Products and New Product Development

Product: Goods and Services

• A product satisfies wants/needs and can be a good, service, or idea.
• A good is tangible and can be physically handled, for example, an iPhone.
• A service is intangible, providing benefits like experiencing a ride-sharing service.

New Product Development

• New product offerings need introducing when an existing product/brand becomes old, sales decline, or customers get bored with the offering.

"Product" Defined

• A product is a good, service, or idea with tangible and intangible attributes that satisfy consumers and are received in exchange for money or value.

New Product Development: 7 Steps

• Idea generation involves getting ideas for new or improved products by listening to customers or focus groups.
• Suppliers, employees and salespeople can assess the competition in trade shows to generate ideas.
• Idea screening is about eliminating unsound concepts to devote costly resources to development.
• Screening involves estimating consumer demand, profitability, and production feasibility.
• Product analysis estimates production costs, selling price, sales volume, and profitability.
• Production costs depend on features needed to meet the customer's need.
• Selling price, sales volume, and profitability depend on competition.
• Development and testing involves concept testing and soliciting customer responses mostly through focus groups.
• The focus group goal is to determine likes/dislikes about the idea, purchase intent and appropriate pricing.
• Product and marketing mix development: A prototype is developed for additional feedback on marketing mix elements if the product is viable through testing and analysis.
• Market testing occurs when a product is placed in test markets, though some companies skip this or perform it virtually.
• Commercialization involves launching the product if it makes it through the prior process.
• Commercialization means deciding to market the product.
• New products can be introduced in one region at a time, which is termed as "rolling out the product".

Total Product Offer

• The total product offer includes benefits associated with a good/service/idea to impact a consumer's purchase decision.
• A car provides transportation and intangible benefits like style/image when you purchase it.

Total Product Offer: 1. Core Product

• The core product provides the benefit/service that satisfies the basic need/want motivating the purchase.
• For a car, the core benefit is convenient transportation.

Total Product Offer: 2. Actual Product

• The actual product is the purchase's tangible aspect that you can touch/see/hear/smell/taste.
• It gives core benefits when it is used.
• Consumers assess benefits by comparing brands, quality, features, styling, or packaging.
• For a car, the actual product is the automobile itself.

Total Product Offer: 3. Augmented Products (Benefits)

• The augmented product consists of real/perceived benefits that add value to the customer's purchase.
• Customer service/support, delivery/installation, warranty, and credit terms are examples of these.
• Augmented benefits might include a reasonable price, easy payment plan, or a 10-year warranty for a car.
• Security of owning a new car offers a more satisfying customer experience.

Online Shopping as a Total Product Offer

• The core product is convenience; you can purchase at anytime and anywhere.
• The actual product involves ordering and buying items online.
• Customer service/support and on-time delivery are augmented product elements.

Airline Services as a Total Product Offer

• The core benefit is cheap air travel to various destinations.
• The actual product is the airline journey itself.
• Augmented product elements involve customer service and a low price.

Product Differentiation

• Product differentiation is distinguishing a product from its competition in real or imaginary terms for customers with respect to factors such as price, location, target, and brand name.
• Companies distinguish their products by establishing concrete or intangible differences in between similar products.
• Product differentiation is critical for a product's success.
• A product won't motivate customers over competitors if it lacks unique qualities.

Product Differentiation: Role of Customers

• Companies rely on customer input/feedback to help shape their products.
• Listening to customer suggestions and incorporate helps foster good relationships.
• Knowing the customer needs helps to tailor the product offering.
• Consumer input provides information that prompts companies to focus narrowly.

Product Lines and Product Mix

• Product line is a group of similar products marketed to one general market.
• Product line length refers to the number of items in any given product line.
• Product mix is the combination of all product lines offered for sale by a company.
• Product mix width is the number of offered product lines which is based on profit.

Campbell's Product Mix

• Campbell's product mix includes three major product lines.
• These are healthy beverages, baked snacks, and simple meals.
• Each product line also consists of individual sublines, consisting of multiple individual items.

Consumer vs B2B Products

• Consumer products are purchased by households for personal consumption and are traded in consumer markets.
• Business-to-business products are industrial products bought by businesses for processing/resale/as supplies and are traded in B2B markets.
• Products can be classified as consumer or B2B, and the distinction depends on their use.

Consumer Product Classifications

• Products can fall into four categories: convenience, shopping, specialty, and unsought.

Convenience Products

• Convenience goods and services are those the customer purchases frequently/immediately/effortlessly.
• They are typically nondurable goods normally used or consumed quickly.
• Convenience products include gum, junk food, cigarettes, newspapers, ketchup, prepaid reload, and car washes.
• Purchases are based on habitual behavior.
• They are relatively low-priced items that are usually promoted through brand awareness and image.
• Widely distributed through convenience stores or grocery stores, purchasing decisions are based on the convenience of location and brand name image.

