Product Marketing chp. 11/12

idea generation

(development of new viable product ideas) done with a firms internal R&D efforts (for pioneer efforts), R&D consortia, outsourcing, customer input, collaboration with other firms, license technology from research intensive firms, brainstorm, research competitors products (for follower strategy)

exploratory

(in depth interviews or focus groups) research to test the concept, after which it can undertake conclusive research through internet or mall surveys

test marketing

(mini product launch) a method of determining the success potential of a new product, this introduces the offering to a limited geographical area prior to a national launch, this is a strong predictor of product success because the firm can study actual purchase behavior (more reliable than tests) the product uses all aspects of the marketing mix and firm can estimate demand for entire market (costs more and takes longer than premarket tests so firms sometimes skip this)

product launch

(most important step) if market testing returns positive results, the firm will introduce the product to the entire market, very costly and complex, coordination of marketing mix necessary, involves the firm confirming their target market and deciding how the product will be positioned and the firm finalizes the promotion, place, and price of the product (also marketing budget for first year)

exclusive cobranding

JLO and Mark anthony clothing exclusively at sears

Product Marketing Mix

Promotion Price Place

Types of products

Specialty: wedding gowns, college apparel, strong preference, considerable effort for search Shopping: shoes, appliances, cellphones...fair amount of time Convenience: can goods, shampoo minimum effort evaluate prior to purchase Unsought: never normally think about buying these, dictionary or fire extinguisher

product development

a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or prototype

trade show

a temporary concentration of manufacturers that provide retailers the opportunity to view what is available an new in the market place

diffusion of innovation

adoption process and the rate that this happens

copy cat

against brand, copy cats

Product

anything that is of value to a consumer and can be offered through voluntary marketing exchange goods, services, places, ideas, organizations, people, and communities different for not tangible goods

observability

benefits/uses are easily communicated enhancing the diffusion process

Concept Testing Concepts

brief written descriptions of a product or service, its technology working principles, customer needs it would satisfy concept statement is presented to potential buyers and their reactions triggers MARKET RESEARCH reaction if made available frequency and potential of purchase what segments and which needs

improving business relationships

buyers and suppliers

brand repositioning

change a brand's focus to target new markets or realign the brand's core emphasis with changing with market preferences

premarket testing

conducted by firms before they actually bring a product or service to market to determine how many customers will try and then continue to use the product according to a small group of potential consumers based on advertising and product itself (not promotion) customers are exposed, surveyed, and a decision is made whether or not to test the market itself

internal R&D

continuous investment scientists work to solve complex problems and develop new ideas product development cost is high new breakthrough is high profits few successful ideas will cover the costs of unsuccessful ones

brand associations

core of apple brand mental links between brand and its key product attributes: logo, slogan, famous personality

evaluation of results

critical post-launch review (after product launch) to determine whether the product and its launch were a success or failure and what additional resources or changes to the marketing mix are needed, they measure purchase patterns to determine market demand (adjust marketing mix, accordingly) three factors determining success: (1) satisfaction of technical requirements (performance) (2) customer acceptance and (3) its satisfaction of the firms financial requirements (profitability) -> all interrelated

PLC

descriptive but not predictive defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace, it offers marketers a starting point for their strategy planning, stages reflect marketplace trends and industry sales/profit, four stages: introduction, growth, maturity, and decline, not every product follows the same life cycle curve, a lot of products stay in the mature phase unless another better product enters the market or the product becomes outdated, managers analyze the types of strategies that may be required over the life of their products

Product Line Depth and Breadth

different product lines multiple products within product lines

Prototype

engineering team develops this based on research findings from the concept testing and their own knowledge about materials and technology, this is the first physical form/service description of a new product (still in rough/tentative form) that has the same properties as a new product but is produced through different manufacturing processes (sometimes crafted individually) and tested through alpha and beta testing and may develop several versions based on testing issues that need resolution

Value of Branding

facilitate purchasing establish loyalty protect from competition reduce marketing costs are assets impact market value mr peanut bring back old images

fashion cycles

fashion trends what is cool

slotting allowance

fees firms/manufacturer's pay to retailers simply to get new products into stores or gain more or better shelf space for their products

market testing

firm must test the market for the new product with a trial batch of products, take two forms: premarket testing and test marketing

Licensing

firms buy the rights to use the technology or ideas from other research intensive firms through a licensing agreement (save high cost of internal R&D) firm is buying a solution that already exists but hopefully hasn't been marketed yet

family brand

firms corporate name used to brand its product lines and products

Outsourcing

firms have trouble generating ideas so it turns to outside firm to help generate ideas for new products, can employ anthropological, graphic design, engineering, and psychological techniques and professionals (creativity)

Brainstorming

firms participate in these sessions, where a group works together to generate ideas (which are never immediately accepted/rejected) moderator is there to channel participants attention to specific product features, performance expectation, or packaging, at the end of the session participants vote on combination of best ideas

market saturation

get bored with the same product, looses value, get excited about new attributes

R & D

groups of other firms and institutions (governments and schools) that firms work with to develop new ideas or obtain solutions for developing new products, usually involves experts who costs can run very high (too much for one firm to bear) so research is disseminated to many firms

managing risk through diversity

having a broad portfolio of products to reduce risk and enhance value withstand external shock

brand awareness

how many consumers in a market are familiar with the brand and what it stands for, created through repeated exposures of various brand elements, in communications to consumers

how they develop new products

idea generation, concept testing, product development, market testing, product launch, and evaluation of results

individual

individual brand names for each of a firms products

Lead Users

innovative product users who modify existing products according to their own ides to suit their specific needs (other consumers might want this modification)

