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"
Nike shoes ("value package" includes.....)
Ralph Lauren clothes ("value package" includes.....)
a night at the pub ("value package" includes.....)
New Product Development
A business exists to: satisfy customer needs and wants.
Market research: asking them what they want.
Businesses must constantly develop new products.
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.
early years are full of danger,
they grow quickly,
Product life cycle model shows:
product growth (sales, profits, units, market share, etc.)
time (as years/decades pass what happens to "growth"?) Growth
Time (the product life cycle) varies from weeks to decades.
Product Life Cycle Stages
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.
Sales - are low
Costs - high per customer
Profits - negative
Customers - innovators
Competitors - few
create product awareness and trial
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
Sales - rapidly increasing
Profits - rising
Customers - early adopters
Competitors - growing nu