L5 product bho1171
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Transcript of L5 product bho1171
Product
Lecture 5aChapter 7 (Sharp, 2013)
BHO1171 – Session 5 Slide 2
Products Defined
“A product is anything that can be offered to a market to satisfy a want or a need. Products that are marketed include physical goods, services, experiences, events, people, places, properties, organisations, information, and ideas.”
– Kotler and Keller (2012, p. G7)
BHO1171 – Session 5 Slide 3
What is a product?
All the satisfaction, use, benefit provided by the product
Is a car just nuts & bolts? It’s more Gestalt - the whole is
greater than the sum of the parts
BHO1171 – Session 5 Slide 4
Gestalt in products
Products are bought for more than just the bits that make them up
This Mercedes Benz commercial presents their cars as life companions, not just cars
BHO1171 – Session 5 Slide 5
What is a service
"The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need.”
or“Anything that can’t be dropped on
your foot” (The Economist)
BHO1171 – Session 5 Slide 6
Services
Services Any activity or benefit that one party
can offer to another that is essentially intangible and does not result in the ownership of anything.
Service organisations Offer their customers something that is
essentially intangible: the interaction does not result in the ownership of anything that endures.
BHO1171 – Session 5 Slide 7
Customer Contact - Differentiation
This ad presents different styles of customer service in banking Take particular notice of the customer service set
up shown at the end of the ad ANZ Commercial
BHO1171 – Session 5 Slide 8
Brands and products
A product is something that is made in a factory A brand is something that is bought by a customer.
A product can be copied by a competitor A brand is unique.
“Within every brand there is a product, not every product is a brand”
(Bullmore 1984).
BHO1171 – Session 5 Slide 9
Marketing mix and branding strategies
1. Brand Fit2. Features3. Product Name4. Logo5. Labels and Packaging6. Product Mix and Range
BHO1171 – Session 5 Slide 10
1. Brand fit
Relational market-based assets (rMBAs) Accumulated over time Embodied in the brand
• Reputation, goodwill Co-production of firm/product and
external environment• Distribution, selling channels, end-
customers, partnerships
BHO1171 – Session 5 Slide 11
2. Features
Customers have core needs which they want to meet Or fundamental benefits
But once those are understood… Can devise components and features of the product
http://www.rosedalenaturalhealth.com/partnering-with-rnhc/articles-2/things-every-walker-and-runner-should-know-getting-the-most-of-your-running-shoes/
http://insider.nike.com/us/shoes/nike-air-max-2012-running-shoe-2466/
BHO1171 – Session 5 Slide 12
3. Product name
Name of the product (adds to? comes from?) strong positive rMBAs
But what’s in a name?
BHO1171 – Session 5 Slide 13
3. Does the name really matter?
It is argued that the actual name really doesn’t matter Many successful brands were not well
researched but named after someone/something
BHO1171 – Session 5 Slide 14
Some ridiculous, successful brands
BHO1171 – Session 5 Slide 15
Naming Your Brand
Brand names should be Memorable (EasyJet) Able to be registered (Cadbury) Easy to pronounce (Hoechst) Easy to read and spell (Pfizer) Translatable (Coca Cola, Nova) Meaningful (Cash Converters,
ComfortBra) Culturally sensitive
BHO1171 – Session 5 Slide 16
Logos and brands Corporate brand
Maple Leaf Foods International (Toronto HQ)
Product brand “Maple Leaf Prime” is name
used for poultry products Brand mark or Logo
the element of the visual brand identity that does not consist of words but design and symbols.
BHO1171 – Session 5 Slide 17
5. Labels and packaging
Packaging not only protects the good Draws attention to it on the shelf Adds value
• Especially true if bought as a present or a personal reward
Contains information about the product• Purpose• Instructions
– Self-service
BHO1171 – Session 5 Slide 18
5. Components of a packageAppearance Protection
Cost Disposability
Function
BHO1171 – Session 5 Slide 19
6. Product mix and range
A range of products that fulfil the same basic need Example: manufacturer and range of
cars
Defined in terms of breadth (generalist) and depth (specialist)
BHO1171 – Session 5 Slide 20
Product categoriesConsumer products• For personal use or consumption
Industrial products• Products bought for further processing or for use in
conducting a business.
Consumer and industrial products• Some products are made both for consumer and
industrial use
Developing and marketing new products
BHO1171 – Session 5 Slide 22
What is a New Product?Were the Sony Walkman, stone wash jeans or the
mobile phone new products?One way to classify newness is from a customers
viewpoint e.g. a continuum based on how much behavioural
change or new learning is required by the consumer to use the product.
Another way to classify is from a firm’s point of view e.g. the amount of technological change required to
replace vs reformulate.
