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Chapter 6

chap 6 (additional notes)

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Ryerson University
ECN 510

Chapter 6 • Product value package: overall value attributes of a product that are marketed, can include intangible attributes such as image or reputation o Product features: qualities that a company builds into its products, tangible or intangible o Product benefits: not directly apparent, for example, a mower can produce an attractive lawn. • Consumer products can be classified as: o Convenience goods: relatively inexpensive, used rapidly and regularly, purchased with little effort (e.g. newspaper, milk) o Shopping goods: moderately expensive, purchase less frequently, alternatives are evaluated by consumers (e.g. stereos and tires) o Speciality goods/services: expensive, rarely purchased, consumers spend a great deal of time locating exact desired items (e.g. wedding gown). • Industrial products can be classified as: o Expense items: consumed within a year (e.g. grain to make bread) o Capital items: permanent, expensive, and long lasting such as buildings and equipment The Product Mix • Product mix is the group of products a company has available for sale o Divided into product lines: groups of similar products intended for similar buyers o Over time, companies diversify their product lines and offer more than one of them to increase sales and increase security Developing New Products • It is essential to keep developing and modernizing products to keep up with changing consumer trends and tastes • There are risks associated with developing new products, their support and adoption by consumer communities may be slow (e.g. HDTVs) • Most new products will not be successful o The more rapidly a product goes from laboratory to marketplace, the better its chances of success. Speed to market is a strategy which involves quickly responding to changes in the market. • 7-Step Product Development Process: 1. Product Ideas 2. Screening (is the company able to realize the idea?) 3. Concept testing (market research and price levels) 4. Business analysis (early cost-benefit report, sales projections, does the product roughly meet the firm’s profitability goals?) 5. Prototype development (very costly) 6. Product testing and test marketing (tested internally, made available for sale at limited areas, very costly but gives feedback on how the market will respond) 7. Commercialization (full-scale production and marketing of the product) • Service development pro
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