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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Product - The 1st "P" What are consumers really buying? They are buying features and benefits Tangible and intangible Actual and anticipated Known as "the value package" Examples: Nike shoes ("value package" includes.....) Ralph Lauren clothes ("value package" includes.....) a night at the pub ("value package" includes.....) New Product Development Remember, A business exists to: satisfy customer needs and wants. Market research: asking them what they want. Businesses must constantly develop new products. Both: In response to changing customer needs and wants In anticipation of changing customer needs and wants Read pp. 553 - 557 on "Developing New Products" Product - The Life Cycle Model Products - like people - have lives. Products: are born, early years are full of danger, they grow quickly, mature, and decline. Product life cycle model shows: product growth (sales, profits, units, market share, etc.) time (as years/decades pass what happens to "growth"?) Growth Time Time (the product life cycle) varies from weeks to decades. Product Life Cycle Stages Introduction Growth Maturity Decline The Product Life Cycle - Explanation New products, services, ideas are introduced into the market and over months or years generate sales and income for their organisations. INTRODUCTION PHASE Characteristics: Sales - are low Costs - high per customer Profits - negative Customers - innovators Competitors - few Marketing Objective: create product awareness and trial Marketing Strategy: Product: basic offering Price: use cost-plus - tends to be on high side Promotion: Build product awareness among early adopters Lots of money was spent on research and development, aim is to recover costs as soon as possible and start making a profit. 50% of new product ideas fail. Business must do ongoing market research, stay in touch with customers to evaluate reaction to the new product.. Place: build selective distribution GROWTH Characteristics: Sales - rapidly increasing Profits - rising Customers - early adopters Competitors - growing nu
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