BHO1171 – Session 5 Slide 23
Developing and marketing new products
What do we mean by ‘new’?There are three categories of new products:
Discontinuous innovations• Completely new • e.g. first mobile phone
Continuous innovations• Slight changes to product features• e.g. most new car models
Dynamic continuous innovations• Large change in technology, but product largely the same to use• e.g. Dyson’s vacuum cleaner
BHO1171 – Session 5 Slide 24
Alternatives to NPD
Acquiring new productsCopy products that have been developed elsewhere
E.g. Many successful companies have copied technology:
The Ssangyong Chairman Daewoo Le Mans Lexus
Purchase the ability to produce or supply a new product
BHO1171 – Session 5 Slide 25
The Linear NPD Process
1. Idea Generation
2. Idea Screening
3. Concept Development
4. Business Analysis
5. Product Development
6. Market Testing
7. Product Launch
As each stage is
reached, a “Go/Kill” decision needs to be taken
BHO1171 – Session 5 Slide 26
An example of NPD processes
Wow Toys
BHO1171 – Session 5 Slide 27
An example of R&D NPD
New Speaker Development at Warwick University
BHO1171 – Session 5 Slide 28
Example of concept testing
Volvo S60 Concept Development
BHO1171 – Session 5 Slide 29
New Product Testing
Testing new products for functional performance is important To make sure you got it right
An example of when Chinese carmaker Brilliance got it wrong
An example of when Mercedes Benz got it right in the 1980s
BHO1171 – Session 5 Slide 30
New Product Failure Rate
The success rate of fully developed products can be generalised at between 45% and 67% Based on Australian, US and UK studies conducted
in the last fifteen years • NOTE: it is how the firm itself perceives its product to
have performed relative to their expectations that determines success in these studies.
Sources citing the failure rate at launch to be as high as 90% tend to be unsubstantiated and are likely wildly overstated.
BHO1171 – Session 5 Slide 31
Some empirical results
27% of product line extensions failed; 31% of new brands introduced in categories where
the company already had a product failed; and 46% of the new products that were introduced to
new categories failed. • (Urban and Hauser, 1993)
While not guaranteed of success, line and brand extensions are considered less risky because they attempt to capitalise on existing market based assets
• (Aaker and Keller, 1990).
The Product Life Cycle (PLC)
BHO1171 – Session 5 Slide 33
Why develop new products?
It is claimed products have a finite life span
PLC Product Life Cycle
As a product dies, it needs to be replaced
BHO1171 – Session 5 Slide 34
The Product Life Cycle (PLC)
Profits
Sales
Development Introduction
Growth
Maturity
Decline
SalesProfit ($)
Loss ($)
BHO1171 – Session 5 Slide 35
Marketeer Beware! Individual brands may not follow PLC globally
e.g., Daewoo took 70s Opel design and sold many cars in 90s in US as Pontiac LeMans
Each market is different 86% of North American households have microwave less than 15% in Italy
Using PLC can kill product off early
BHO1171 – Session 5 Slide 36
Introduction: a stage of the PLC when sales are low as a new idea is first introduced to a market
Growth: a stage of the PLC where industry sales grow fast but profits rise and start falling as competitors enter the market
Maturity: a stage when industry sales level off and competition gets tougher
Decline: new products start to replace the old
Introduction
Growth
Maturity
Decline
Product Life Cycle
BHO1171 – Session 5 Slide 37
+
Product modePrice policy
Place
PromotionProfits
newuse skimming or
penetration strategiesrapidly building distribution
networkbuild general demand
expected losses
Introduction
Growth
Maturity
Decline
Product Life Cycle
BHO1171 – Session 5 Slide 38
+
Product modePrice policy
Place
PromotionProfits
differentiated productsmaintain stable pricing policy
solidify distribution channels and network
generate secondary demandhighest profits (peak)
Introduction
Growth
Maturity
Decline
Product Life Cycle
BHO1171 – Session 5 Slide 39
+
Product modePrice policy
PlacePromotion
Profits
modify product or product usageprice reduction; non-price
competitionincrease distribution efforts
concentrate on productpositioning
stable profits
Introduction
Growth
Maturity
Decline
Product Life Cycle
BHO1171 – Session 5 Slide 40
+
Product modePrice policy
PlacePromotion
Profits
maintain a basic productmaintain pricing or rise prices
limit distribution effortscut-back on advertising and
sales promotionsreduced profits
Introduction
Growth
Maturity
Decline
Product Life Cycle
BHO1171 – Session 5 Slide 41
Extending the PLC
Ansoff matrix There are three strategies that might be
considered to help achieve PLC extension in sales. These are also ways of implementing one of the chosen options from the Ansoff framework:• Modifying the market• Modifying the marketing mix• Modifying the product
BHO1171 – Session 5 Slide 42
Product category life cycle (PLC)
BHO1171 – Session 5 Slide 43
Limitations of the PLC
Brand sales do not necessarily follow a symmetrical curve
Length of the life cycle may vary
Relate to specific markets
Can be manipulated by management Modifying the market
• Seek new segments (example: business to consumer, international)
Modifying the marketing mix• New channels of distribution
Modifying the product