MKT 300 Chapter 12 (Eaton)

Intangible=

subjective

Diffusion Process

The process by which the ACCEPTANCE of an innovation is SPREAD BY COMMUNICATION to members of social system over a period of time

4. Perishability

means that a service cannot be saved, its unused capacity cannot be reserved, and it cannot be inventoried "Use it or Lose it" Anything with capacity; if unsold, lost revenue

Tangible=

objective

Levels of a Product: Service Example Diagram

overnight transportation: problem solving, advice and info, order taking, suppliers, pickup, documentation, tracing, billing

Types of Products

physical objects people organizations services places ideas information

Compability

potential consumers feel a new product is CONSISTENT WITH their present NEEDS, values, and practices

Product/Services Continuum

1. Ranging from Pure Product to Pure Service 2. Most services are hybrids 3. GOODS = TANGIBLE 4. SERVICES = INTANGIBLE 5. Adding service aspects to a product often TRANSFORMS the product from a COMMODITY INTO a compelling EXPERIENCE

Why do firms focus on Services?

1. Services frequently provide higher profit margins than products 2. Customer satisfaction and loyalty are driven by service excellence 3. Services can be used as a differentiation strategy in competitive markets

5 Stages of Traditional Adoption Process

1. awareness 2. interest 3. evaluation 4. trial 5. adoption

Why New Products Fail

1. no discernible benefits 2. poor match between features and customer desires 3. overestimate of market size

New Product Development Successful New Products

1. strong RELATIVE ADVANTAGE 2. reflect understanding of customer needs 3. exhibit higher performance-to-cost ratios and higher contribution margins 4. launched with larger budgets 5. strong top management support Products fail if they don't solve a problem

New Product Development Process

6 Steps 1. idea generation 2. idea screening 3. concept development 4. business analysis 5. market testing 6. commercialization

Product Failure is Rampant

95% if new U.S. consumer products 90% of European consumer products reasons for failure: ignoring unfavorable market research, overestimating market size, marketing decision errors, and stronger than anticipated competitive actions

Specialty Product

A particular item that consumers search extensively for and are reluctant to accept substitutes

Shopping Product

A product that requires comparison shopping, because it is usually more expensive and found in fewer stores

Unsought Product

A product unknown to the potential buyer or a known product that the buyer does not actively seek

Convenience Product

A relatively inexpensive item that merits little shopping effort

Understanding the Service Experience

All products, be they goods or services, deliver a bundle of benefits to the consumer The BENEFIT CONCEPT is the encapsulation of these benefits in the consumer's mind The service experience demonstrates that CONSUMERS are an INTEGRAL part of the service process

Services Marketing

Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything All businesses are becoming SERVICE businesses

Levels of a Product Diagram

Augmented Product: warranty, customer support, financing, delivery, service Actual Product: packaging, style, brand name, attributes, design Core Benefits

3. Concept Development

Creation of prototype Marketing strategy Packaging, branding, labeling Manufacturing feasibility Final government approvals if needed

Brand Extensions

Current brand to new product class. EX: cheetos chap stick

Understanding the Service Experience Diagram

Customer= servicescape, service providers, other customers, invisible organization & systems

Innovation Continuum

Discontinuous: new to the world Continuous: add features that already exists, small change Dynamically Continuous:

Creating Compelling Experiences

Economic value progresses from commodities to goods to services to experiences

Gap Model Diagram

Gap 1: KNOWLEDGE Gap 2: standards Gap 3: delivery Gap 4: communication Gap 5: SERVICE starts with provider bottom to up: management perception, quality specifications, service delivery, communication with customers customer bottom to up: perceived service, expected service

Adopter Categories

How early (or late) a consumer adopts a new product on relation to other adopters INNOVATORS, EARLY ADOPTERS, EARLY MAJORITY, LATE MAJORITY, LAGGARDS

Line Extension

Improvement; new and improved; new colors

Product Extensions

LINE and BRAND

3 Additional P's

Participants (people) Process Physical (surroundings) -Atmospherics: the concrete physical and spatial aspects of the environment encompassing a consumer activity

Marketing Mixes for Services: Product

Processing (service strategy) People Processing: transportation, health clubs Possession Processing: lawn or car repairs Mental Stimulus Processing: experiential Information Processing: accounting, training, financial services

What is Service Quality?

