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Chapter 6

Chapter 6 summary notes

6 Pages
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Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird

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WHAT IS A PRODUCT?
-marketers must consider what consumers want in order to plan strategies effectively
The Value Package
-features: the qualities, both tangible and intangible, that a company builds into its products
-to attract buyers, must also provide benefit
-value package: products marked as a bundle of value-adding attributes, including reasonable
cost
-in buying a product, consumers are also buying an image and reputation
Classifying Goods and Services
-one way to classify is to classify it according to expected buyers - 2 groups, buyers of consumer
products and buyers of industrial products (hence dif. marketing approach)
-consumer products (3 categories)
-convenience goods/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
-shopping goods/services: moderately expensive consumer goods/services that are
purchased infrequently, causing consumers to spend some time comparing their prices
-specialty goods/services: very expensive consumer goods/services that are purchased
rarely, causing consumers to spend a great deal of time locating the exact item desired
-industrial products (2 categories)
-expense items: relatively inexpensive industrial goods that are consumed rapidly and
regularly
-capital items: expensive, long-lasting industrial goods that are used in producing other
goods/services and have a long life
The Product Mix
-product mix: the group of products a company has available for sale
-product line: a group of similar products intended for a similar group of buyers who will use
them in a similar fashion
-some companies will have multiple/diversified product lines which helps the company
grow and offset slow sales in another other product line.
DEVELOPING NEW PRODUCTS
-to expand or diversify product lines, firms must develop successful and introduce new products,
and require constant renewal.
The Time Frame of New Product Development
-companies often face multi-year time horizons and high risks when developing new products
-it takes ~50 new product ideas to generate 1 new product...which could also fail. (~9/10 new
products will fail) b/c of lack of space and customer demand.
-speed or market: strategy of introducing new products to respond quickly to customer and/or
market changes (introduce new products before competitors)
The Seven-Step Developmental Process for goods
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1. product ideas. product development begins with a search for ideas for new products
2. screening. an attempt to eliminate all product ideas that do not mesh with the firm’s abilities,
expertise or objectives
3. concept testing. after ideas been pulled, consumers inputs are retrieved thru market research
4. business analysis. developing an early comparison of costs vs benefits of product, to predict
whether the product can meet minimum profitability goals
5. prototype development. product ideas begin to take shape. requires input from specialists, can
be expensive.
6. product testing and test marketing. using what is learned from 5, begins limited production of
product, then tested internally to see if it meets performance (if does, goes on sale @ limited
areas) very costly stage, but useful.
7. commercialization. if test-marketing results are positive, company begins full-scale production
and marketing of product @ many areas. usually follows 6 right after to prevent competitoros
from bringing their own version of product.
Variations in the Process for Services
-there are important differences in steps 1 and 5
1. service ideas.
- service package: identification of the tangible and intangible features that define the service
5. service process design.
-service process design: selecting the process, identifying worker requirements, and
determining facilities requirements so that the service can be effectively provided
THE PRODUCT LIFE CYCLE
-product life cycle (PLC): the concept that the profit-producing life of any product goes thru a
cycle of introduction, growth, maturity (levelling off), and decline
Stages in the Product Life Cycle h
1. introduction. begins when the product reaches the marketplace. marketers focus on making the
product known -> many costs, no profits
2. growth. if new product = attractive, sales climb up -> start profit. competitors introduce own
versions.
3. maturity. sales below to slow. prices fall due to competition of similar products, eventually
sales start to fall.
4. decline. sales and profits fall, new products take away sales. remove or reduce promotional
support but may let product linger to provide some benefits
-extending product life
1. product extension: existing, unmodified product that is marketed globally.
2. product adaptation: product modified to have greater appeal in foreign markets.
3. reintroduction: process of reviving for new markets products that are obsolete in older ones
IDENTIFYING PRODUCTS
-marketers not only develop products features but also identify product so consumers recognize
them.
Branding Products
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Description
MGTA04 Chapter 6 WHAT ISAPRODUCT? - marketers must consider what consumers want in order to plan strategies effectively The Value Package - features: the qualities, both tangible and intangible, that a company builds into its products - to attract buyers, must also provide benet - value package: products marked as a bundle of value-adding attributes, including reasonable cost - in buying a product, consumers are also buying an image and reputation Classifying Goods and Services - one way to classify is to classify it according to expected buyers - 2 groups, buyers of consumer products and buyers of industrial products (hence dif. marketing approach) - consumer products (3 categories) - convenience goodsservices: 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 - shopping goodsservices: moderately expensive consumer goodsservices that are purchased infrequently, causing consumers to spend some time comparing their prices - specialty goodsservices: very expensive consumer goodsservices that are purchased rarely, causing consumers to spend a great deal of time locating the exact item desired - industrial products (2 categories) - expense items: relatively inexpensive industrial goods that are consumed rapidly and regularly - capital items: expensive, long-lasting industrial goods that are used in producing other goodsservices and have a long life The Product Mix -product mix: the group of products a company has available for sale - product line: a group of similar products intended for a similar group of buyers who will use them in a similar fashion - some companies will have multiplediversied product lines which helps the company grow and offset slow sales in another other product line. DEVELOPING NEW PRODUCTS - to expand or diversify product lines, rms must develop successful and introduce new products, and require constant renewal. The Time Frame of New Product Development - companies often face multi-year time horizons and high risks when developing new products - it takes ~50 new product ideas to generate 1 new product...which could also fail. (~910 new products will fail) bc of lack of space and customer demand. - speed or market: strategy of introducing new products to respond quickly to customer andor market changes (introduce new products before competitors) The Seven-Step Developmental Process for goods 1 www.notesolution.com
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