MKTG 2030 Chapter Notes - Chapter 10: Coca-Cola Zero Sugar, Service Innovation, Cross-Functional Team

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1 May 2015

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Developing New Products and Services
Apple’s Innovation Machine
-Fortune rates Apple as world’s most – admired company
-Bloomberg rates Apple as most innovative company
-iCloud: stores all content and wirelessly pushed any changes/purchases from one device to the “cloud”
and to any other device
-Cloud computing: involves moving data and processing tasks onto a data centre server accessible by
the Internet
-Product: good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies
consumers and is received in exchange for money or some other unit of value
Variations of Products
Product Line and Product Mix
-Product line: group of products closely related because they satisfy aa class of needs, are used
together, are sold to same customer group, or fall within given price range
-Product item: a specific product as noted by unique brand, size or price within each product line
-SKU: stock keeping unit, is a unique identification number that defines an item
-Product mix: number of product lines offered by a company
Classifying Products
-Is necessary to help develop similar marketing strategies for product offerings
Types of User
-Consumer goods: products purchased by ultimate consumer
-Business/industrial/organizational goods: products that assist in providing products for resale
oApple computer can be sold for personal use or for office use
Degree of Tangibility
-Nondurable good: consumer n one or a few uses (food products and fuel); require consumer ads
and wide distribution
-Durable goods: lasts over an extended number of uses (appliances, cars, stereo equipment); require
personal selling
-Services: activities, deeds or basic intangibles offered for sale in exchange for money or something of
Classifying Consumer and Business Goods
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Classification of Consumer Goods – Depends on the Individual
-Convenience goods: purchased frequently, conveniently and with minimum shopping effort;
inexpensive; people will accept substitutes; widespread distribution (Toothpaste, hand soap)
-Shopping goods: consumer compares several alternatives based on price, quality or style; fairly
expensive, needs much comparison shopping time, differential is stressed (TV, Airline ticket)
-Specialty goods: consumer makes a special effort to search out and buy, limited distribution, unique
brand or status, consumers are brand loyal, infrequent purchase, very expensive (Rolex watch, Tiffany
-Unsought goods: items consumer does not know about or does not initially want; price varies; limited
distribution; awareness is essential; consumers will accept substitutes (burial insurance, thesaurus)
Classification of Business Goods
-Sales result from derived demand: sale of business goods result from sale of consumer goods
Production Goods
-Items used in manufacturing process that become part of final product
-Raw materials and component parts
-Are sold directly to business users
Support Goods
-Items used to assist in producing other goods/services
oInstallations: buildings and fixed equipment
oAccessory equipment: tools and office equipment; purchased in small order sizes
oSupplies: similar to convenience goods; stationary, brooms; purchased with little effort; price
and delivery are key factors
oServices: intangible activities to assist business buyer; advisory, maintenance and repair
services; sellers reputation is critical
What is a New Product?
Newness Compared with Existing Products
-If a product is functionally different from existing products
-Additional features can be added to existing products to make it more appealing
Newness in Legal Terms
-Products can only be termed “new” for up to 12 months
Newness from Company’s Perspectives
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-Product line extension: least risk, incremental improvement of an existing product; Coke Zero is an
extension of the original coke
-Innovation/Technology: significant jump in innovation; cellphone manufacturer offering new
-True Innovation: truly revolutionary new product; first Apple comp. in 1976
Newness from Consumers Perspective
-Determine newness based on effects on consumption
oContinuous innovation: no new behaviours must be learned; need to gain consumer
awareness and have wide distribution (toothpaste manufacturers can add small features to
make new product)
oDynamically continuous innovation: disrupts consumer’s normal routine; advertise points of
difference and benefits; electric toothbrush or compact disc player
oDiscontinuous innovation: requires new learning; wireless router and electric car; need to
educate consumers through product trial and personal selling; kindle
What are New Services?
-For labour intensive and interactive services, actual providers are part of the customer experience
-Many services require physical presence of the customer; customers demand local decentralized
production of the service
-New services do not have tangible product to carry a brand name
oService innovation: new core products for markets that have not been previously defined
(FedEx’s overnight express delivery)
oProduces innovation: innovative new processes to deliver existing core services in new ways
with greater value enhancement to the customer (Uni/college offering online MBA program)
oService line extension: additions to existing lines of services (banks offering insurance)
oProcess line extension: new ways of delivering existing services so they offer greater
convenience or different experience (telephone or internet banking)
oSupplementary service innovations: adding new elements to core service or improving
existing supplementary services that accompany core service (hospital that adds valet parking
or FedEx offering high-speed internet for customers at its locations)
oBasic service improvements: modest changes in performance of current service (serving
customer quicker)
oStyle changes: require no change in service core or service process (new colour scheme for
service facility, new personnel uniforms)
-Most service companies focus on creating only incremental improvements (continuous innovation)
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