CHAPTER 7 CREATE THE PRODUCT EG. When you buy a washing machine, the
core product is the ability to get clothes clean,
BUILD A BETTER MOUSETRAP—AND ADD VALUE but the actual product is a large, square, metal
The marketer’s task is twofold:
1 , to create a better value than what’s out The actual product also includes the unique
features of the product, such as its
there already appearance or styling, the package, and the
2 , to convince customers that this is true
A product is a tangible good, service, idea, or
some combination of these that satisfies THE AUGMENTED PRODUCT
consumer or business customer needs
through the exchange process Augmented product—the actual product plus
Products can be physical goods, services, ideas, other supporting features such as a warranty,
people, or place. credit, delivery, installation, and repair service
A good is a tangible product, something that after the sale.
we can see, touch, smell, hear, taste, or Marketers know that adding these supporting
possess. features to a product is an effective way for a
Intangible products—services, ideas, people, company to stand out from the crowd.
place—are products that we can’t always see, EG. Apple revolutionized the music business
touch, taste, smell, or possess. when it created its iTunes Music Store that
Marketers think of the product as more than enables consumers to download titles directly
to their digital music and video libraries.
just a thing that comes in a package. They
view it as a bundle of attributes that includes
the packaging, brand name, benefits, and HOW MARKETERS CLASSIFY PRODUCTS
supporting features in addition to a physical Generally, products are either consumer
A large part of the marketer’s role in creating products or business-to-business products.
the value proposition is to develop and HOW LONG DO PRODUCTS LAST
market products appropriately.
Marketers classify consumer goods as durable
LAYERS OF THE PRODUCT or nondurable depending on how long the
A product is everything that a customer product lasts.
Durable goods are consumer products that
receives in an exchange. provide benefits over a period of months,
We distinguish among 3 distinct layers of the
product—the core product, the actual product, years, or even decades, such as cars, furniture
and the augmented product.
FIGURE7.1 Nondurable goods, such as gasoline,
newspapers and food, in the short term.
We are more likely to purchase durable goods
THE CORE PRODUCT
under conditions of high involvement, while
The core product consists of all the benefits nondurable goods are more likely to be low-
the product will provide for consumer or
business customers. When they offer these products, (computer or
A benefit is an outcome that the customer house) they will spend a lot of time, marketers
receives from owning or using a product. need to understand consumers’ desires for
Marketing is about supplying benefit, not different product benefits and the importance
attributes. of warranties, service, and customer support.
Many products actually provide multiple Consumers usually don’t “sweat the details”
benefits. so much when they choose among
nondurable goods. There is little search for
THE ACTUAL PRODUCT information or deliberation. Sometimes, this
means that consumers buy whatever brand is
The actual product—is the physical good or
available and reasonably priced.
the delivered service that supplies the desired Marketers can probably be less concerned
benefit. with developing new product features to
attract customers; they should focus more on creating new uses for the existing product, as They may visit several stores and devote
well as pricing and distribution strategies. considerable effort to comparing products.
Intelligent agents or shopbots—computer
HOW DO CONSUMERS BUY PRODUCTS programs that find sites selling a particular
product. Some of these programs also provide
Marketers also classify products based on
information on competitors’ prices, and they
where and how consumers buy the product. may even ask customers to rate the various e-
A convenience product typically is a
nondurable goods or service that consumers businesses that they have listed on their site
so consumers can learn from other shoppers
purchase frequently with a minimum of which sellers are good and which are less than
comparison and effort.
Convenience products are low priced and Specialty products have unique characteristics
widely available. that are important to buyers at almost any
Consumers generally already know all they
need or want to know about a convenience EG. Rolex watches and Alienware laptops.
product, devote little effort to purchases, and Consumers usually know a good deal about
willingly accept alternative brands if their
specialty products, and they tend to be loyal
preferred brand is not available in a to specific brands.
convenient location. Most convenience
product purchases are the results of habitual A specialty product is an extended problem-
solving purchase that requires a lot of effort to
consumer decision making. choose. That means firms that sell these kinds
Make sure the product is easily obtainable in
all the places where consumers are likely to of products need to create marketing
strategies that make their product stand apart
look for it. from the rest.
