Marketing ch 12 video

Video 2 Developing new Products

"New" -From customers viewpoint it could mean offering innovative benefits or being different and distinctly better from existing choices. These new benefits may have risen from advances in technologies or the application of an existing technology to a new problem. -Or new could mean never having been sold before. This would be a breakthrough. These products are called new to the world. -Or from a firms perspective they may develop a product as new to them, but not really new to customers. -Or if a firm were to begin marketing an existing product in a new market like in a new country, that product would be new to that market, but not new to the firm.

Venture Team

- A cross-functional group that creates entirely new products that may be aimed at new markets

Three basic ways to delete a product: Phase-out

- Allows a product to decline without a change in the marketing strategy

Product Modification

- Changes in one or more characteristics of a product -Differs from a line extension in that the original product does not remain in the product line -Certain conditions must exist for the modification for work -The product must be modifiable -Customers must be able to perceive that a modification has been made -The modification should make the product more consistent with customers' desires so it provides greater satisfaction

Product differentiation

- Creating and designing products so that customers perceive them as different from competing products

Line Extension

- Development of a product that is closely related to existing product in the line but is designed specifically to meet different customer needs -Are less expensive and less risky than introducing a new product -May focus on a different market segment or attempt to increase sales within the same market segment by more precisely satisfying the needs of people in that segment -The success of a line extension is enhanced if the parent brand has a high-quality brand image and if there is a good fit between the line extension and its parent -Line extensions, when successfully applied, can take market share from competitors

Business Analysis

- Evaluating the potential impact of a product idea on the firm's sales, costs, and profits -Marketers ask a series of questions and attempt to answer them through market information -The results of customer surveys, along with secondary data, supply the specifics needed to estimate potential sales, costs, and profits -To forecast sales, organizations sometimes employ break even analysis to determine how many units they would have to sell to begin making a profit or payback analysis to compute the time period required to recover the funds that would be invested in developing the new product -Because break even analysis and payback analyses are based on estimates, they are usually viewed as useful but not particularly precise tools -Assessing the potential of a product idea for the firm's sales, costs, and profits -Demand -Market conditions -Capabilities -Costs: developing and marketing

Run-out

- Exploits any strengths left in the product

Product design

- How a product is conceived, planned, and produced -Components of design: -Styling - The physical appearance of a product -Functionality -Usefulness

Product Support services: Customer services

- Human or mechanical efforts or activities that add value to a product Examples: Delivery and installation Financing arrangements customer training Warranties and guarantees Repairs Layaway plans Convenient hours of operation Adequate parking Toll-free numbers Websites

Disruptive Innovation

- Identifies old technologies that can be exploited in new ways or develops new business models to give customers more than they've come to expect from current products in a specific market

Commercialization

- Refining and finalizing plans and budgets for full-scale manufacturing and marketing of the product has been implemented. -Early in this stage: -Marketing management analyzes the results of test marketing to find out what changes in the marketing mix are needed before introducing the product -Marketers must make decisions about warranties, repairs, and replacement parts -this process isn't really quite over yet because constant monitoring of the product can result in more tweaks in the marketing mix

Screening

- Selecting the ideas with the greatest potential for further review -Product ideas are analyzed to determine if they match the organization's mission, objectives, and resources -A firm's overall abilities to produce and market the product are also analyzed -At times, a checklist of new-product requirements is used when making screening decisions -Most new product ideas are rejected during the screening phase -Choosing the most promising ideas for further review. -It does not mean throwing away the ideas we didn't choose. -Potential to cannibalize our existing product lines -Company's capabilities and fit -Needs and wants of buyers

Product Features

- Specific design characteristics that allow a product to perform certain tasks -For a brand to have a sustainable competitive advantage, marketers must determine the product designs and features that customers desire -Information from marketing research helps assess customers' product design and feature preferences

Product Positioning

- The decisions and activities intended to create and maintain a certain concept of the firm's product, relative to competitive brands, in customers' minds

Brand manger

- The person responsible for a single brand

Market Manager

- The person responsible for managing the marketing activities that serve a particular group of customers

