Product of Marketing

definitions within product organizations

A product is a bundle of attributes (features, functions, benefits, and uses) that a person receives in an exchange. In essence, the term "product" refers to anything offered by a firm to provide customer satisfaction—tangible or intangible. Thus, a product may be an idea (recycling) , a physical good (a pair of jeans), a service (banking), or any combination of the three. A product line is a group of products marketed by an organization to one general market. The products have some characteristics, customers, and/or uses in common, and may also share technologies, distribution channels, prices, services, etc. There are often product lines within product lines. A strategic business unit or SBU is a self-contained planning unit for which discrete business strategies can be developed

repositioning

As competitors' offerings and customer preferences change, marketing may need to make a significant change to the marketing mix to reposition the product. This involves changing the market's perceptions of a product or brand so that the product or brand can compete more effectively in its present market or in other market segments.

before filling strategy key questions should be answered

Can the new product support itself? Will it cannibalize existing products? Will existing outlets be willing to stock it? Will competitors fill the gap if we do not? What will happen if we do not act?

market factors that can shift

Changes in consumer tastes Changes in the size and characteristics of particular market segments Changes in availability or cost of raw materials and other production or marketing components

organizational capabilities

Companies develop processes to manage new products, hire leaders to manage new-product development, and develop a culture based on their institutional values and norms around new products. All of these factors tip the scale toward success or failure

price discounts

Companies will sometime offer a price discount during a product launch. When we cover pricing in more detail in the next module, we will discuss when this can be an effective strategy.

Luke has finished his marketing analysis of the inputs to his company surrounding its ice cream birthday cakes. He now is deeply working on the marketing outputs for the cakes. What is the next marketing step for Luke to take?

Define key messages that communicate the birthday cake benefits to the birthday market

questions for analysis of business case

Does the product provide sufficient unique value to the target customer? Can that be achieved at a cost that supports the value? Does that value appeal to a large enough target market to generate sufficient revenue?

decisions

Duration of testing: the product should be tested long enough to account for market factors to even out, but a long test cycle delays the broad launch and may diminish the impact of the product announcement. Selection of test markets: the test market should reflect the norms for the new product in such areas as advertising, competition, distribution system, and product usage. Sample size determination: the number of markets and tests must account for the different variables in the market, while allowing for the fact that each test market adds cost to the launch budget and time to the product release cycle.

enabling sciences and technologies

Enabling technologies refer to those technologies that can be used to develop new products.

product deletion

Eventually a product reaches the end of its life. There are several reasons for deleting a mature product. First, when a product is losing money, it is a prime deletion candidate. In regard to this indication, it is important to make sure that the loss is truly attributable to the product. If the product appears not to be profitable when it is actually covering costs of other products, then deleting the product could negatively impact other products in the portfolio.

promised product

Every product has an implied promise, which is a characteristic that is attached to the product over time

Brad begins work with his company's newly created product line of personal care products. What overall framework does Brad need to use as he starts to work on the marketing mix for these products?

Focus on each product and the way they collectively fit together as a product line

specialty products

From the consumer's perspective, these products are so unique that it's worth it to go to great lengths to find and purchase them

channel partner incentives

If the company depends on a partner to sell or distribute the pricing, it might choose to offer pricing discounts and incentives to the distribution partner

If marketers decide to make a product modification, what must they consider?

If they have a strong enough perception of understanding the products' target customer

defining product requirements

In all cases, the product team seeks a tight match between the market need and the product that is designed, developed, and delivered.

new products bring risk

In the strategic opportunity matrix section we reviewed a number of strategies that include new and existing products. Why is it important to consider whether the product and/or market is new in this strategic context? Current products in current markets are known, and new products and new markets are not known.

customer and competitive influences

Innovation by a competitor can spur new ideas and possibilities across the industry. Similarly, customers seeking innovation who are willing to share ideas with their vendors can accelerate the generation of new product ideas and bring a voice of reality that increases the chance of success.

product modification

It is normal for a product to be changed several times during its life. Certainly, a product should be equal or superior to those of principal competitors. If a change can provide superior satisfaction and win more initial buyers and switchers from other brands, then a change is probably warranted.

user centered design

It seems naturally to conform to your preferences and needs. The creation of such products is the goal of user-centered design.

fuzzy front end vs new product development

Nature of Work (FFE) Experimental, often chaotic. "Eureka" moments. (NPD)Can schedule work—but not invention. Disciplined and goal oriented with a project plan. Commercialization Date (FFE)Unpredictable or uncertain. (NPD)High degree of certainty. Funding Variable—in the beginning phases many projects may be "bootlegged," while others will need funding to proceed. Budgeted. Revenue Expectations (FFE)Often uncertain, with a great deal of speculation. (NPD)Predictable, with increasing certainty, analysis, and documentation as the product release date gets closer. Activity (FFE)Individuals and team conducting research to minimize risk and optimize potential. (NPD)Multifunction product and/or process development team. Measures of Progress (FFE)Strengthened concepts. (NPD)Milestone achievement.

role of products in portfolio

New products bring greater risk to the product portfolio but also greater potential reward. The goal of portfolio management is to balance risk in order to create strong performance today and in the future. Though new products can drain resources in the short run, they are positioned to generate new sales in the long run—and to take off when other products are entering stages of maturity and decline.