There are several types of convenience
Unsought products are goods or services
products: FIGURE 7.2 consumer has little awareness or interest until
Staples such as milk, bread, and gasoline are a need arises, retirement plans and disability
basic or necessary items that are available
insurance are unsought products. It requires a
almost everywhere. When selling staples, good deal of advertising or personal selling
marketers must offer customers a product and is a real challenge to fine convincing ways
that consistently meets their expectations for
to interest people in these kinds of products—
quality and make sure it is available at a price just ask any life insurance salesperson.
comparable to the competition’s prices.
We buy impulse products on the spur of the One solution may be to make pricing more
When they want to promote impulse products, HOW DO BUSINESSES BUY PRODUCTS?
marketers have two challenges: to create a
product or package design that is enticing, and Marketers classify business-to-business
to make sure their product is highly visible. products based on how organizational
We purchase emergency products when we’re customers use them.
in dire need; because we need the product Equipment refers to the products an
badly and immediately, price and sometimes organization uses in its daily operations.
product quality may be irrelevant to our Heavy equipment, sometimes called
decision to purchase. installations or capital equipment.
Shopping products are goods or services for Light or accessory equipment; they are
which consumers will spend time and effort to portable, cost less, and have a shorter life
gather information on price, product span than capita equipment.
Marketing strategies for equipment usually
attributes, and product quality.
They are likely to compare a alternatives emphasize personal selling and may mean
before they buy. The purchase of shopping custom-designing products to meet an
products is typically a limited problem-solving industrial customer’s specific needs.
decision. Maintenance, repair, and operating (MRO)
Consumers are only moderately brand products are goods that a business customers
loyal;they will typically switch whenever a in a relatively short time.
different brand offers new or better benefits. Mainternace products include light bulbs,
mops, cleaning supplies, and the like. Repair products are items such as nuts, bolts, continuous innovations, dynamically
washers, and small tools. continuous innovations, and discontinuous
Operating supplies include computer paper innovations.
and oil to keep machinery running smoothly.
Use a sales force ro promote MRO products,
others rely on catalogue sales, the Internet,
and telemarketing in order to keep prices as A continuous innovation is a modification to
an existing product.
low as possible. This type of modification can set one brand
Raw materials are products of the fishing,
lumber, agricultural, and mining industries apart from its competitors.
The consumer doesn't have to learn anything
that organizational customers purchase to use
in their finished products. new to use a continuous innovation.
Firms produce processed materials when they From a marketing perspective, this means that
it’s usually pretty easy to convince consumers
transform raw materials form their original
state. to adopt this kind of new product.
A knockoff is a new product that copies, with
Organizations purchase processed materials slight modification, the design of an original
that become a part of the products they make.
Some business customers purchase product.
Firms deliberately create knockoffs of clothing
specialized services from outside suppliers. and jewellery, often with the intent to sell to a
Specialized services may be equipment-based,
such as repairing a copy machine or fixing an larger or different market.
assembly line malfunction, or non-equipment DYNAMICALLY CONTINUOUS INNOVATIONS
based, essential to the operation of an
organization but are not part of the
A dynamically continuous innovation is a
production of a product. pronounced modification to an existing
Component parts are manufactured goods or product that requires a modest amount of
subassemblies of finished items that learning or change in behaviour to use it.
organizations need to complete their own
products. DISCONTINUOUS INNOVATIONS
Marketing strategies for component parts
usually involve nurturing relationships with To quality as a discontinuous innovation, the
customer firms and on-time delivery of a product must create major changes in the way
product that meets the buyer’s specifications. we live.
Consumers must learn a great deal to use a
“NEW AND IMPROVED!” THE PROCESS OF discontinuous innovation because no similar
INNOVATION product has ever been on the market.
An innovation is anything that customers HWO DO WE MEASURE INNOVATION
perceive as new and different.
