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Transcript of Creating the Product. 2 Chapter Objectives Explain the layers of a product Describe the...
![Page 1: Creating the Product. 2 Chapter Objectives Explain the layers of a product Describe the classifications of products Understand the importance of new products.](https://reader035.fdocuments.in/reader035/viewer/2022062322/56649e2c5503460f94b1aceb/html5/thumbnails/1.jpg)
Creating the Product
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Chapter Objectives
• Explain the layers of a product
• Describe the classifications of products
• Understand the importance of new products
• Show how firms develop new products
• Explain the process of product adoption and the diffusion of innovations
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Real People, Real Choices
• Black and Decker (Eleni Rossides)
• Considering the results of a survey, Black and Decker needed to decide what to do with its ScumBusterOption 1: if it ain’t broke, don’t fix itOption 2: emphasize value for your moneyOption 3: ramp up the ScumBuster’s features
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Build a Better Mousetrap: The Value Proposition
• Value proposition: benefits the consumer will receive if she buys the product
• Product: tangible good, service, idea that satisfies customer needs
• Good: a tangible product, something we can see, touch, smell, hear, taste, or possess
• Intangible products: services, ideas, people, places
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Layers of the Product Concept
• Core product: basic benefits the product will provide
• Actual product: physical good or delivered service that supplies the benefits
• Augmented product: actual product plus supporting features’ such as warranty, repair, installation, customer support
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Classifying Products
• Products are either consumer products or B2B products.
• Categories differ in how consumers and business customers feel about products and how they purchase them.
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Classifying Goods: How Long Does the Product Last?
• Durable goods: provide benefits over a period of months, years, decadesExample: automobile
• Nondurable goods: consumed in the short termExample: newspapers
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Classifying Goods: How Do Consumers Buy the Product?
• Convenience product: frequently purchasedStaples (milk) Impulse products (candy bar)Emergency products (drain opener)
• Shopping product: purchased with considerable time and effortAttribute based (shoes)Price-based (water heater)
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Classifying Goods: How Do Consumers Buy the Product? (cont’d)
• Specialty products: have unique characteristics important to buyers Rolex watch
• Unsought products: those in which consumers have little interest until a need arises insurance
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Business-to-Business Products
• Classified by how organizational customers use themEquipment Maintenance, repair, and operating (MRO) productsRaw materialsProcessed materials and special servicesComponent parts
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The Process of Innovation
• The FTC says : --A product must be entirely new or changed
significantly to be called new, and --A product may be called new for only six months.
• Innovation: anything that customers perceive as new and different
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It’s Important to Understand How Innovations Work
• Technology is advancing at a dizzying pace.
• New products are expensive to develop and even more costly if they fail.
• New products can contribute to society.
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Types of Innovations
• Innovations differ in degree of newness --Continuous innovations --Dynamically continuous innovations --Discontinuous innovations
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Continuous Innovations
• A modification to an existing product
• --Consumer doesn’t have to learn anything new.
• --Knockoffs copy, with slight modification, the design of an original product.
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Dynamically Continuous Innovation
• A pronounced modification to an existing product
• --Requires a modest amount of learning or behavior change. Convergence: the coming together of two or more
technologies to create a new system with greater benefit than its parts.
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Discontinuous Innovations
• A totally new product
• --Creates major changes in the way we live.
• --Consumer must engage in a great deal of learning.
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Developing New Products
• New-product development can be creating totally new products or making an existing product better.
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Phases in New-Product Development
• Phase 1: Idea generation Brainstorm for products that provide customer
benefits.
• Phase 2: Product-concept development and screeningTest product ideas for technical and commercial
success.
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Phases in New-Product Development (cont’d)
• Phase 3: Marketing strategy developmentDecide how to introduce the product to the
marketplace.
• Phase 4: Business analysisAssess a product’s commercial viability.
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Phases in New-Product Development (cont’d)
• Phase 5: Technical development Refine and perfect new product.Develop prototypes or test versions of proposed
product (in R&D department).
• Phase 6: Test marketingTest complete marketing plan in a small geographic
area similar to larger market.
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Phases in New-Product Development (cont’d)
• Phase 7: Commercialization Launch new product into the market.Begin full-scale production, distribution, advertising,
sales promotion.
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Adoption and Diffusion
• Product adoption: process by which a consumer or business customer begins to buy and use a new good, service, or idea
• Diffusion: process by which the use of a product spreads throughout a population
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Stages in Consumer Adoption of a New Product
• Awareness: learning the innovation exists
• Interest: seeing how the new product might satisfy an existing or newly realized need
• Evaluation: weighing costs/benefits of new product
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Stages in Consumer Adoption of a New Product (cont’d)
• Trial: experiencing or using product for the first time
• Adoption: buying the good or agreeing with the new idea
• Confirmation: weighing expected versus actual benefits and costs
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The Diffusion of Innovations
• Adopter categories InnovatorsEarly adoptersEarly majorityLate majorityLaggards
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Product Factors AffectingRate of Adoption
• Relative advantage
• Compatibility
• Complexity
• Trialability
• Observability
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How Organizational Differences Affect Adoption
• Innovators: are new, smaller, or younger firms• Early-adopter firms: are market-share leaders• Late-majority firms: prefer the status quo and
have large investments in existing production technology
• Laggard firms: are probably already losing money
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Real People, Real Choices
• Black and Decker (Eleni Rossides)
• Eleni chose Option 3: ramp up the ScumBuster’s featuresThe company continues to modify the basic concept
with new features and new applications to “clean up” against the competition
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Marketing in Action Case:You Make the Call
• What is the decision facing Kodak?
• What factors are important in understanding this decision situation?
• What are the alternatives?
• What decision(s) do you recommend?
• What are some ways to implement your recommendation?
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Keeping It Real: Fast Forward to Next Class Decision Time at Grendha
• Meet Angelo Daros, VP of Grendha Shoes, a major Brazilian shoe manufacturer
• Plan: to launch the Rider brand in the U.S. market
• The decision: How to position the Rider brand for the United States