Product Development Stages

• Product development is an iterative process with feedback loops at various stages, requiring a team effort across the company.
• Skipping steps can be risky but potentially cost-effective, depending on the product's "newness."

Concept Testing

• This involves presenting a brief written description of the product concept to potential buyers from the target market(s).
• It triggers the marketing research process, using methods like focus groups, mall intercepts, and video simulations to gauge customer reactions.
• Customer feedback determines whether the product development proceeds.

Product Development

• Prototype creation is a crucial step.
• Alpha testing focuses on the product's performance and its ability to satisfy needs.
• Beta testing involves potential customers using the product in a "real-use" setting.

Market Testing

• Premarket tests expose a small group of customers to the marketing mix and survey them to estimate sales and gauge their likelihood of repeat use.
• Test marketing involves a mini product launch in select areas to estimate market demand.
• Test marketing is more expensive than premarket tests but provides a larger sample exposed to more of the marketing mix.

Product Launch

• Product launch confirms positioning and target markets.
• Activities include promotion, place (distribution), price, and timing.
• It represents an intense exercise in the 4Ps, supported by research from previous stages.

Evaluation of Results

• Evaluation assesses satisfaction of technical requirements, customer acceptance, and the firm's financial requirements.

Reasons for New Product Failure

• Common reasons include low product quality, poor design, too small a target market, incorrect positioning, wrong price strategy, poor marketing communication, and competition.

Diffusion of Innovations

• Relative advantage, compatibility with consumer lifestyles, trialability, low complexity, and observability are key product features that drive successful adoption.
• Relative advantage: should offer advantage over alternatives
• Compatibility: with consumers’ lifestyles
• Trialability: experimentation before commitment
• Complexity: low complexity is better
• Observability: easily observable innovations spread faster

Variations on the Product Life Cycle

• The product life cycle can have variations.

Product Mix Definition

• A product mix allows a producer to organize different products based on practical influences on exchanges.
• Product mix is influenced by expectations of organizational management, logistics, efficiency, and organizing operations.
• Product mix is also affected by expectations of consumer behavior like brand associations, complementary/conflicting products, and purchasing behavior.

Product Mix Components

• Product Category: A group of products viewed by consumers as substitutes for each other.
• Product Line: A collection of associated product categories.
• Product Mix: The collection of all product lines of an organization or marketing campaign.
• Product Line Depth (or Length): The number of product categories in a product line.
• Product Line Breadth: The number of product lines in a product mix.

Stock Keeping Unit (SKU)

• Within each product category are individual products identified by Stock Keeping Unit (SKU).
• Individual products/packages are identified internally and with logistics partners using codes related to SKU, such as bar codes and RFID chips.

What is a Product?

• A product is anything of value to a consumer that can be offered through a marketing exchange, including goods, services, places, ideas, organizations, people, and communities.
• Innovation transforms ideas into new products & services supporting firm growth.

Why Firms Create New Products

• Firms create new products to satisfy changing customer needs, manage risk through diversification, address market saturation, capitalize on new opportunities (niche markets), and keep up with fashion cycles.

Strategies for Extending the Product Life Cycle

• Strategies include developing new uses, modifying the product, increasing frequency of use, increasing the number of users, finding new users/segments, and repositioning the product.

Product Mix

• Breadth = number of product lines.
• Depth = number of products within a product line.
• Product mix: complete set of all products offered by a firm
• Product line: groups of associated items
• Product category: items seen as substitutes for one another

When to Change Product Mix

• Increase/decrease Breadth: Adding/deleting product lines
• Increase/decrease Depth: Adding/deleting products (SKUs) or entire categories

Brand Definition

• A brand identifies one seller's good or service as distinct from others.
• A brand is a customer experience: A collection of images and ideas
• Components: Name, Slogans, Logo, Characters, Jingle, URL
• A brand as a social construct

Effective Marketing from Brands

• Effective marketing (more bang for your buck)
• Rely on logos, slogans, jingles for quick recognition
• Present in Retrieval Set: a shortcut in decision-making
• Protection vs. Price Competition
• Builds Loyalty
• Ethical Exchange
• Requires knowledge by both parties of the consideration they receive.

Brand Consumer Knowledge

• A brand is a conceptual anchor, providing a focal point for consumers to think about exchanges for products that might be quite different in nature.
• Brand: content includes Expectations of products offered, expectations of exchanges offered, expectations of customer service and expectations of social impact associated with the exchange or the brand
• Brand: origins include Personal history/experience, reference group opinions and narrative, exposure to promotional materials and 3rd party media portrayals

Brand Product Line Strategies

• Family Brands: One brand name across all products (e.g., Kellogg’s Corn Flakes, Froot Loops).
• Individual Brands: Distinct operations and identity per line, useful for differentiated targeting.
• Brand Extension: Using a brand for diversification, effective with conceptually similar products (e.g., Dental hygiene → accessories).
• Cobranding: Multiple brands on one product/promotion (e.g., Campbell’s Disney-themed soups).
• Brand Licensing: One firm pays to use another’s brand name/logo (e.g., Garfield Eats).

Brand Extension Benefits

• Established name, perceived quality, lower marketing costs, synergy, and boosted sales of the core brand can occur.

Brand Extension Failures

• Issues arise when the core and new product lack "fit," associations don't align, or there are too many extensions, leading to brand dilution.

Avoiding Brand Dilution

• Evaluate product class fit, evaluate consumer perceptions, and avoid too many extensions.

Branding Strategies

• Manufacturer owned & managed
• Retailer developed (outsourced)
• Unbranded (generic) products

Value of Branding

• Brands impact market value, are assets, reduce marketing costs, protect from competition, establish loyalty, and facilitate purchasing.

Brand Equity Components

• Brand Awareness: How many people include the brand in their retrieval set.
• Perceived Value: What do people think of the brand’s products.
• Brand Associations: What concepts do consumers link the brand with.
• Brand Loyalty: Are purchases repeated.

Brand Ownership Strategies

• Generic: No brand, commodities with low trust.
• Manufacturer Brands: Brand owned & maintained by manufacturer.
• Private-label/Store Brands: Manufacturer meets brand holder specs with retailers building the brand.

Product in the Marketing Mix

• The marketing mix gives us places to look to take action.
• Product Actions – Examples includes Change the product, add to the product, take something away from the product, create a new product, stop selling a product, associate the product with a brand, disassociate a product with a brand, associate a product with a product line and start/stop selling an entire product line

What is a Product? Value to Consumer

• The product is what the consumer receives in the exchange, so our actions on product influence the value the consumer receives.

Consumer Product Types – influences on product adoption

• Specialty: Inspires interest & motivates research, expensive with particular standards/desires – hard to substitute.
• Shopping: Require comparison with more expensive and less widely distributed than convenience products.
• Convenience: Little or no evaluation before purchase requiring little effort/planning; usually, wide distribution.
• Unsought: Outside of ordinary consumer interest (unwanted/unknown).

Diffusion Attributes

• Relative Advantage: Better than the alternatives.
• Compatibility: Product compatible with consumer needs.
• Ease-of-use.
• Observability: Show, don’t tell.
• Complexity & Trialability.

Product Development Process

• Idea Generation, Concept Testing, Prototype/Product Development with Alpha and Beta Testing are all aspects of product development