Innovation – a product that consumers Innovation is a complicated item to try to
perceive to be new and different from existing measure. This is because it involves not only
products. marketing, but the firm’s overall culture,
An innovation may be a completely new leadership, and processes in place that foster
product that provides benefits never available innovation.
before, such as personal computers when
they were first introduced, or it may simply be o How aware are organization
an existing product with a new style, in a members of a firm’s goals for
different colour, or with some new feature,
like blue Smarties. o How committed is the firm and its
leadership to those goals?
TYPES OF INNOVATIONS o How actively does the firm support
innovation among its organization
Innovations differ in their degree of newness, members? Are there rewards and
and this helps to determine how quickly the
other incentives in place to innovate?
target market will adopt them. Is innovation part of the performance
Marketers classify innovations into 3 evaluation process?
categories based on their degree of newness: o To what degree do organization They estimate technical success when they
members perceive that resources are decide whether the new product is
available for innovation? technologically feasible
Commercial success when they decide
whether anyone is likely to buy the product.
o Does the organization have an
appetite for learning and trying new PHASE 3: MARKETING STRATEGY DEVELOPMENT
things? Develop a marketing strategy to introduce the
o Do organization members have the
freedom and security to try things, product of the marketplace.
Is means that marketer must identify the
fail, and then go forward to try
different things? target market, estimate its size, and
Outcomes of innovation determine how they can effectively position
the product to address the target market’s
o What is the number of innovations
launched in the past 3 years? needs.
o What % of revenue is attributable to Marketing strategy development includes
planning for pricing, distribution, and
launches of innovations during the
past 3 year? promotion expenditures both for the
introduction of the new product and for the
NEW PRODUCT DEVELOPMENT
How firms actually develop new products. PHASE 4: BUSINESS ANALYSIS
There are 7 phases in the process of new
Marketers still must find out if the product can
product development: idea generation,
product concept development and screening, make a profitable contribution to the
marketing strategy development, business organization’s product mix.
analysis, technical development, test The business analysis for a new product begins
marketing, and commercialization. with assessing how the new product will fit
into the firm’s total product mix.
PHASE 1: IDEA GENERATION
PHASE 5: TECHNICAL DEVELOPMENT
In the initial idea generation phase of product
development, marketers use a variety of Is it survives the scrutiny of a business analysis,
sources to come up with great new product a new product concept then undergoes
ideas that provide customer benefits and that technical development in which a firm’s
are compatible with the company mission. engineers work with marketers to refine the
Often firms use marketing research activities design and production process.
such as the focus groups—search for new The better a firm understand how customer
will react to a new product, the better its
chances of commercial success. For this
PHASE 2: PRODUCT COMCEPT DEVELOPMET AND reason, a company's research and
SCREENING development department usually develops
one or more physical version or prototypes of
Although ideas for products initially come the product.
from a variety of sources, it is up to marketer Prospective customers may evaluate these
to expand these ideas into more complete mock-ups in focus groups or in field trials at
product concepts. home.
Product concepts describe what features that
If it will be manufacturing goods, the company
product should have and the benefits those may have to buy new production equipment
feature will provide for consumers. or modify existing machinery.
Technical development sometimes requires
In new product development, failures often the company to apple for a patent.
come as frequently than successes Because patents legally prevent competitor
When screening, marketer and researcher from producing or selling the invention, this
examine the chances that a new product legal mechanism may reduce or eliminate
concepts that have little chance to make it in competition in a market for many years so
the market. that a firm gains some “breathing room: to recoup its investments in technical Product adoption is the process by which a
development. consumer or business customer begins to by
and use a new good, service, or idea.
PHASE 6: TEST MARKETING Diffusion—describes how the use of a product
It means the firm tries out the complete spreads throughout a population
At first only a small number of perple buy it,
marketing plan—the distribution, advertising, but change happens in a hurry when the
and sales promotion—in a small geographic
area that is similar to the larger market it process reaches the moment of critical mass,
this moment of truth is called the tipping
hopes to enter. point—a product’s sales spike from a slow
On the negative side, test marketing is
extremely expensive. climb to an unprecedented new level.
