LESSON 10: DEVELOPING NEW PRODUCTS AND SERVICES
LO 9-1: Recognize the terms that pertain to products and services.
A product is defined as a good, service or idea consisting of a bundle of tanglible and
intangible attritbues that satifies consumers needs and is received in exchange for
money or something of value
Services are intangible activities or benefits that an organization provides to satisfy
consumers needs in exchange for money or something else of value
LO 9-2: Identify the ways to classify consumer and business products and
Consumer products are products purchased by the ultimate constumer
Business products are products organizations buy that assist in providing other products
Basis of Type of Consumer Product
on Convenience Shopping Specialty
Example Toothpaste, cake Camera, tv, airline Rolls Royce, rolex,
of mix, hand soap tickets surgery
Price Relatively Fairly expensive Usually very
Place widespread Large number Very limited
Promotio Price, availability andDifferentiation from Uniqueness of brand
n awareness stressed competitors stressed and status
Brand Aware of brand but Prefer specific Very brand loyal, will
Loyalty will accept brands but will not accept
substitutes accept substitutes substitutes
Purchase Frequent purchases Infrequent Infrequent
CONCEPT CHECK: How is the concept of involvement related to the different
types of consumer products?
Involvement is all about how much effort and time the consumer puts into
purchasing the product. Based on the different types of consumer products the
consumer will either put in more or less time into the decision. Consumers are
the most involved in purchasing a speciality product, has medium involvement in
purchasing a shopping product and has the least involvement in buying a
LO 9-3: Describe the four unique elements of services.
The four I’s of services are the four unique elements that distinguish services from
goods; intangibility, inconsistency, inseparability, and inventory.
List the four I’s of services define each.
The four unique Definition:
Services cant be touched or seen before the purchase
Depend on the people who provide them; quality varies.
Consumer cannot distinguish the service provider from the
Inseparability service itself.
Idle production capacity is defined as when the service provider is available but there is
no demand for the service
A product item is a specific product that has unique brand, size or price
2 A product line is defined as a group of products that are closely related because they
are similar in terms of consumer needs and uses, market segments, sales outlets or
A product mix is defined as all the product lines offered by a company
CONCEPT CHECK: Give an example of a product item, a product line, and a
One example of a product item is ultra downy softener for clothes. An example of
a product line is Nike’s shows and clothing. A product mix is Cray Inc. which has
three product lines.
LO 9-4: Explain the significance of “newness” and “consumer learning” in terms
of new products and services.
Low ← Degree of New Consumer Learning Needed → High
Basis of Dynamically
Compariso Continuous Continuous Discontinuous
n Innovation Innovation Innovation
Definition Disrupts consumers Requires new
Requires no new normal routine but learning and
learning by does not require consumption
consumers totally new learning patterns by
Examples New improved Electric toothbrush, Wireless router,