The document discusses key concepts in product management including product definition, classification, development process, branding, and packaging. It covers:
1. Defining products as goods, services, or ideas and classifying them as consumer or business products.
2. The new product development process from idea generation to commercialization including techniques for generating ideas and evaluating concepts.
3. Managing existing products through line extensions, modifications, and potential deletion.
4. The importance of branding, developing brand equity, and different types of brands.
5. The functions and strategic importance of packaging, labeling laws, and universal product codes.
3. Strategic Planning for Product Place Product Price Promotion Target Market Brand Type of Brand: Individual or family Manufacturer or dealer Warranty None, full, or limited Package Protection, Promotion, (or both) Product Idea Physical good/service Features Quality level Accessories Installation Instructions Product line
7. Basic Categories of Consumer Products Category Convenience Type of Purchase Decision Shopping Specialty Relatively low Price Promotion Placement or Distribution Moderate Relatively expensive Little information sought Mass media Mass media; some emphasis on personal selling Widely available More information sought Lots of information sought Mass media; more emphasis on personal selling Selectively available Exclusively available Unsought Immediate Decision It might be low or high More emphasis on personal selling Selected
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16. Business Products Business Product Classes Installations Component Parts and Materials Accessories Professional Services Raw Materials MRO Supplies
17. Basic Categories of Industrial Products Category Installation Type of Purchase Decision Accessory equipment Raw materials Not as important Price Promotion Very important Multiple members of buying center Personal Selling Few members of buying center May be important Advertising Component Parts and materials Several members of buying center May be important Personal selling Frequent; complexity varies Supplies Simple; frequent; may be a single buyer Important Personal selling Advertising Business services Varies Varies Varies
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21. Goods and Services Durable Goods Non-Durable Goods Services Fantastic Sam’s Haircut Airline Taxi Ride Restaurant Meal Kleenex Tissues Scott Towels Pair of Glasses Sealy Mattress Maytag Washer Auto Repair
25. Product Mixes and Product Lines Source: Courtesy of P. Gayle Fuguitt, Marketing Research Director, Big “G” Division, General Mills Ready-to-Eat Cereals Convenience Foods Snack Foods Baking Products Dairy Products Total Wheaties Lucky Charms Cinnamon Toast Crunch Cheerios Kix Trix Hamburger Helper Suddenly Salad Betty Crocker Cake Mixes Creamy Deluxe Frosting Dessert Mixes Pop Secret Popcorn Fruit Rollups Nature Valley Granola Bars Bisquick Gold Medal Flour Yoplait Yogurt Colombo Yogurt Width (MIX) D E P T H LINE
40. The Eight Dimensions of Quality Chrysler DuraCell Sears Die Hard Singapore Airlines Walt Disney World Perceived Quality Ralph Lauren Midas Performance Features Overall Evaluation Conformance Durability Reliability Serviceability Aesthetics
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46. Types of New Products New-to-the-World Products New Category Entries Additions to the Product Line Product Improvement Repositionings New!
47. New-Product Development Process Idea Generation Ideas from: Customers and users Marketing research Competitors Other markets Company people Intermediaries Screening Strengths and weaknesses Fit with objectives Market trends Rough ROI estimate Idea Evaluation Concept testing Customer reactions Rough estimates of cost, sales, profits Development R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Commercial -ization Finalize product and marketing plan Start production and marketing “ Roll out” in select markets Final ROI estimate
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49. Technique Delphi Method Benefit Analysis Description A panel of experts fills out a questionnaire; a researcher tabulates the results and sends them to panel members. Repeat the process until the panel reaches a consensus or an impasse. Use Analysis Relative Brand Profile Unique properties Techniques for Generating Ideas List all the benefits customers receive from the product under study. Think of benefits that are currently missing from the list. Ask customers how they use the product under study. List the various uses. Ask target markets whether the brand name makes sense for other product categories under consideration. A stretch of the brand name that makes sense to potential buyers can be the basis for a new product. List all the properties held in common by a product or material currently on the market. Look for unique properties of the organization’s product.
