Module 7: Developing the Product
Levels of a Product
According to Philip Kotler, a product is more than just its tangible value, that is, it has abstract value, and that customers will choose a product based on their perceived value of it.
1. Convenience products 2. Shopping products 3. Specialty products 4. Unsought products
Based on Consumers' Shopping Habits
1. Nondurable goods 2. Durable goods 3. Services
Based on Durability and Tangibility
1. Industrial goods 2. Materials and parts 3. Capital items 4. Supplies and business services
Based on Industrial Use
Durability and Tangibility, Consumers' Shopping Habits, Industrial Use
Classifications of Consumer Products
Concept development and testing
Comes when a good idea has been found viable Product concept is a detailed version of the idea
Product Mix Decisions
Company may include several product lines in its portfolio, which makes up the product mix Each product line consists of several sub-lines
1. Idea generation 2. Idea screening 3. Concept development and testing 4. Marketing Strategy development 5. Business analysis 6. Product development 7. Test marketing 8. Commercialization
In the new-product development, eight steps are needed to bring a new product to the market.
Services
Intangible products that are offered to the market
Product line stretching
Involves lengthening the product line beyond its current range
Materials and parts
Make up the raw materials and the manufactured materials and parts that are sold directly to industrial users
New-product of development process
Offerring a new product to the market requires proper planning.
Intangibility
The cannot be seen, heard, smelled, touched, or tasted, and the buyer cannot claim ownership once it has been availed of
Inseparability
The consumer has to be present when the service is being rendered This is also referred to as simultaneous consumption and production
Intangibility, Perishability, Variability, Inseparability
The four characteristics of services
Staples
are convenience goods that are bought on regular basis
Services
are intangible products that involve activities that do not result in ownership, and are provided by one entity or person for another entity or person
Emergency goods
are items that consumers buy based on an urgent need
Impulse goods
are items that consumers purchase without planning
Industrial goods
are products that are bought for further processing or for use in conducting a business
Product Features
being able to offer a feature that is a first in the market can create a valuable competitive advantage
Shopping products
products that consumers compare based on suitability, quality, price, and style
Unsought products
products that consumers do not normally think about
Pure services
products that do not involve tangible goods such as legal services
Specialty products
products that have unique characteristics or brand identification which buyers consider as important for them to make special purchasing effort
Pure tangible goods
products which are not accompanied by services such as salt, sugar, or shampoo
Product development
sees the product concept transform into the physical form of the product It evaluates if the concept can indeed be developed into the actual product
Supplies and business services
short-term goods and services supplied to businesses to facilitate business
Nondurable goods
tangible goods that are bought frequently since they are consumed in one or a few uses
Durable goods
tangible goods that are not bought frequently since they are used for along time
Product development
the company finds new idea and develops it into a product Sales are nonexistent, company spends on product research and development
Idea generation
the first step toward new-product development, companies generate ideas Internal sources include the company's research and development department External sources include customers, competitors, suppliers, and others
Maturity stage
the product has reached its potential, so the level off and slow down Brand in this stage need to innovate their products in order to keep the interest of the consumers and to defend the brand against competitors
Introduction stage
the product is released in the market but sales are slow the objective is to create awareness of the product's existence
Goods-and-services combinations
where goods are accompanied by services in buying the product
Growth stage
where the products starts picking up sales Sales increase as the product becomes known in the market
Marketing Strategy development
Designed to introduce the product to the market It is composed of three parts: target market, the product's planned marketing price, distribution, and budget, outlines the planned long-term sales, goals, and marketing mix strategy
Business analysis
Evaluates the attractiveness of the proposal based on costs, sales, and profit projections
Idea screening
Reduces the numbers of ideas generated in the first step Marketers will evaluate the ideas if they are profitable, if customers will buy, and if differentiation can be done
Decline stage
Sales and profits go down, the product loses its popularity and the company may choose to maintain, harvest, or drop the product from its portfolio
Variability
Services are hard to replicate to all customers. There will always be variations or differences because not all customers are the same
Perishability
Services cannot be stored for future use unlike goods that can be inventoried
Product Life Cycle
Some products stay long and prosper, while others eventually meet the end after they have served their customers
1. Individual Product Decisions 2. Product Line Decisions 3. Product Mix Decisions
There three levels involve in Product decisions:
Product attributes, branding, packaging, labeling, and product support services
What are the individual product decisions?
1. Core benefit 2. Generic product 3. Expected product 4. Augmented product 5. Potential product
What are the levels of a product?
1. Product Quality 2. Product Features 3. Product Style & Design
What are the produch attributes?
1. Product line filling 2. Product line stretching
What are the product line decisions?
Product line filling
adds more items within the range of the product line
Product Support Services
are an important contribution to a customer's overall brand experience and satisfaction Customer service is part of a company's offering to its customers, which can take a minor or major role in product support services
Test marketing
happens after the concept test and product test have been successful The product and its proposed marketing program are tested by introducing them to a realistic marketing setting
Potential product
includes all the possible improvements or transformations that the product may potentially undergo in the future
Augmented product
includes attributes and characteristics that set the product apart from its competitors
Commercialization
introduces the new product to the market and implements the proposed marketing strategies
Product
is "anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need" (Kotler and Armstrong, 2014) It is the object of the exchange process, which the company is willing to provide for its customers in exchange for something of equivalent or greater value It is the key element in the overall market offering, which may include both tangible goods and services
Style
is a basic and distinctive mode of expression
Branding
is a name, term, sign , symbol, design, or a combination of these that identifies the maker or seller of a product or service Customers attach meaning and emotions to brands, which can then lead to developing brand relationships Brands can also communicate quality
experience
is a part of the company's offerings. Customer experience can be a point for differentiation.
Fashion
is a popular style in a given field
Expected product
is a set of attributes that a buyer normally expects to get when buying the product
Fad
is a temporary period of unusual high sales
Packaging
is the first thing that a consumer sees in a product acts as a tool to ensure easy recognition of the product when it is in the market Some packaging serves as special purpose
Generic product
is the no-frills version of the product
Core benefit
is the very reason a customer buys a product
Product Quality
it can be defined as "freedom from defects"
Product Style & Design
it defines the appearance of a product, while design contributes to the product's usefulness and look
Capital items
long-lasting goods that aid in the buyer's production or operations
Labeling
means to identify the product and to communicate the name and other pertinent information about the product The label can communicate the product's positioning through the graphics and design on the label
Convenience products
products that are purchased frequently, and with minimal effort