Which of the following is a true statement?

New products introduce risk into a portfolio as well as future potential profits.

press strategies

Often companies issue press releases about new products in order to increase visibility through earned media. The press release can be sent to targeted press outlets, posted on the company Web site, sent as an information message to customers, and distributed to industry influencers

growth stage

Once rapid growth begins, the product or industry has entered the growth stage. When a product category begins to demonstrate significant growth, the market usually responds: new competitors enter the market, and larger companies acquire high-growth companies and products.

new product development process

Phase 1 Stage 1: Generating New Product Ideas Stage 2: Screening Product Ideas Stage 3: Concept Development and Testing Phase 2 Stage 4: Business Case Analysis Stage 5: Technical and Marketing Development Phase 3 Stage 6: Test Marketing Stage 7: Launch Stage 8: Evaluation

5 stages of product life cycle

Product development Market introduction Growth Maturity Decline

3 most common things for fill out product line further

Product proliferation: the introduction of new varieties of the initial product or products that are similar (e.g., a ketchup manufacturer introduces hickory-flavored and pizza-flavored barbecue sauces and a special hot dog sauce). Brand extension: strong brand preference allows the company to introduce the related product under the brand umbrella (e.g. Jell-O introduces pie filling and diet desserts under the Jell-O brand name). Private branding: producing and distributing a related product under the brand of a distributor or other producers (e.g., Firestone producing a less expensive tire for Costco).

augmented products

Services can provide a more complete and satisfying customer experience. Services can increase the total revenue for each sale.

notable developments for how internet has changed how we think about new products

The Internet increases our ability to find new products. In the past, if a local store carried version 3.0 of any product, a buyer could consider the attributes of version 3.0 and make a purchase decision. Today, the buyer may enter the store, but she's more likely to know the improvements incorporated in version 4.0 and the new features expected in version 5.0. The Internet supports real-time comparisons of competitive products, including their features and users' experience with the products. The Internet enables new products and services that have changed expectations for service delivery. The Internet enables customers to recommend new products and experiences to others.

making the business case

The business case is often the most challenging screening process in the new-product development process. It is not uncommon for a product team to get excited about an idea, get positive feedback on the concept from target buyers, and then fail to make the numbers work in the business case. Usually the business case review results in a "go, no-go" decision for the product concept.

creating the go to market plan

The marketing requirements drive the technical product requirements that will be used to develop the product, but they have a second purpose, too. The market requirements are the major input to the marketing plan that will be used during the product launch.

market introduction stage

This phase of the PLC requires a significant marketing budget. The market is not yet aware of the product or its benefits. Introducing a product involves convincing consumers that they have a problem or need which the new offering can uniquely address.

If a marketing team successfully defines a product's market requirements, what is an additional benefit of that process?

Those market requirement definitions will drive the the marketing plan.

Which of the following statements is true about managing a product portfolio?

To better understand past performance and discover future growth opportunities, companies should perform deep analysis of a SBU or products performance.

How is the marketing department involved in the technical and marketing development stage of the product development process?

They test product prototypes with target customers and identify the most effective marketing mix for the new product.

maturity stage

When growth begins to plateau, the product has reached the maturity phase. In order to achieve strong business results through the maturity stage, the company must take advantage of economies of scale

defining market requirements

Your marketing-requirements document would explain who the buyer is, what she needs, and which particular features of the product will best address her needs

Kroger grocery stores have an in-house brand for many products, including butter, ice cream, salad dressing, and cheese,. This is an example of:

a line-filling strategy

early majority

adopters are more risk averse than early adopters, so they wait for the wrinkles to be ironed out of new products before making a purchase

late majority

adopters arrive after the "average" participant has embraced an innovation

laggards

are the last to adopt an innovation. Often they are older and less educated than buyers in the other diffusion of innovation segments

unsought products

are those the consumer never plans or hopes to buy

innovators

are willing to take risks and are viewed by their peers as risk takers

Hilliers' Garden Centers offers not only plants and products customers need for their gardens, but also a gardening club that anyone can join. The garden club Hilliers' offers is considered a(n):

augmented product

using the product life cycle

can be a useful tool in planning for the life of the product, but it has a number of limitations. Not all products follow a smooth and predictable growth path. Some products are tied to specific business cycles or have seasonal factors that impact growth.

product line decisions

can contain one product or hundreds of products. The number of products in a product line refer to its depth, while the number of separate product lines owned by a company is the product line width. There are two overarching strategies that deal with product line coverage. With a full-line strategy the company will attempt to carry every conceivable product needed and wanted by the target customer. Few full-line manufacturers attempt to provide items for every conceivable market niche. Instead, they provide many products for a particular market segment. Companies that employ a limited-line strategy will carry selected items. Limited-line manufacturers will add an item if the demand is great enough, but they make that decision based on the market opportunity for the product rather than on a desire to meet all customer needs with their product line.