50. Technique Achilles heel Free Association Description List the weaknesses of a product or product line (for the organization and its competitors). Prune the list to the one or two weaknesses most likely to inspire a response from competitors. Identify product concepts that could result from correcting these weaknesses. Study of other people’s failures Study products that have failed. Look for ways to solve the problems that led to failure. Stereotype activity Write down one aspect of the product situation–a product attribute, use or user. Let the mind roam and jot down every idea that surfaces. Repeat the process for other aspects of the product situation. Ask, “How would ________do it?” –referring to how a member of some group or a particular person would use the product. Example: What type of bicycle would a senator ride? Can also ask what the stereotype would not do. Techniques for Generating Ideas
72. Elements of Brand Equity Provides value to customer by Enhancing Customer’s: Interpretation/Processing of information Confidence in the Purchase Decision Use Satisfaction Provides value to firm by Enhancing: Efficiency and effectiveness of Marketing Programs Brand Loyalty Prices/Margins Brand Extensions Trade Leverage Competitive Advantage Brand Loyalty Name Awareness Perceived Quality Brand Associations Other Proprietary Brand Assets Brand Equity Name Symbol
91. Universal Product Codes 0 12345 67890 5 Identify Manufacturer Assigned by the Uniform Code Council Identify Product Assigned by the Manufacturer Check Digit
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Defining “Product”: Key Terms and Ideas Product . Product means the need-satisfying offering of a firm. This definition is important because it reminds managers to focus on consumers and not on the technical and managerial details involved in producing products. Quality . From a marketing perspective, quality means a product’s ability to satisfy a customer’s needs or requirements. Quality may be absolute or relative, but in all cases the customer’s expectations for quality in a given product forms the basis for determining how to achieve customer satisfaction. Goods/Services . A product can be a physical good or an intangible service, or it can be a blend of both. Discussion Note: Consumers are increasingly demanding more services with the goods they buy. For example, in the personal computer business successful companies offer reliable equipment coupled with extensive, free technical telephone support services. Both together are the product the customer buys. Differences Between Goods and Services . Since both are products, this distinction is not usually necessary. But in fine tuning a product’s position, recognizing these differences can aid marketers in planning: Intangible. Goods have a physical existence. Services are deeds performed for a customer. Simultaneous production and consumption. Services are produced and consumed at the same time. Products are produced first then sold for later consumption. Perishable. Services cannot be stored for later use. Transported. Services cannot be transported to another location for sale. Customer presence. Many services require the presence, even participation, of the customer. Summary Overview A modern view of products goes beyond a physical item for sale and focuses on those things that help consumers satisfy needs. Products are need-satisfiers and consumer problem-solvers.
Consumer product classes are discussed on this slide. Business product classes are products meant for use in producing other products. These are covered on the following slide. Product Classes: Consumer Products Consumer product classes are based on how consumers think about and shop for products: Convenience Products . Convenience products are needed by consumers but consumers aren’t willing to spend much time and effort shopping for them. These products may be bought often, require little service or selling, be inexpensive and bought out of habit. Types include: Staples. Staples are bought often, routinely, and without much thought. Branding is used for many staples to make them easier to remember and find. Impulse. Impulse products are bought quickly, as unplanned purchases, because of a strongly felt need. These purchases may be strongly affected by the immediate situation. Emergency. Emergency products are purchased immediately when the need is great. Consumers don’t shop around for these products nor ask how much they cost. Shopping Products. Shopping products are those that customers feel are worth the time and effort to compare with competing products. Homogeneous shopping products are those that the customer sees as basically the same and wants at the lowest price. Heterogeneous shopping products are seen as different, perhaps in quality and suitability. Specialty Products . Specialty products are consumer products that the consumer really wants and makes a special effort to find. These are characterized by the consumer’s willingness to search . Unsought Products . Unsought products are those the customer doesn’t want yet or know that he or she can buy. New unsought products represent ideas potential customers don’t know about yet. Regularly unsought products are ones that just don’t motivate customers to seek them out, even though they may need them. Summary Overview Products may be grouped into classes that share important characteristics or functions that marketers must perform or provide to the customer. Consumer products are products meant for the final consumer and fall into four broad classes: convenience, shopping, specialty, and unsought.
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Summary Overview Many factors affect strategy planning for business products. Business markets are characterized by derived demand -- the demand for business products derives from the demand for the final consumer products they are used to make. This means that demand tends to be inelastic -- a change in price doesn’t have much effect on the quantity ordered. Business suppliers may face almost pure competition. Tax treatments affect buying too--a capital item lasts for years and is depreciated over its life. An expense item is deducted in the year it is bought. Business Products Business product classes are based on how buyers see products and how they’ll be used: Installations . Installations are important capital items. One of a kind installations such as office buildings and custom-made equipment require special negotiations for each sale. Accessory Equipment . Accessories are short-lived capital items such as tools and production equipment. Raw Materials . Raw materials are unprocessed expense items. They become a physical part of the goods the firm makes. Farm products are grown or raised by farmers. Natural products are those that occur in nature, such as wood and mineral ores. Component Parts and Materials . Components are processed expense items that become part of a finished product. Component parts are finished or nearly finished products in themselves that go into other products, like tires for a car. Component materials are processed goods but require more processing before becoming part of the final product ( wire ). MRO Supplies . MRO stands for Maintenance, Repair, and Operating supplies. Maintenance supplies include products like paint and light bulbs. Repair supplies are parts needed to fix worn or broken equipment. Operating supplies include things needed to do the work, like copier toner and paper clips. Professional Services . These are specialized services that support a firm’s operations, such as management or presentation graphics consulting. Here the service part of the product is emphasized.
