Chapter 13 Notes v2.docx

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Business Administration
BUS 100
Kim Milnes

Thomas Davies Bus 100 Chapter 13 – Developing and Promoting Goods and Services What is a Product? 1) Features and benefits a) Value package = product marketed as a bundle of value-adding attributes  Post-purchase care, style, youth, trend, precision, etc. b) Features are what you get physically, the laptop components and hardware 2) Classifying Goods/Services a) Classifying Consumer Products  Convenience goods/services = relatively inexpensive, bought and used quickly and often with minimal search effort  Shopping goods/services = moderately expensive (i.e. HDTVs) purchased infrequently, causing consumers to spend some time comparing brands and options  Speciality goods/services = very expensive, rarely purchased requiring extensive search, substitutes not accepted  Unsought products = low product awareness, negative interest, personal selling b) Classifying Industrial Products  Expense Items = relative inexpensive industrial goods consumed rapidly and regularly  Capital items = expensive, long lasting industrial goods….used in producing good/service and has long life 3) The Product Mix a) Product Mix = group of products a company has available for sale b) Produce Line = group of similar products intended for a similar group of buyers who will use them in a similar fashion  Companies may extend to create multiple product lines Developing New Products 1) Development is vital, but risky…think Blu-Ray vs. HD DVD battle 2) The Time Frame of New Product a) Can often take years for new products to arrive in market (expensive!) b) Product Mortality Rates  50 products = 1 reach market  Of the ones that reach market, even fewer are successful due to market saturation c) Speed to Market  Strategy of introducing new products to respond quickly to customer and/or market changes  Estimate than 3 months late = 12% lifetime profit loss 3) The Seven-Step Development Process a) Product ideas b) Screening c) Concept testing  Use market research 1 Thomas Davies Bus 100 d) Business analysis  Costs vs. benefits e) Prototype development f) Product testing and test marketing  Expensive, as limited production, but lots of marketing, provides performance feedback g) Commercialization 4) Stages in product Life Cycle a) Introduction  Marketing focuses on making customers aware…concept awareness, not brand b) Growth  Profits arrives, and other firms rush to create competitor  Heavy advertising to create brand difference c) Maturity  Sales growth slows, max profit reached  Many products stay at maturity….laundry detergent, etc. d) Decline  Extend product life by adapting, reintroducing to new market (i.e. less developed area) Identifying Products 1) Branding Products a) Branding = process of using symbols to communicate the qualities od a product made by a particular producer  Easy to say, easy to sell, easy to remember…….fits target market b) Branding may change to revitalize a name, due to licensing, or other regulations c) Adding Value through Brand Equity  Brand equity = added value a brand name provides beyond its functional benefits  Higher brand equity = greater awareness/loyalty d) Types of Brand Names  National brands = products distributed by and carrying name associated with producer  Licenses brands = selling the limited rights to another company to use brand name on product  Private brands = products promoted by and carrying name associated with retailer/wholesaler, not manufacturer  Generic brands = no-frills products sold under the general category name rather than specific company name e) Brand Loyalty  Customer’s recognition of/preference for and insistence on buying certain brand products  Three parts: awareness, preference, and insistence f) E-business and International Branding  International branding presents problems…translation, idioms, slang  Companies must adapt and use the local trends to ensure product success 2) Trademarks, Patents, and Copyrights a) Trademark = exclusive legal right to use a brand name 2 Thomas Davies Bus 100  Granted for 15 years and may be renewed  Must protect trademark…© for brand  Must ensure brand name not ‘genericized’ (refrigerator, yo-yo, thermos) b) Patent = protects an invention or idea for period of 20 years  Cost ~$2,000 and take time to be approved  Can have great benefits…lawsuits if others using patented material c) Copyrights = exclusive ownership rights granted to credits for the tangible expression of an idea  Books, articles, designs, etc.  Given to author for life, then estate for additional 50 years  Note: cloning dinosaur from DNA not copyrighted….Jurassic Park story can be 3) Packaging Products a) Packaging = physical container in which product is sold (inc. labels) b) Serves as in-store advertisement, making product attractive, displays brand and featur
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