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