Product Design and Development

• Goods or services sold by a business must be designed, developed, named, and packaged.
• Products are often modified, improved, or replaced to extend their life cycle or increase sales.

Product Development at BestHome

• BestHome is a German multinational corporation with 430 stores in 43 countries.
• In 2017, BestHome's profit was €2.98 billion on a revenue of €23.7 billion.
• BestHome stocks 8,000 product lines and introduces 1,500 new/modified products annually.
• Lena Huth leads a team of 23 designers and emphasizes a thorough approach to product development.
• Designers visit homes to understand current and future needs.
• Design teams include designers, material analysts, product developers, technicians, and engineers.
• Teams work transparently in a converted aircraft hangar in Frankfurt, encouraging collaboration.
• A prototype shop with craftsmen and a 3D printing facility is available at the design facility.
• Designers are encouraged to travel, work with foreign designers, and attend international trade fairs.
• Lena Huth states that costs heavily influence design as designers tweak materials to save money.

The Marketing Mix

• A good marketing strategy meets customers' needs by designing quality products, offering acceptable prices, informing consumers via promotion, and ensuring accessibility.
• The marketing mix involves balancing product, price, promotion, and place, with this chapter focusing on the importance of the product.

Product Development

• Product development is a continuing process for many businesses to replace outdated products and gain a competitive advantages.
• It can be lengthy (e.g., pharmaceuticals), risky, with uncertain returns of investment.
• Stages of development include: generating ideas, analysis, and development.

Generating Ideas

• Ideas for new products come from owners, customers, competitors, staff, and R&D, including copying or adapting rivals' products.

Analysis

• Each potential product idea must be analyzed to determine if it is marketable, technically feasible, fits the portfolio, and is legal.

Development

• Developing a product may involve experimentation, simulations, model building, and testing, with frequent design changes being necessary.

Test Marketing

• Product testing is conducted in a small, representative market to gather consumer feedback.

Commercialization and Launch

• This includes final product refinements, marketing strategy design, national launch, and possibly a press conference.
• Product ideas may face rejection at any stage, but rejections decrease as development progresses.

Goods and Services

• Products encompass goods (e.g., consumer goods like clothes and food) and services (e.g., telecommunications, healthcare).
• Producer goods (e.g., machines) and specialist services (e.g., accounting) are also significant.

Packaging

• Packaging is a crucial aspect since consumers often associate quality of packaging with quality of the product.
• Factors influencing packaging design: protection, environment impact (recyclable, minimized materials), convenience, cost-effectiveness, design, information.

Product Life Cycle

• A product progresses through five stages: development, introduction, growth, maturity and saturation, and decline.
• Development stage sales are zero as the product is still being researched and designed.
• Introduction requires an official launch, incurring high costs for new facilities and promotion; businesses may then use skimming or penetration pricing strategies.
• Growth marks rising sales, increased revenue, falling costs, and potential profits.
• Maturity and Saturation leads to flattening sales, recovered costs, and improving cash flow.

Extension Strategies

• Extension strategies aim to lengthen a product's life due to high development costs and may include finding new markets/uses, modifying the product, developing the product range, changing appearance/packaging, or encouraging more uses.
• Effective strategies make it harder for competitors to enter the market by updating/improving a product.

Case Study: Microsoft® Windows

• Microsoft Windows is a well-known global brand of computer operating software.
• The first version was introduced in 1985, the most resent version Windows 10 was launched in 2015.

Managing and Reviewing the Product Portfolio

• A product portfolio includes all products a business currently offers to customers.
• The Boston matrix is a tool to analyze products based on market share and potential for growth, placing them into four categories.
  • Stars are valuable with high market share and growth potential and are likely to be profitable.
  • Cash Cows are mature with high market share but low market growth potential
  • Question Marks have low market share but growing markets.
  • Dogs are at the end of their life cycle with low market share and no market growth.

Large vs Small Businesses

• The marketing mix is vital for all businesses, regardless of size because it can affect performance.
• Larger companies are more inclined to invest in product development due to greater resources and potential rewards.

Cheesy Snax Case Study

• Cheesy Snax produces cheese-flavored snacks focusing on quality in its marketing mix.
• Cheesy Crackles and Cheesy Pops are company “cash cows” with annual sales of around 30 million sold units each.
• The company's snack “Cheesy Puffs” targets children and has potential, whereas “Cheesy Nuts” product sales are in decline.
• “Blue Cheesy Crackles” production stage is under development but has concerns about its bright blue color to consumers.