Product manager

- The person within an organization who is responsible for a product, a product line, or several distinct products that make up a group

Immediate drop

- Used when losses are too great to prolong the product's life

Timothy Prestero: Design for People, Not awards

-"no dumb users, only dumb products." -we tend to over-simplify sometimes when it comes to marketing and looking at the book. -Here the idea was not to design just to receive an award, although if you design something really well for outcomes, hopefully you will. -but its the emphasis on designing for outcomes and thinking about things like manufacturability and even the appearance of it, especially if that's an important criteria for one of your constituents, and other things that he discussed.

Repositioning

-A brand's market share and profitability may be strengthened by product repositioning of existing products -Repositioning requires changes in perception and usually changes in product features -Repositioning can be accomplished physically by changing the product, its price, or its distributors -A marketer may reposition a product by aiming it at a different target market

Developing New products

-A firm develops new products as a means of enhancing its product mix and adding depth to a product line -Developing and introducing new products is fairly expensive and risky -Failing to introduce new products is also risky -Companies can lose market share with failure to innovate and keep up with competitive products

Gradual product intro can also create probs

-A gradual introduction allows competitors to observe what the firm is doing and monitor results just as the firm's own marketers are doing -If competitors see that the newly introduced product is successful, they may quickly enter the same target market with similar products -As a product is introduced region by region, competitors may expand their marketing efforts to offset promotion of the new product -Too much delay in launching a product can cause the firm to miss out on seizing market opportunities, creating competitive offerings, and forming cooperative relationships with channel members

Types of Product Test

-Alpha Testing: in house or research facility, with or without the customer. The Taco Bell employees testing the new products is example of this. -Beta Testing: hear a lot about with software, is conducted at the customer's site or home. It's a short term test, but with customers in the actual use environment. Often the goal is to find problems more than to gain perception, but both can occur. -Gamma Testing: an evaluation by end-users, but involves having customers interact to the product for an extended period of time. Example would be Nike asking an athlete to test a new running shoe for a year and keeping a diary of experiences. This is an ideal test because it gets the product out in customers hands for a long period of time for a thorough evaluation, possibly all the way until the product would need to be replaced.

Simulated Test Marketing

-Consumers at shopping centers are asked to view an advertisement for a new product and are given a free sample to take home, then are subsequently interviewed over the phone or through online panels and asked to rate the product -Advantages: Greater speed Lower costs Tighter security -Not all products that are test marketed are launched

Benefits of Test marketing

-Exposes the product in a natural marketing environment to measure its sales. -Assesses sales performance potential -Identifies weaknesses in the product or the marketing mix. -Allows for experiments with variations in advertising,pricing, and packaging in different test areas and to measure the extent of brand awareness, brand switching, and repeat purchases resulting from alteration in the marketing mix. -Reduces the risk of failure.

Components of a concept

-Form: a physical thing that should be described. This is the tangible part of the goods based product. For service, it's the step by step process the customer will go through to receive the service. -Benefit: what it will do for customers. -Technology: How the form was attained. Lack of understanding of the technology behind a product can be a key reason for product failure.

How much quality to build into the product?

-In determining the specific level of quality that is best for a product, a marketer must: -Ascertain approximately what price the target market views as acceptable -Set a quality level consistent with that of the firm's other products -Consider the quality of competing brands

Concept Testing

-It is not always conducted. -Not for sense-based products -Not for new technologies -Often easier for services

Gradual product introduction is desirable

-It reduces the risks of introducing a new product -If the product fails, the firm will experience smaller losses if it introduced the item in only a few geographic areas than if it marketed the product nationally -A company cannot introduce a product nationwide overnight, because a system of wholesalers and retailers to distribute the product cannot be established so quickly -If the product is successful from launch, the number of units needed to satisfy nationwide demand for it may be too large for the firm to produce in a short time -General introduction allows for fine-tuning of the marketing mix to satisfy target customers

Where do good ideas come from?