RELIABILITY: perform promised service dependably and accurately Responsiveness: willingness to help customers and provide prompt service Assurance: employees must be knowledgeable, courteous, convey trust and confidence Empathy Tangibles

Service Can Mean...

Service as a Product: hotels telecommunication, banking, healthcare Customer Service: taking requests, answering ?'s, responding to complaints Service as Value-Added for Manufactured Product: training, installation, repair of physical product

Service Providers

The PUBLIC FACE of a service firm is its service providers 7 types of complaints about service providers: apathy, brush-off, coldness, condescension, robotism, rulebook, runaround

Managing Service Quality

The effective marketing of services requires that managers learn what customers want and expect in their interaction with the service provider (service encounter). If expectations do not equal experience, a GAP exists

2. Idea Screening

The filter which ELIMINATE IDEAS that are inconsistent with the organization's new-product strategy or are inappropriate for some other reason

5. Market Testing

The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation

Adoption Process

The stages through which an individual consumer passes in arriving at a decision TO TRY (or not to try), to continue using (or discontinue using) a new product

Service Providers Diagram

Triangle: Company (T), Customers (R), Employees (L) Facilitating Promises (L): Internal Marketing (employees as customers) External Marketing (R): making promises Interactive Market (B): keeping promises

Trailability

a new product is capable of being tried on a limited basis. EX: Awell has trialability internet

4. Business Analysis

consideration in analysis stage: demand, cost, sales, profitability

Relative Advantage

consumers perceive a new product as superior to existing substitutes

Types of Consumer Products

convenience product shopping product specialty product unsought product

Key Points from Levels of a Product

core is the reason why we buy the product

New Product Development Long-Term Success

correlation with new product success and company's profitability and sales growth Industry Leader: 49% rev from products developed in the last 5 years Least Successful: 11% rev from products developed in last 5 years

Product Life Cycle (Style)

goes up and goes in small continuous waves

Product Life Cycle (Fashion)

goes up and slowly declines

Product Life Cycle (Fad)

increases quickly, reaches a peak point, quickly decreases

4 Unique Characteristics of Goods and Services

intangibility, inseparability, variability, perishability

Product Life Cycle Diagram

introductory stage, growth, maturity, decline in sales peaks well into mature stage for when the product reaches maturity

1. Intangibility

is the primary source from which the other three characteristics emerge Services cannot be seen, felt, tasted, or touched in the same manner that goods can be sensed difficult to EVALUATE even after consuming service

Servicescape

is the use of PHYSICAL EVIDENCE to design service environments. EX: ambient conditions, inanimate objects, other physical evidence

Product Characteristics that influence Diffusion

relative advantage compatibility complexity trialability observability

4. Decline Stage

sales volume= declining product features= reduced retail outlets=reduced marketing goal=survival

3. Maturity Stage

sales volume=flat product features=new retail outlets=max marketing goal=preference

2. Growth Stage

sales volume=growing product features=increasing retail outlets=increasing marketing goal=preference

1. Introduction Stage

sales volume=low product features=basic retail outlets=limited marketing goal=trial

The Importance of Services

services as a percentage of GDP 81% services as a percentage of employment 81%

1. Idea Generation

sources of ideas: customer, employees, distributors, competitors, R&D, consultants, creative thinking

6. Commercialization

steps in marketing a new product: customer advertising, trade announcements, sales training, distribution shipments, inventory buildup, production

Marketing Mixes for Services: Promotion

stressing tangible clues using personal info sources create a strong organization image engage in post purchase communication

3. Variability

the DIFFERENCE IN CONSISTENCY from one service transaction to the next It makes it impossible for a service operation to achieve 100 percent perfect quality on an ongoing basis

2. Inseparability

the simultaneous production and consumption of the service In English, have to be there at the same time as the service provider to experience the optimal service (even self-service technologies)