Textbook Notes (363,137)
Canada (158,217)
MGTA02H3 (361)
Chapter 6

Chapter 6 Textbook Notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

MGTA04 01 Chapter 6: Developing and Promoting Goods and Services - When making strategic decisions, you can not only focus on one element of the marketing mix without having to deal with the other three elements What is a Product? (pg. 121 124) - When developing an effective marketing mix strategy for any product, marketers must consider what consumers really buy when they purchase products The Value Package - Product features are the qualities, tangible and intangible, that a company builds into its products such as a 12-horsepower motor on a lawn mower - To attract buyers, features also must provide benefits (e.g. produces an attractive lawn) - A value package is a product that is marketed as a bundle of value-adding attributes, including reasonable cost - Most items in a value package are services or intangibles that, collectively, add value by providing benefits 9K,9L3.70,809K0.:89420788,9L81,.9L43 0 J 1,890OL;079L208 - Products are much more than just visible features and benefits, customers are also buying an image and a reputation (e.g. Sw,9.K8Z,9.K702L35045O0414:3J,39703L3088 Classifying Goods and Services - Buyers fall into two groups: buyers of consumer products and buyers of industrial products Classifying Consumer Products - Consumer products are commonly divided into three c,90J47L089K,9701O0.9-:078 behaviour: convenience, shopping, and specialty products o Convenience goods (e.g. milk & newspapers) and convenience services (e.g. fast food restaurant) are relatively inexpensive, consumed rapidly and regularly, causing consumers to spend little time looking or comparing their prices o Shopping goods (e.g. stereos & tires) and shopping services (e.g. insurance) are more expensive and are purchased less frequently, causes consumers to spend more time comparing brands, prices, pe71472,3.06:,OL909. o Specialty goods (e.g. wedding gowns) and specialty services (e.g. catering) are extremely important and expensive purchases, purchased rarely which causes consumers to spend a great deal of time locating the exact item desired Classifying Industrial Products - Depending on the cost and frequency of usage, industrial products can categorized: o Expense items are inexpensive materials and services that are consumed rapidly and regularly (e.g. industrial goods used directly in the production process) o Capital items are more expensive (often purchased by high-level managers), long-lasting industrial goods that are used in producing other goods or services and have a long life (e.g. buildings and building maintenance services) The Product Mix - The product mix is the group of products a company has available for sale (e.g. Black & 0.N072,N0894,89078;,.::2.O0,3070O0.97L.7LOO809. Product Lines www.notesolution.comMGTA04 02 - A product line are a group of similar products intended for a similar group of buyers who will use them in a similar fashion (e.g. from iced tea, a company can introduce many different flavours in order to attract a larger consumer base) - Companies may extend their horizons and identify opportunities outside existing product lines, the result is multiple (or diversified) product lines - Multiple product lines allow a company to row rapidly and can help to offset the consequences of slow sales in any one product line Developing New Products (pg. 124 127) - No firm can count on a single successful product to carry it forever, due to competition and shifting consumer preferences, firms must develop and successfully introduce streams of new products The Time Frame of New Product Development - Companies often face multi-year time horizons and high risks when developing new products (e.g. HDTV is an example of a product that has been slower to develop since not all broadcaster offer HD programs and consumers were hesitant about the prices) Product Mortality Rates - It takes about 50 new product ideas to generate one that finally reaches the market - Creating a successful new product has become increasingly difficult because the number of new products hitting the market each year is increasing and the average supermarket caries a total of only 20,000 to 25,000 different items. Because of the lack of space and customer demand, about 9 out of 10 products fail. - Most successful products are innovative and deliver unique benefits Speed to Market - The more rapidly a product moves from the laboratory to the marketplace, the more likely it is to survive. By introducing products ahead of competitors, companies establish market leadership (becomes in entrenched in the market before competitors) - Speed to market is a strategy of introducing new products to respond quickly to customer andor market changes The Seven-Step Development Process - Firms adopt a basic seven-step process to increase their chances of developing a successful new product 1. Product ideas N Product ideas can come from consumers, the sales force, research and development people, or engineering personnel N Key is to actively seek ideas and reward those whose ideas are successful 2. Screening N This stage is an attempt to eliminate all product ideas that do not mesh ZL9K9K01L728,-LOL9L080[5079L80474-M0.9L;08 N Representatives from marketing, engineering, and production are involved 3. Concept testing N Once ideas have been chosen, companies use market research to solicit .438:2078L35:9 1L728.,3L039L1-0301L98,357L.0O0;0O3000 4. Business analysis www.notesolution.com
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