-It's not a quick process and it's not even something we can do systematically through the process stages. Steve Johnson guest speaker: -He focuses on connectivity, its not so much about we're not gonna have any more ideas because of the internet. We see a lot of criticisms of the internet because we are more distracted and we're very superficial in our communications, in our reading now. But the fact that connectivity can overcome that because we can be more connected with others, we can still push forward with innovation. And its not going away bc of this new technology that we have.

Video 4 Product Development

-Making the final determination of whether producing the product is feasible and cost effective. -Might choose first to conduct a pilot test, which is a smaller scale production run of the final product, but still, actually, quite expensive to implement. -These are usually performed by engineering or research and development, marketers stay very involved of their knowledge of the customer's needs and wants.

Bases for positioning

-Marketers can use several bases for product positioning -Head-to-head Is best when the product's characteristics are at least equal and if the product is priced lower -Avoid competition Is critical when introducing a brand into a market in which the company already has one or more brands -A product's position can be based on specific product attributes or features -Other bases for product positioning include price, quality level, benefits provided by the product, and target market

How to know when a product is a breakthrough?

-One way to think is how disruptive can the new product be potentially to the market? -Can it change people's lives? -Will they really do things differently than before? -Breakthrough products don't have to completely come out of the blue -Another way to think about a breakthrough product is it generates other new products and even industries.

Consumer perceptions of Product (goods) Quality: 8 Dimensions

-Performance: this means how well does the product do what it is supposed to do. -Features: the bells and whistles that add value. They are related to function modifications. -Reliability: consistency, will the product perform as it should every single time. -Conformance: does the product meet or conform to some kinda specifications, usually some industry standards. In cars this might be fuel efficiency or safety standards. -Durability: are you expected to have this over a long period of time? If its durable its thought to last a long time. -Serviceability: whether the product is easy to maintain and repair. -Aesthetics: how well the product appeals to the senses. Product design is as much an art as a science for a lot of products. -Perceived quality: the overall perception of feeling that you just can't quite pinned downed anyone component.

Product Deletion

-Products eventually come to a time where they may be deleted from the product mix. - Eliminating a product from the product mix when it no longer satisfies a sufficient number of customers -A declining product reduces an organization's profitability and drains resources that could be used to modify other products or develop new ones -A marginal product may require shorter production runs, which can increase per-unit production costs -When a dying product loses favor with customers, the negative feelings may transfer to some of the company's other products -Product deletions may be met with opposition by management, salespeople, and other employees

Product quality

-Quality - The overall characteristics of a product that allow it to perform as expected in satisfying customer needs -Two dimensions of quality: -Level of quality - The amount of quality a product processes -Consistency of quality - The degree to which a product has the same level of quality over time

3 major types Product modification

-Quality: usually reflect changes in durability and dependability of the product. -functional modification: typically reflect changes in a product's versatility, effectiveness, convenience or safety. -Aesthetic: are those changes to how the product looks.

Product testing with users

-Quite common for companies to use their own employees as first line product testers. -Most of these employees are not full time taste testers, but work in other departments and are called in to try new products during testing days. -Marketers test for user's experiences, quality and safety.

Video 3 Concept Testing

-Seeking customers input on new product ideas. -It serves as a sort of advanced screening. -It is a good way to further refine and narrow down a small set of maybe our top ideas, to see which one we're going to proceed with. -It can give us valuable insights into what customers think are the most important attributes or benefits of an idea. -With this feedback we can modify our project idea before we have invested a lot into actual design and development.

Prototype Testing

-Sometimes conducted -a markup of a product that is not necessarily fully functional but which allows a customer to better experience what the final product would be like is used. -This is usually a more reliable test on a concept test but it also means that some basic design decisions must be made earlier in the process than a company might prefer to do.

Safety Testing

-The CPSC conducts safety testing on all different products to make sure they safe. -They are their to test consumer safety because consumers cannot do that by themselves.

Quality Testing Red wing shoes

-They conduct quality tests on their boots to see how durable and safe they are. -Helps marketers with their marketing promotional claims they might make.

