marketing ch 9

brand extension

(1) a significant jump in innovation or technology (2) involving putting an established brand name on a new product in an unfamiliar market. -In the first case, the significant jump in technology might be when a manufacturer offers new smartphones or digital cameras. -The second case—using an existing brand name to introduce a new product into an unfamiliar market—looks deceptively easy for companies with a powerful, national brand name. -Colgate thought so. It put its brand name on a line of frozen dinners called Colgate's Kitchen Entrees. The product line died quickly. -A marketing expert calls this "one of the most bizarre brand extensions ever," observing that the Colgate brand name, which is strongly linked to toothpaste in people's minds, does not exactly get their "taste buds tingling."8

Consumer and Business products: examples of ones that could go either way

Two broad categories of products widely used in marketing relate to the type of user. -For example, an Apple iMac computer can be sold to consumers for personal use or to business firms for office use. Each classification results in different marketing actions. -Viewed as a consumer product, the iMac would be sold through Apple's retail stores or directly from its online store. -As a business product, an Apple salesperson might contact a firm's purchasing department directly and offer discounts for large volume purchases.

shopping products

are items for which the consumer compares several alternatives on criteria such as price, quality, or style.

components

are items that become part of the final product. These include raw materials such as steel, as well as assemblies such as a Ford car engine.

unsought products

are items that the consumer does not know about or knows about but does not initially want.

specialty products

are items that the consumer makes a special effort to search out and buy.

people-based services

unskilled labor, skilled labor, professionals

Newness from the Consumer's Perspective

-A second way to define new products is in terms of their effects on consumption. This approach classifies new products according to the degree of learning required by the consumer, as shown in Figure 9-3. -continuous innovation, dynamically continuous innovation, discontinuous innovation

automated (self-service) examples

-ATMS -online brokerages -Automated car washes

gap analysis

-Differences between the consumer's expectations and his or her actual experiences are identified through -This analysis asks consumers to assess their expectations and experiences on dimensions of service quality.

four I's of services

-Four unique elements distinguish services from goods. -These are intangibility, inconsistency, inseparability, and inventory—referred to as this

government agency services

-Governments at the federal, state, and local levels provide a broad range of services. -These organizations also have adopted many marketing practices used by business firms. -For example, the United States Postal Service's "Easy Come. Easy Go" marketing campaign is designed to allow it to compete better with UPS, FedEx, DHL, and foreign postal services for global package delivery business.

protocol

-Ideally, a new product or service needs a precise _________, -a statement that, before product development begins, identifies (1) a well-defined target market; (2) specific customers' needs, wants, and preferences; and (3) what the product will be and do to satisfy consumers.

Newness compared with existing products

-If a product is functionally different from existing products, it can be defined as new. Sometimes this newness is revolutionary and creates a whole new industry, as in the case of the legendary Apple II computer. - At other times more features are added to an existing product to try to appeal to more customers. And as HDTVs, smartphones, and tablet devices become more sophisticated, consumers' lives get far more complicated. -This proliferation of extra features—sometimes called "feature bloat"—overwhelms many consumers.

inventory

-Many goods have these handling costs that relate to their storage, perishability, and movement. -With services, these costs are more subjective and are related to idle production capacity,

classifying services

-Services can be classified according to whether they are delivered by (1) people or equipment, (2) business firms or nonprofit organizations, or (3) government agencies. -Organizations in each of these categories often use significantly different kinds of market-mix strategies to promote their services.

Inconsistency

-Services depend on the people who provide them. As a result, their quality varies with each person's capabilities and day-to-day job performance. -Inconsistency is more of a problem in services than it is with tangible goods. Tangible products can be good or bad in terms of quality, but with modern production lines, their quality will at least be consistent. -On the other hand, the Philadelphia Phillies baseball team may have great hitting and pitching one day and the next day lose by 10 runs. Organizations attempt to reduce inconsistency through standardization and training.

product line extension

-The lowest level, which usually involves the least risk, -This is an incremental improvement of an existing product line the company already sells. -For example, Purina added its "new" line of Elegant Medleys, a "restaurant-inspired food for cats," to its existing line of 50 varieties of its Fancy Feast gourmet cat food. -This has the potential benefit of adding new customers but the twin dangers of increasing expenses and cannibalizing products in its existing line.

radical invention

-The third and highest level of innovation involves this, a truly revolutionary new product. -Apple's Apple II, the first commercially successful "personal computer," and its iPad and iPod are examples of radical inventions. -Effective new-product development in large firms exists at all three levels.

business products

-also called B2B products or industrial products) are products organizations buy that assist in providing other products for resale. -Some products can be considered both consumer and business items.

examples of skilled labor

-appliance repair -plumbers -caterers

Services

-are intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value. -Examples of services are having a dental exam or watching a movie. -In the U.S. economy today, services are an even more important part of our gross domestic product (GDP) than goods. -Services now contribute about $8 trillion to the U.S. GDP, whereas goods provide only half of that.

convenience products

-are items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.

support products

-are items used to assist in producing other products and services. These include: -Installations, such as buildings and fixed equipment. -Accessory equipment, such as tools and office equipment. Supplies, such as stationery, paper clips, and brooms. -Industrial services, such as maintenance, repair, and legal services.

