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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Developing and Promoting Goods and Services What is a Product The Value Package either good, service or both, customers get value from the benefits, features and intangible rewards associated with a product - features: the qualities, both tangible and intangible, that a company builds into its products (features are different from benefits; features must provide benefits ex. The mower must produce an attractive lawn) - benefits are very important; they can be the focal point of a marketing campaign, rather than features - value package: product marketed as a bundle of value-adding attributes, including reasonable cost Classifying Goods and Services - one way to classify goods and services is according to who is expected to buy them; there are buyers of consumer products and buyers of industrial products - classifying consumer products: - convenience goods and services: relatively inexpensive, consumer goods or services that are bought and used rapidly and regularly, causing consumers to spend little time looking for them or comparing their prices (ex. Milk, fast food) - shopping goods and services: moderately expensive consumer goods or services that are purchased infrequently, causing consumers to spend some time comparing their prices (ex. Stereos, insurance) - specialty goods and services: very expensive consumer goods or services that are purchased rarely, causing consumers to spend a great deal of time locating the exact item desired (ex. Catering, wedding gown) - classifying industrial goods - expense items: relatively inexpensive industrial goods that are consumed rapidly and regularly (ex. Bulk loads of tea processed into tea bags) - capital items: expensive, long-lasting industrial goods that are used in producing other goods or services and have a long life (ex. computers, airplanes) The Product Mix - product mix: the group of products that a company has available for sale (ex. Black and Decker makes toasters, vacuum cleaners, etc) - most companies begin with a single product and progress to meet the needs of more consumers - product line: a group of similar products intended for a similar group of buyers who will used them in a similar fashion - a lot of companies identify opportunities outside of their existing product line (Procter and Gamble used to make soap, now they make papers, food, coffee as well Developing New Products - to survive, companies must expand or diversify their product lines, no firm can depend on only one product; basic products require constant renewal - Research and Development (R&D) refers to those activities that are necessary to provide new products, services and processes - technology: the application of science that enables people to do entirely new things or to perform established tasks in a new and better way - after studying the movement of the human foot in minute detail, Canstar Sports Inc developed the Micron Mega skate, which is now worn by 70% of NHL players The New Product Development Process - product mortality rates: it is estimated that it takes 50 new product ideas to generate one product that finally reaches the marketplace; many great ideas have failed in the market - speed to market: the strategy if introducing new products to respond quickly to customer andor market changes - the faster a product moves from the laboratory to the marketplace, the more likely it is to survive; companies establish market leadership by introducing new products ahead of competitors - The seven-step development Process: - product ideas: product development begins with a search for ideas (can come from consumers, sales force, R&D, engineering personnel) - screening: an attempt to eliminate all product ideas that do not mesh with the firms abilities, expertise or objectives
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