Concept Testing Tools and Services

-This is something that can be done online so you don't have to have expense and time, and cost of bringing people together and having them in a room for an hour to talk about something.

Perceptual mapping

-To simplify buying decisions and avoid a continuous reevaluation of numerous products, buyers tend to group, or "position," products in their minds -Rather than allowing customers to position products independently, marketers often try to influence and shape consumers' concepts or perceptions of products through advertising -Marketers sometimes analyze product positions by developing perceptual maps -Perceptual maps are created by questioning a sample of customers about their perceptions of products, brands, and organizations with respect to two or more dimensions

Why do new products fail?

-as many as 80 to 90% of all new product introductions fail. Top products to fail 25. Smith and Wesson mountain bike 24. Cosmopolitan yogurt 23. Microsoft Webtv 22. Life savers soda 21. Clairol's touch of Yogurt shampoo 20. Coors, Rocky mountain spring water 19. Cocaine energy drink 18. Earring magic ken 17. Colgate kitchen entrees 16. Apple newton 15. Delorean 14. Kellogg's Breakfast mates 13. Pepsi AM and crystal Pepsi 12. Frito Lay Lemonade 11. bottled water for pets 10. BIC underwear 9. Corfam Fake leather 8. Harley davidson perfume 7. Ben-Gay aspirin 6. Maxwell House Ready-to-drink coffee 5. RJ Reynolds' smokeless cigarettes 4. Mcdonalds arch deluxe 3. Sony betamax 2. Ford edsel 1. New coke

Case Example: Post-it Notes (1990)

-first want to point out the exact same connectivity that Steve Johnson talked about where we talked about where ideas come from. -It took Silver the man who developed the glue, and experimented on a lot of different things. He really couldnt find the right application for it. -It took combination of his ideas and his glue with Fry's idea of having the bookmarks to hold the place and the handles. And taking that and Fry having the kinda passion and dedication to take it farther until he finally hit upon the idea of the little Post-it via the sticky note concept so that connectivity had to be there. -also if let people explore things they want to explore, even though we saw at one of them had to go home and try to build the machine in his basement. There was still this atmosphere and this culture of exploring an innovation in 3m which is why its known as one of the top innovative companies in the world.

Phases of new product development Idea generation

-is critical, as without the idea we can't proceed. -Ideas can come form internal sources like employees and researchers as well as external sources like customers and suppliers for example can be really good sources of ideas for new products

Test Marketing

-one final test -a limited introduction of a product in a geographic area chosen to represent the intended market. -The aim is to determine the extent to which potential customers will buy the product -Companies use test marketing to lessen the risk of product failure

Product Support Services

Customer services are those activities that add value or support the core product. Ex: Let's say that a consumer has purchased a media entertainment system that includes a large screen tv. The entertainment system is the core product, but more than likely the customer did not drive to the store, buy a particular tv and other equipment, bring it home and install it themselves. Instead the store prob delivered the system and installed it and set it up. This is an example of a support system that adds value to the core product of the entertainment system.

Example: Improved Technology

Dyson air multiplier -Not really a breakthrough product, this new product applies a new or improved technology to an existing problem, solving it in a new way that has the additional benefit of being more quiet. -these are the characteristics that tend to be more successful with new products. Its doing something new and different but also has a benefit that customers can see.

Managing the product mix

Two basic approaches: Line extension and Product modification Line extension example: jell-o, they have normal jell-o and now pudding pops and jell-o cups. Product Modification: the automobile industry uses this instead of line extension. With this, new products are introduced, but they replace rather than add to products in the mix.

Functional Modification

Video example of this showing the changes ford made in the ford focus, it can park itself now.

Rollout process

With a rollout, a product is introduced starting in one geographic area or set of areas and gradually expands into adjacent ones

Line extension video example

snickers has extended its line by adding a new flavor to the core product. Also an example of a fun use of humor that is not likely to offend, like some of the ones we saw in the last unit, but also uses humor to emphasize that core benefit of the new product, and how the extension is different from the original with its peanut butter taste.