• Packaging

What products are available at the Homestar-runner store

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Price

• Target price - the price a typical customer will be willing to

pay for a product with a particular set of qualities and features

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Promotion

• Advertising• Sales promotions• Public relations• Personal selling

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Promotion

• Promotion - the way in which a company advertises,

announces, publicizes, and pushes its products

• Promotional mix - the combination of advertising, sales

promotions, public relations, and personal selling used to reach and persuade customers to buy a product

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Promotion

• Advertising - the paid, nonpersonal promotion of a

company’s goods and services using mass media to influence consumers

• Sales promotion - nonpersonal, persuasive efforts designed

to boost a company’s sales immediately

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Promotion

• Public relations - the practice of conveying messages to the

public through the media to influence people’s opinions about the company and its products

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Promotion

• Personal selling - direct, face-to-face communication by

salespeople with existing and potential customers to promote a company’s products

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Place

• Place - the distribution and sales channels used to

get both a product and its marketing message to the customer

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Different Types of Marketing Channels

Figure 10.9

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Video: 3M Greptile Grip Golf Glove

• 3M Corporation is a highly diversified multi-million dollar company known for technology and innovation. Its entrance into the sports industry represents an interesting process in product development and successful marketing.

• How does 3M differentiate its sports brand from its other product lines?