A company's product is taking market share from another product in the same company. This process is known as:

cannibalization

Which methodology shortens the time frame needed to collect and capture marketing mix feedback and data?

lean startup methodology

four levels of a product

core, tangible, augmented, and promised

maturity

costs are lowered as a result of increasing production volumes and experience curve effects sales volume peaks and market saturation is reached new competitors enter the market prices tend to drop due to the proliferation of competing products brand differentiation and feature diversification is emphasized to maintain or increase market share profits decline

market introduction

costs are very high slow sales volumes to start little or no competition demand has to be created customers have to be prompted to try the product makes little money at this stage

decline

costs increase due to some loss of economies of scale sales volume declines prices and profitability diminish profit becomes more a challenge of production/distribution efficiency than increased sales

growth

costs reduced due to economies of scale sales volume increases significantly profitability begins to rise public awareness increases competition begins to increase with a few new players in establishing market increased competition leads to price decreases

A company just received an influx of investor cash for its consumer 3D printer product. The company is developing two prototypes to be tested and run through a few focus groups. This 3D printer product is at which life cycle stage?

development stage

does the product...

features, functions, benefits, and uses that the target customer expects and desires

How should the marketing mix be applied to or address products?

focus on one product or a product line across the entire marketing mix

Which stage of the product life cycle requires marketers to pay particular attention to the distribution of their product?

growth stage

lean startup methodology

has been described by Eric Ries as an approach that helps new companies achieve product-market fit during their earliest product launch

early adopters

have a high degree of opinion leadership among the adopter categories

the launch

he product launch is truly the beginning of the implementation of a sustained marketing plan—a plan that will be analyzed, evaluated, and adjusted throughout the product life cycle.

augmented product

includes the tangible product and all of the services that support it.

convenience product

inexpensive product that requires a minimum amount of effort on the part of the consumer in order to select and purchase it

The goal of a marketer's interaction with the product life cycle is to:

influence the life cycle

Characteristics of Service Products

intangible simultaneous production and consumption little standardization high buyer involvement

product development

investment is made sales have not begun new product ideas are generated, operationalized, and tested

line filling strategies

involve increasing the number of products in an existing product line to take advantage of marketplace gaps and to reduce competition

line extension strategies

involves adding new products under an already established and well-known brand name

product

is a bundle of attributes (features, functions, benefits, and uses) that a person receives in an exchange refers to anything offered by a firm to provide customer satisfaction, tangible or intangible

product line

is a group of products marketed by an organization to one general market.

product marketing

is the function of understanding the target customer's needs, and promoting and selling the product to the target customer

evaluation

it should be clear that product evaluation is a recurring activity that begins with the idea-screening stage. Careful, objective evaluation of the product at every stage leads to better investment decisions and better products. The difference in this final stage of the process is that the marketer has the benefit of significant market data for the evaluation, which can help improve the marketing plan going forward. It is only at this stage—after the product launch—when the marketer can see which buyers purchase the product, how competitors respond, and how the new product interacts with the company's other products in the marketplace.

Which phase of the product life cycle requires potentially the most significant amount of money for marketing campaigns?

market introduction stage

tangible product

means "perceptible by touch," so the tangible aspects of a product are those that can be touched and held

organizing for effective product marketing

organizations group like products into product lines, and then group lines of business targeting a common set of customers into something called strategic business units (SBUs).

A group of products in an organization that has some common elements and that is marketed to one general market is the definition of a:

product line

business products

purchased by other industries or firms and can be classified as production goods—i.e., raw materials or component parts used in the production of the final product—or support goods—such as machinery, fixed equipment, software systems, and tools that assist in the production process

consumer products

purchased by the final consumer

outside world influences

range of influences outside of the company that affect the ease with which new ideas can be developed. Government regulations can positively or negatively influence new-product and idea generation. Society, culture, and the economic environment can create a rich environment for new ideas.

What marketing mix strategies do marketers have with individual products?

repositioning, product modification, product deletion

core product

satisfies the most basic need of the customer

What stage is critical in the product development process for weeding out potentially costly product mistakes?

screening product ideas stage

What are the classification groups for consumer products?

specialty, shopping, unsought, convenience

An organization groups together similar products into product lines. What is it called when an organization groups those product lines into specific market-targeting strategy groups?

strategic business unit (SBU)

decline stage

the focus shifts almost entirely to eliminating costs

Which stage in the new product development process is fully implementing a sustained marketing plan?

the launch stage

product portfolio management

to ensure that the company's investment in products meets objectives

A design process that directly engages end users at every design process stage to address the needs, limitations, and wants of the end user is the definition of:

user-centered design

shopping products

usually more expensive and are purchased occasionally. The consumer is more likely to compare a number of options to assess quality, cost, and features.