consumer products

-are products purchased by the ultimate consumer -The four types of consumer products shown in Figure 9-1 differ in terms of (1) the effort the consumer spends on the decision, (2) the attributes used in making the purchase decision, and (3) the frequency of purchase. -Types: Convenience products, shopping products, specialty products, and unsought products

dynamically continuous innovation

-disrupts consumers normal routine but does not require totally new learning -examples: electric toothbrush, LED HDTVs, and smartphones -marketing strategy: advertise points of difference and benefits to consumers

Operated by skilled operators examples

-electric utilities -airlines -computer networks

product line

-is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range. -Nike's product lines include shoes and clothing, whereas the Mayo Clinic's service lines consist of inpatient hospital care and outpatient physician services. Each product line has its own marketing strategy.

product item

-is a specific product that has a unique brand, size, or price. For example, Ultra Downy softener for clothes comes in different forms (liquid for the washer and sheets for the dryer) and load sizes (40, 60, etc.). -Each of the different product items represents a separate stock keeping unit (SKU), which is a unique identification number that defines an item for ordering or inventory purposes.

A durable good

-is one that usually lasts over many uses, such as appliances, cars, and smartphones. -This classification method also provides direction for marketing actions. -For example, Wrigley's gum, rely heavily on consumer advertising. -In contrast, costly types of these goods, such as cars, generally emphasize personal selling.

new product strategy development

-is the stage of the new-product development process that defines the role for a new product in terms of the firm's overall objectives. -During this stage, the firm uses both a SWOT analysis (Chapter 2) and environmental scanning (Chapter 3) to assess its strengths and weaknesses relative to the trends it identifies as opportunities or threats. -The outcome not only defines the vital "protocol" for each new-product idea but also identifies the strategic role it might serve in the firm's business portfolio.

examples of unskilled labor

-lawn care -security guards -janitorial services

professional service examples

-management consultants -accountants -lawyers

inseparability

-means that the consumer cannot distinguish the service provider from the service itself. -For example, the quality of large lectures at your university or college may be excellent, but if you don't get your questions answered, find the counseling services poor, or do not receive adequate library assistance, you may not be satisfied with the entire educational experience delivered.

operated by relatively unskilled operators examples

-motion picture theaters -dry cleaners -taxis

discontinous innovation

-requires new learning and consumption patterns by consumers -examples: wireless router, digital video, recorder, and electric car -educate consumers through product trial and personal selling -high degree of new consumer learning method needed

continous innovation

-requires no new learning by consumers -examples: New improved shaver, detergent, toothpaste -marketing strategy: gain consumer awareness and wide distribution

intangibility

-services that can't be touched or seen before the purchase decision. Instead, services tend to be a performance rather than an object, which makes them much more difficult for consumers to evaluate. -To help consumers assess and compare services, marketers try to make them tangible or show the benefits of using the service. -For example, American Airlines attempts to make the benefits of flying on its airline more tangible by running an ad showing and emphasizing the comfort of its reclining seats.

Idea generation

-the second stage of the new-product development process, involves developing a pool of concepts to serve as candidates for new products, building upon the previous stage's results. -Many forward-looking organizations have discovered that they are not generating enough useful new-product ideas. One internal approach for getting ideas within the firm is to train employees in the art and science of asking specific, probing questions. -The goal in generating new-product ideas and strategies is to move from "what is" questions that describe the present situation to "what if" questions that focus on solutions and marketing actions. -The following discussion suggests methods of generating new-product ideas both internally and externally, the latter often using open innovation.

idle production capacity

-which is when the service provider is available but there is no demand for the service. For a service, inventory cost involves paying the service provider along with any needed equipment. -If a physician is paid to see patients but no one schedules an appointment, the idle physician's salary must be paid regardless of whether the service was performed.

Marketing Reasons for New-Product Failures

1. Insignificant point of difference 2. Incomplete market and product protocol before product development starts 3. Not satisfying customer needs on critical factors 4. Bad timing 5. No economical access to buyers 6. Poor product quality 7. Poor execution of the marketing mix: brand name, package, price, promotion, distribution 8. Too little market attractiveness

product mix

Many firms offer a this, which consists of all of the product lines offered by an organization. -For example, Cray Inc., has a small product mix of three lines (supercomputers, storage systems, and a "data appliance") that are mostly sold to governments and large businesses. -Procter & Gamble, however, has a large product mix that includes product lines such as beauty and grooming (Crest toothpaste and Gillette razors) and household care (Downy fabric softener, Tide detergent, and Pampers diapers).

open innovation

consists of practices and processes that encourage the use of external as well as internal ideas as well as internal and external collaboration when conceiving, producing, and marketing new products and services.

good

has tangible attributes that a consumer's five senses can perceive. For example, Apple's iPad can be touched and its features can be seen and heard. A good also may have intangible attributes consisting of its delivery or warranties and embody more abstract concepts, such as becoming healthier or wealthier. Goods also can be divided into nondurable goods and durable goods

product

is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value. L

A nondurable good

is an item consumed in one or a few uses, such as food products and fuel.

new product development process

the seven stages an organization goes through to identify opportunities and convert them into salable products or services.