MKT 337 Lecture Notes - Lecture 10: Open Innovation, Strategic Alliance, Swot Analysis

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4 Jan 2017
Chapter 10: Developing New Products and Services
What are products and services?
A product is a good, service or idea consisting of a bundle of tangible and
intangible attributes that satisfy consumers’ needs and is received in exchange
for money or something else of value.
Service: intangible activities or benefits that an organization provides to satisfy
consumer needs in exchange for money or something else of value
Classified products:
o Consumer products: products purchased by the ultimate consumer
Convenience products: items consumers purchase frequently
Shopping products: consumer compares several alternatives n criteria
such as price, quality or style
Specialty products: items that consumer makes a special effort to search
out and buy
Unsought products: items that consumer does not know about or knows
about but does not initially want.
o Business product: products that organizations buy that assist in providing other
products for resale.
Derived demand: sales of business products frequently result from the
sale of consumer products.
Components: items that become part of the final product
Support products: items used to assist in producing other goods and
Accessory equipment
Industrial services
Product Item: specific product that has a unique brand, size, or price
Product Line: group of product or service items that are closely related
because they satisfy a class of needs, are used together, are sold to the
same customer group, are distributed through the same outlets or fall
within a given price range.
Product Mix: consists of all the product lines offered by an organization
New products and why they succeed or fail
If a product is functionally different from existing products, it can be defined as new.
In legal terms: Federal Trade commission advises that the term new be limited to
use with a product up to six months after it enters regular distribution
Organizational Perspective: Three levels of newness: Product-line extension, jump
in innovation and technology, true innovation
Consumer Perspective: continuous innovation: requires no new learning;
dynamically continuous innovation: Disrupts consumers normal routine but does
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