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Chapter 3

MGTA02H3 Chapter Notes - Chapter 3: Brand Awareness, Oligopoly, Everett Rogers


Department
Management
Course Code
MGTA02H3
Professor
Arif Toor
Chapter
3

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MGTA02 Chapter 3Products: The Things Consumers Need and Want
Products: Filling Needs and Satisfying Wants
Product: A good o seie that fills a uye’s eed o satisfies a at
o Elements of a product: Function, features, and benefits
Function: What a product is intended to do (at a basic level)
o Ex. A car is used for transportation
Features: Additional attributes or offerings which contributes improved usefulness or experience to a product
o What distinguishes one product from another similar one
o Ex. Cars can vary in things like types of chair, air conditioning/heating, and space, that can make it better
tha aothe opay’s a
Benefits: The advantages that are derived from producing a product
o Will alays ay depedig o the peso’s eeds ad ats
Product Value = Function + Feature + Benefits
o Value: The regard with which a product is held by potential buyers, expressed as its financial worth
o Value package: The bundle of tangible and intangible functions, features, and benefits that a business
offers to buyers of a product
o Marketers try to figure out how much value customers place on a product, and will attempt to increase
that value by adding additional things (value package)
Understanding Different Products and Their Consumers
Different products attract different people
o Two types: Buyers of consumer products and buyers of industrial products
Consumer Products: Products purchased by the end user, for personal use (direct transfer to person using
product)
o Ex. Food, clothing, books
o People are more likely to choose products based on their lifestyles or products that stand outthe
easier it is to recall a product name, the more attention consumers give to it and increases their
likelihood of buying that particular product
Industrial Products: The parts, ingredients materials, and supplies that are bought by one business from another
in the process of making consumer products
o Ex. Cereal companies need to buy cardboard to make cereal boxes (cardboard would be the industrial
product)
o Sold to a much smaller group of buyers, compared to consumer products who sell to the public mass
o Businesses must keep in mind whether their products will be sold to other businesses or consumers
Within consumer products are three subcategories of products:
o Convenience products: Inexpensive consumer goods or services which are purchased frequently and
with little expenditure of time and effort
Ex. A chocolate bar, a cup of coffee
o Shopping products: Products that are moderately expensive, and purchased infrequently causing
consumers to spend time comparing features, benefits, and price
Ex. Laptops and cars
Businesses must ensure that there is good value in terms of the features offered for their
products
o Speciality products: Products to which consumers will attach a great deal of importance and for which
they will spend a good deal of both time and effort to find exactly what they want
Typically luxury items such as jewelry and housing
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MGTA02 Chapter 3Products: The Things Consumers Need and Want
Product Obsolescence
Diffusion of innovations theory: Explains how an idea or product gains momentum and spreads through a
population over time
o Developed by Everett Rogers
He argued that the people who are the first to try a new product are different from people who
try the product much later
Identified five categories of people based on their willingness to try something new
Innovators
o Small group of people who want to be the first to try something new, and are
willing to take risks to do so
o Takes little effort to appeal to them
Early Adopters
o People aware of new changes and are comfortable adopting them
o Does’t euie uh ifoatio to oie the
o Things like how-to manuals and information sheets will appeal to them
Early Majority
o Willing to adopt new ideas or try new products more than the average person
o Typically need evidence to see that the new idea/product works before
adopting them
Ex. Success stories
Late Majority
o Skeptical of new changes and will only try them after the majority of the
population has tried them
o Things like success stories will also appeal to this group of people
Laggards
o People who are conservative and bound to tradition
o Skeptical of change and the hardest type of people to appeal to
o Will often try new products after the previous versions are out-of-date/no
longer being used
The Product Life Cycle
Product life cycle: The introduction, growth, maturity, decline, and ultimate demise of products and industries,
as technologies and tastes change
Time can be measured in various ways: weeks, months,
years, or decades
Products tend to follow the same pattern:
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