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Chapter 8

COMM 131 Chapter Notes - Chapter 8: Laundry Detergent, Business Casual, Business Analysis


Department
Commerce
Course Code
COMM 131
Professor
Jacob Brower
Chapter
8

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Marketing
Chapter 8: Developing and Managing Products and Services
February 5, 2013
What is a Product?
- Product: anything that can be offered to a market for attention, acquisition, use, or
consumption that satisfies a want or need
- Service: an activity, benefit, or satisfaction offered for sale that is essentially intangible
and does not result in ownership
Products, Services, and Experiences
- Marketing-mix planning begins with building a product offering that brings value to
customers
- Market offerings include both tangible goods and intangible services
- Pure Tangible Good: no services accompany the product (ie. toothpaste)
- Pure Service: offer consists primarily of a service (ie. dentist appointment)
- Companies create and manage customer experiences to differentiate their offer
Organizations, People, Places, and Ideas
- Organization Marketing: activities undertaken to create, maintain, or change the
attitudes and behaviour of target consumers toward an organization
- Person Marketing: consists of activities undertaken to create, maintain, or change
attitudes or behaviours toward people
- Place Marketing: activities undertaken to create, maintain, or change attitudes or
behaviours toward particular places
Levels of Products and Services
1. Core Customer Value
- What is the customer really buying?
- Define problem-solving benefits that customers seek
- ie. Blackberry users seek mobility and connectivity to people and resources
2. Actual Product
- Turn core benefits into a product
- Develop product and service features, design, quality, level, brand, packaging
- ie. The Blackberry is the product
3. Augmented Product
- Offer additional customer service and benefits
- ie. Blackberry provides customers with a complete solution to mobile
connectivity problems
Product and Service Classifications
1. Consumer Products: bought by final consumers for personal consumption
Convenience Products: consumers buy frequently, immediately, and within
minimum of comparison and buying effort (ie. laundry detergent)

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Shopping Products: the customer, in the process of selection and purchase,
compares on bases such as suitability, quality, price, and style (ie. clothes)
Specialty Products: has unique characteristics or brand identification for
which a significant group of buyers is willing to make a special purchase
effort (ie. Lamborghini, luxury goods)
Unsought Products: customer either does not know about or knows about but
does not normally think of purchasing (ie. life insurance, blood donations)
2. Industrial Products: purchased for further processing or for use in a business
Materials and Parts: raw materials and manufactured materials and parts, sold
directly to industrial users
Capital Items: aid in the buyer’s production or operations (ie. installations,
accessory equipment)
Supplies and Services: convenience products of the industrial field, purchased
with minimum effort or comparison
New Product Development
New Product Development Strategy
- Acquisition: buying a whole company, a patent, or a license to produce someone else’s
product
- New Product Development: the development of original product improvements, product
modifications, and new brands through the firm’s own product development efforts
- New products bring new solutions and variety to customer’s lives and are a key source
of growth for companies
- Innovation is expensive and risky
New Product Development Process
1. Idea Generation
- Systematic search for new product ideas
- Ideas come from internal sources and external sources (customers, competitors,
distributors, suppliers, advertising agencies etc.)
- Companies analyze customer questions and complaints to find better solutions
2. Idea Screening
- Screening new product ideas to spot good ideas and drop poor ones
- Executives write up new product ideas to be reviewed (describe product,
proposed customer value proposition, target market, competition, pricing, etc.)
- Company must answer the RWW (is it real, will we win, is it worth it)
3. Concept Development and Testing
- Develop ideas into a product concept
- Product Concept: detailed version of the new product idea stated in meaningful
customer terms
- Product concept must be developed and tested with a group of potential
consumers
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4. Marketing Strategy Development
- Marketing Strategy Development: designing and initial marketing strategy for a
new product based on the product concept
- Strategy must answer questions about how, when, where, and to whom the
product will be introduced
- Marketing Strategy Statement
Describe target market, planned value proposition, sales, market share, and
profit goals for the first few years
Outline product’s planned price, distribution, and marketing budget for the
first year
Describe planned long-run sales, profit goals, and marketing mix strategy
5. Business Analysis
- Evaluate the business attractiveness of the proposal
- Business Analysis: a review of the sales, costs, and profit projections for new
products to find out whether these factors satisfy the company objectives
- Estimate minimum and maximum sales to assess the range of risk
6. Product Development
- Developing the product concept into a physical product to ensure that the
product idea can be turned into a workable market offering
- R&D department develops and tests multiple versions of the product concept
(design a prototype that satisfies excited consumers)
7. Test Marketing
- Product and marketing program are tested in realistic market settings
- Gives the marketer experience with marketing the product before going to the
introduction stage
- When costs of developing are low, or management is confident, the company
may do little or no test-marketing (ie. line extensions or copies of successful
competitor products)
8. Commercialization
- The full-scale introduction of the new product into the market
- High costs for company
Managing New Product Development
Customer-Centered
- Understanding of what customers need and value
- Solve customer problems
- Offer a compelling customer value proposition
Team-Based
- Sequential Approach: one company department works individually to complete
its stage of the process before passing it to the next stage
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