Reverse Engineering

involves taking a product apart, analyzing it, and creating an improved version that does not infringe on the competitions patents

perceived value

leaving the store paying less relationship of products and services benefits and its costs

complexity

less complex means more reception and quicker rate of diffusion

brand loyalty

less sensitive to price marketing costs are much lower insulation from competition repeated buying

introductory price

limited duration, lower than normal prices designed to provide retailers with an incentive to try the product, special events in the form of special displays, introductory celebrations, or parties in conjunction with an interesting event

Customer Input

listening to the customers in both B2B (low number of customers so firms can track products and solicit suggestions through through focus groups, interviews, surveys, or informal discussions) and B2C markets which originate from a variety of sources (purchase behavior, online media, lead users)

Lovemark...Brand Love

loyalty beyond reason consumers are passionate about a brand lovemarks

Manufacturer/National

managed by the manufacturer

place

manufacturer coordinates the delivery and storage of the new products with its retailers to ensure that it is available for sale when the customer wants it, at the stores the customer is expecting to find it, and in sufficient quantities to meet demand

Branding

name, logo symbols, characters, slogans, jingles, and distinctive packaging, logos have words symbols do not

Why do Firms create new products

new market offerings provide value to both the firm and customers (degree depends on newness) completely new products represent less than 10% of all new products, newness/innovation exists on continuum from truly new to the world - slightly repositioned (all considered innovation) some estimates say only 3% of these products succeed however various overriding and long-term reasons compel firms to continue introducing new products (includes: changing customer needs, market saturation, managing risks through diversity, fashion cycles, and improving business relationships)

competitors products

new product entry by competition may trigger a market opportunity for a firm which can do reverse engineering to understand the product and introduce a better version, copy cat approach is widespread

compatability

new product to fit into a certain segment determines diffusion rate

pioneers/breakthroughs

new to the world products that establish a completely new market or radically change both the rules of competition and consumer preferences in a market, have the advantage of being first movers and these products command a greater market share over a longer time period than later entrants can, don't always succeed (because of copy cats, higher price, and less sophisticated design) these fail because of lack of product testing, targeting the wrong segment, and poor positioning

early majority 34%

not profitable till now not risks so they wait reaches its peak here more choices lower prices and better quality

retailer/store brands

private-label developed by retailers only from that retailer premium generic copycat exclusive or cobranded

Innovation

process by which ideas are transformed into new products and services

Brand Dilution

product class of the core brand and the extension extending the brand name to too many products seek out extensions with similar attributes of the core brand distanced enough/too far away

relative advantage

products better than substitutes diffuse quickly

trade promotion

promotions to wholesalers or retailers to get them to purchase the new products, often combining introductory price promotions, special events, and personal selling

laggards 16%

rely on traditional products and avoid change until they are no longer available

late majority 34%

sales have leveled off and started to decline, last group getting something new

brand extension

same brand name different product line....breadth

Line extension

same brand name within the same product line

changing consumer needs

satisfy desires of market (current and new customers) stop current customers getting board with the current product

brand equity

set of assets and liabilities that add too and subtract from the value provided by the product or service

generic

step down and stable quality

promotion

test results help the firm determine appropriate integrated marketing communications strategy, required at each link in the supply chain (includes: trade promotion, trade shows, and personal selling) and also creates demand among consumers so they will ask retailers to provide product (accomplished with price reductions, coupons, or rebates) by promoting in advance, sometimes must provide education on complex products

Alpha Testing

the firm attempts to determine whether the product prototype will perform according to its design and whether it satisfies the need for which it was intended, it occurs in the firms R&D department (internal) some people concerned when it involves animals

primary package

the part that the consumer uses like the toothpaste tube storage, use, and consumption

manufacturers suggested retail price

the price manufacturer's want retailers, carrying their products, to sell their products at, however many retailers don't abide by this so manufacturer's withhold benefits such as paying for all or part of a promotion or even refusing to deliver merchandise to noncomplying retailers, manufacturer's start with a high MSRP and then over time lower it (more effective than starting at a low price and rising it over time), also consider the price at which the new products are sold to the retailers (they need to make a profit and receive a slotting allowance)

Innovators 2.5%

they are the first people to have to new product or service, takers of new risks, spread word of mouth

first movers

they are the product pioneers creator, readily/recognizable establish a commanding early market share lead

Early Adopters 13.5%

they dont take as much risks wait on reviews of innovators opinion leaders

price

this is a supply chain-wide decision, manufacturers must decide at what price they would like products to sell to consumers on the basis of many factors, often encourage retailers to sell at the manufacturer's suggested retail price

premium

top line associated with high quality

Lanham Act

trademark law protection too generic takes trademark rules away

co-branding

two or more brands on one product

Beta

uses potential customers, who examine the product prototype in a real use setting to determine its functionality, performance, potential problems, and other issues specific to its use

secondary package

wrapper or exterior, typically has the scanner on it