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Summary Overview New products can be anything that in any way provides the company with another way to meet customer needs. This includes totally new inventions and simple color changes in existing products. Canada limits claims of “newness” to twelve months. Because new product success is important to companies seeking growth, most firms formalize the new- product development process. New-Product Development Process Idea Generation . New product ideas come from all over -- salespeople, production workers, customers, competitors -- anywhere! Sharp companies keep an open mind and eye to many relevant sources of new product ideas. Screening . Screening involves evaluating the new idea in relation to strengths, weaknesses, opportunities, and threats facing the company--and also the company’s objectives and resources. Some companies also weigh ideas for their effect on consumer welfare. Safety must be considered. The Hazardous Products Act encourages safety in product design and better quality control. Also, product liability means that the company has the legal obligation to pay damages to persons injured by defective or unsafe products. Also, return on investment (ROI) forecasts can help prioritize product ideas. Idea Evaluation . Here firms use concept testing -- getting reactions from customers about how well a new product idea fits their needs. Such market research can be informal or a very formal, systematic investigation. Development . Here more research and development is conducted on approved product concepts. Use of computer-aided design software and working models are common. Commercialization . At this stage the product is ready for market. The product form is selected and a complete marketing mix is designed for each target market.
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Summary Overview In developing a product concept, a marketing manager must consider the different possible approaches for branding. Brand Strategies Family Brand . This refers to the use of the same brand name for several products, such as Sears’ Craftsmen tools or Kenmore appliances. This is a good approach if the individual products are of a similar quality. A special case of family branding is a Licensed Brand , a well-known brand such as Sunkist that sellers pay a fee to use. Individual Brands . When a company makes very unrelated products that require a separate identity to avoid confusion, developing individual brands for each can be a good idea. Or some companies develop several versions of a product such as toothpaste, each with a unique position in the market. Generic Products . These are products that have no brand at all other than the identification of their contents. Manufacturer Brands . These are brands created by producers. This approach is used to help develop demand for the same product across many markets. Teaching Tip: Consider linking manufacturer brand to promotion “pull,” which is developed in detail later in the course. Dealer Brands . Also called private brands, these brands are created by middlemen (ex: JC Penney’s “Arizona” jeans or Sears’ “Canyon River” jeans). These are usually used to generate higher margins for the middlemen than they can get with the manufacturer brand. This conflict has led to a “battle of the brands” -- a competition between manufacturers and middlemen brands.
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Summary Overview Packaging involves promoting and protecting the product. Good packaging makes products easier to identify and promotes the brand at the point of purchase and in use. The Strategic Importance of Packaging Packaging Makes a Difference . Packaging can do more than contain and protect the product. The package can make the product easier to use and more convenient for the customer to store. Packaging Sends a Message . Creative use of design in packaging can visually help to tie the product to other elements of the promotion mix. Packaging May Lower Distribution Costs . Good packages save space and are easier to handle and display. In helping distributors and end-sale retailers, good packages are more welcome by these intermediaries. Universal Product Codes (UPC) Speed Handling . Using these bar codes with register-based computers speeds check-out of customers and vastly improves inventory monitoring. Teaching Tip: Ask students if they have any stories about some of their favourite products that never seem to get scanned at a checkout. Ask them how much more time it takes to hand enter the code. Could that time savings lead to lower costs? How can packages be re-designed? For example, a 25 kilogram bag of dog food at Wal-Mart used to be all but impossible to scan. Now, the UPC tag is a sticker that peels off at checkout. No more lifting the bag out of the cart, no more wrinkled, unreadable tags!
Summary Overview Branding means the use of a name, term, symbol, or design to identify a product. Some companies use a combination of some or all of these when branding. A brand name is a word, letter, or a group of letters. A trademark includes only those words, symbols, or marks that are legally registered for use by a single company. A service mark is a trademark that refers to a service offering. Brands developed to help identify quality with a specific product. Branding Brand familiarity means how well customers recognize and accept a company’s brand. Five levels of brand familiarity are useful for strategy planning: Rejection . Brand rejection means that potential customers won’t buy a brand unless its image is changed. Nonrecognition . Brand nonrecognition means final consumers don’t recognize a brand at all even though middlemen may use it for identification and control. Recognition . Brand recognition means that customers remember the brand. Discussion Note: Reaching this level can be critically important. For example, a supermarket may hold 20,000 different products and many varieties of a single type of product. Recognition may be all that is necessary to induce purchase. Preference . Brand preference means that target customers usually choose the brand over other brands. Insistence . Brand insistence means customers insist on a firm’s branded product and are willing to search for it. Most marketers seek to develop brand insistence for their products. Brand equity--which refers to the value of the brand’s overall strength in the market--can lead to high brand equity. Teaching Tip: You might tell students to remember this relationship when new-product development is discussed.
