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Chapter 3

MGTA02H3 Chapter Notes - Chapter 3: Innovation Works, Oligopoly, Brand Awareness


Department
Management
Course Code
MGTA02H3
Professor
Arif Toor
Chapter
3

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Products: Filling Needs and Satisfying Wants
Product: a good or service that fills a buyer's need or satisfies a want
In filling a need or satisfying a want, most products deliver three elements
Functions: what a product is intended to do
1)
Features: additional attributes or offerings which contributes improved
usefulness or experience to a product
2)
Benefits: the advantages that are derived from purchasing a product
3)
Product value = function + features + benefits
Value: the regard with which a product is held by potential buyers, expressed
as its financial worth
Value package: the bundle of tangible and intangible functions, features and
benefits that a business offer to buyers of a product
Understanding Different Products and Their Consumers
There are certain goods and services which we will buy only after much
research, much comparison shopping, and after the expenditure of both
time and emotional investment
Two groups of purchasers:
Consumer products: products purchased by the end user, for personal
use
1)
Industrial products: the parts, ingredients materials, and supplies that
are bought by one business from another in the process of making
consumer products
2)
Consumer products can be further divided into three categories
Convenience products: inexpensive consumer goods or services which
are purchased frequently and with little expenditure of time and effort
1)
Shopping products: products that are moderately expensive, and
purchased infrequently causing consumers to spend time comparing
features, benefits and price
2)
Specialty products: products to which consumers will attach a great
3)
Chapter 3 (Products: The Things Consumers Need and
Friday, January 17, 2020
11:29 AM

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Specialty products: products to which consumers will attach a great
deal of importance for which they will spend a good deal of both time
and effort to find exactly what they want
3)
Product Obsolescence
The theory of the product life-cycle suggests that products, technologies and
industries have finite lives
Diffusion of innovations theory: explains how an idea or product gains
momentum and spreads thorough a population
Developed by Everett Rogers
Rogers argued that people who are the first to try a new product are
different from people who try the new product much later
Rogers identified five categories of people, based on their willingness to try
something new
Argued that a business needs different strategies used to appeal to
each category of consumer
Innovators
i.
ii.
iii.
1)
Early adopters
i.
ii.
2)
Early majority
i.
ii.
iii.
3)
Late majority
i.
ii.
4)
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