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Lecture

MGTA04 Chapter 6.docx

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Department
Management (MGT)
Course
MGTA02H3
Professor
H Laurence
Semester
Summer

Description
MGTA04 Chapter 6: Product What is a Product?  Customers get value from various benefits, features, and even intangible rewards associated with a product  Product features are the qualities, both tangible and intangible that a company builds into its products  But to attract buyers, features must also provide benefits  Today’s consumer regards a product as a bundle of attributes which taken together, marketers call the value package: product marketed as a bundle of value adding attributes, including reasonable cost  Classification of goods and services o Consumer products  Convenience goods/services: are consumer rapidly and regularly  relatively inexpensive and are purchased frequently with little expenditure of time and efforts  Shopping goods/services: more expensive and are purchased less frequently than convenience goods and services compare brands, sometimes in different stores and may also evaluate alternatives in terms of style, performance, color, price, and other criteria  Specialty goods/services: extremely important and expensive purchases consumers decide on precisely what they want and will accept no substitutes  spend great deal of money and time to get a specific product o Classifying Industrial Products  Expense items: relatively inexpensive industrial goods that are consumed rapidly and regularly  Capital items: expensive, long lasting industrial goods that are used in producing other goods or services that have a long life  Product mix:  Product mix: the group of products a company has available for sale  Product line: a group of similar products intended for a similar group of buyers who will use them in a similar fashion multiplied or diversified product lines sometimes created and allow company to grow rapidly and can help offset the consequences of slow sales in any one product line Developing New Products  To expand or diversify product lines (to survive), firms must develop and successfully introduce streams of new products  It takes 50 new products ideas to generate one product that finally reaches the market  even then only a few of these survivors become successful products  9/10 products fail because of limited space in stores and lack of space and customer demand  Speed to market: strategy of introducing new products to respond quickly to customer and or market changes  Seven step development process 1. Product ideas; search for ideas for new products 2. Screening: attempt to eliminate all product ideas that do not mesh with the firms abilities, expertise or objectives 3. Concept testing: once ideas have been culled, companies use market research to solicit customer input and allow company to derive benefits and provide appropriate price 4. Business analysis: developing early comparison of costs vs. benefits and make sales/cots projections and see whether product can meet minimum profitability goals 5. Prototype Development 6. Product testing and test marketing: begin limited production and made available fo
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