After they spend months or even years to
A test market also gives the competition a free develop a new product, the real challenge to
look at the new product, its introduction price
firms is to get consumers to buy and use the
and the intended promotional strategy—and product, and to do so quickly so they can
an opportunity to get to the market first with recover the costs of product development and
a competing product.
On the positive side, when they offer a new Marketer must understand the product
product in a limited area, marketers can
evaluate and improve the marketing program. adoption process.
Test marketing uncovers a need to improve STAGES IN CONSUMERS’ ADOPTION OF A NEW
the product itself. PRODUCT
At other times, test marketing indicates
product failure; this advanced warning allows Whether the innovation is better film
the firm to save millions of dollars by “pulling technology or a better mousetrap, individuals
the plug”. and organizations pass through 6 stages in the
Because of the potential problems and adoption process.
expense of test marketing, marketers instead After every stage, people drop out of the
may use special computer software to process, so the proportion of consumers who
conduct simulated tests that imitate the wind up using the innovation on a consistent
introduction of a product into the marketplace. basis is a fraction of those who are exposed to
These simulations allow the company to see it.
the likely impact of price cuts and new
packaging—or even to determine where in the AWARENESS
store it should try to place the product.
To educate consumers about a new product,
PHASE 7: COMMERCIALIZATION marketers may conduct a massive advertising
campaign: a media blitz.
This means the launching of a new product, But this strategy works for new products
and it requires full-scale product, distribution, when at least some consumers see a new
advertising, sales promotion—the works. product as something they want and need and
A launch requires planning and careful just can’t live without.
preparation. Marketers must implement trade
promotion plans that offer special incentives
to encourage dealers, retailers, or other
members of the channel to stock the new A prospective adopter begins to see how a
new product might satisfy an existing or newly
product so that customer will find it on store
shelves the very first time they look. realized need.
They must also develop consumer sales Interest also means that consumers look for
and are open to information about the
promotions such as coupons.
ADOPTION AND DIFFUSION OF NEW PRODUCTS Marketers often design teaser advertisements
that give prospective customers jest enough
What happens after that new product hits the information about the new product to make
market—how and innovation spreads them curious and to stimulate their interest
throughout a population FIGURE 7.9 EVALUATION Favourable experiences make it more likely
that she will become a loyal adopter as her
We weigh the costs and benefits of the new initially positive opinions result in
For complex, risky, or expensive products,
Some marketers feel that reselling the
people thing about the innovation a great deal customer in the confirmation stage in
before they will try it. important. They provide advertisements, sales
Marketers for such products help prospective
presentation, and other communication to
customers see how such products can benefit reinforce a customer’s choice.
Impulse products—something little evaluation INNOVATOR CATEGORIES
may occur before someone decides to by a
good or service. Diffusion describes how the use of a product
spreads throughout a population.
A person may do very little thinking before
she makes an impulse purchase, for these Consumers and business customers differ in
goods, marketers design the product to be how eager or willing they are to try something
new, lengthening the diffusion proves by
eye-catching and appealing to get consumers
to notice the product quickly. months or even years.
Some potential adopters will evaluate an There are five categories of adopters
innovation positively enough to move on to
the next stage. Those who do not thing the INNOVATORS
new product will provide adequate benefits
Make up roughly the first 2.5% of adopters.
drop out at this point. Extremely adventurous and willing to take
TRIAL risks with new products.
Typically well educated, younger, better off
The stage in the adoption process when financially than others in the population, and
potential buyers will actually experience or worldly.
use the product or the first time.
Often marketers stimulate trial when they
provide opportunities for consumers to
Approximately 13.5% of adopters, buy
sample the product. product innovations early in the diffusion
Even if the trial is satisfactory, some
prospective buyers still won’t actually adopt process but not as early as innovators.
Early adopters are very concerned about
the new product because it costs too much. social acceptance, so they tend to gravitate
Online direct marketing—consumers jest can’t
stand to by without first touching, holding and toward products they believe will make others
thing they are cutting-edge or fashionable.
using a produc