Shopping Products

• Shopping goods and services are purchased less frequently than convenience goods.
• They require more effort and time for comparison.
• Comparison is based on attributes including suitability, quality, price and style.
• They are durable goods to be used repeatedly.
• Examples are clothes, shoes, televisions, cameras, stereos, bicycles, lawn mowers, furniture, major appliances, hotel rooms, and airline services.
• They are often sold at shopping centers that allow for easy comparison, like SenQ and Harvey Norman's.
• These companies compete on the basis of price, quality, and brand-name image.

Specialty Products

• Specialty goods and services are unique such that buyers spend considerable time and effort searching specific brands/styles.
• Customers know exactly what they want and don't accept substitutes.
• Specialty products include Ferrari sports cars, Rolex watches, high-fashion designer clothing, and services of prestigious medical/legal experts.
• Specialty products do not undergo comparison shopping due to lacking substitutes.
• Buyers seek specific goods/services regardless of price/location.
• Successful businesses can set higher prices than similar products (shopping goods/services).

Unsought Products

• Unsought goods/services are products buyers don't think about, know exist, or buy only when a problem arises
• Life insurance, cemetery plots, drugs, medical services, and auto repairs are examples of goods or services of this type.
• Persuasive advertising/selling is required to encourage consumers to prepare for life's uncertainties.
• New/innovative products are also categorized as "unsought".
• Personal selling/advertising are needed to promote unsought products and price may often be an important consideration since its urgently needed

Customer Effort

• These classifications are based on how much effort the consumer is willing to spend to acquire the product.
• It is not necessarily based on use, frequency of purchase or price.
• If you are willing to travel to Penang for Char Kueh Teow, it is a specialty product, even if not expensive.

B2B/Business/Industrial Classifications

• B2B/Business/Industrial Classifications are in the categories of equipment, maintenance/repair/operating, raw and processed, component parts. and specialized professional services.

Equipment

• Equipment, also known as installations/capital items, includes physical facilities of a business.
• Examples are factories, warehouses, office buildings, equipment, computers, printers, and copiers.
• These capital items are expensive, unique, intended to last; this involves negotiations that stretch over months/years.
• Marketers can offer financial assistance for maintenance with this equipment.

Maintenance, Repair, and Operating (MRO) Products

• Maintenance, repair, and operating (MRO) products help the production and operations but don't become a part of the finished product.
• They include printing paper, pens, cleaning materials, tools, and lubricants for machines.
• MRO products are marketed based on convenience, mirroring consumer convenience goods and services.

Raw and Processed Materials

• They are the basic inputs that become part of a finished good.
• Raw products/processed farm products like eggs/butter are used to produce grocery items.
• Raw materials like wood/steel give rise to a number of products such as buildings/bridges.
• Raw/processed materials are purchased in bulk at prices based on the quality.

Component Parts

• They are assembled portions of the finished product.
• Examples are brakes, engines, transmissions, and steering columns for cars, or lumber/cement/drywall/electrical wire for houses.
• Businesses buying component parts decide based on quality/recognition because the product's quality reflects the component parts' quality.

Specialized Professional Services

• They help support a firm's operations
• Advertising, management consulting, legal, accounting, and IT services are examples.
• Managers compare costs/quality of specialized offerings with their in-house operations before outsourcing activities

Resale Products

• For some businesses, products may be bought for resale by retailers and not involved in manufacturing.
• Example: 7-Eleven buys and sells Coca-Cola drinks.

Branding

• A brand is a name, term, symbol, or design that distinguishes an organization.
• Branding is key in product distinction that benefits buyers and sellers.
• Branding helps consumers by delivering an expected level of quality and expression when they identify with brands.
• Branding also helps sellers define their product's special qualities and drive repeat purchases.

Brand Extension

• Certain brands have quality and value allowing organizations able to introduce new products quickly and at a relatively low cost.
• Doing so adds length to product lines, wideners product mix, and enhances profitability.

BENEFITS OF BRANDING

• Branding distinguishes products from competition.
• It gives way to product indentification
• It allows for repeat sales
• and new product sales.

Brand Equity

• Strong brand loyalty contributes to brand equity, the overall value of the brand's strength.
• Perceptions of quality contribute significantly to brand equity.
• Example: Toyota's loyal customers purchase another of their vehicles based on quality/consistency and added to Toyota's brand equity.

Branding Strategies

• The branding strategies are manufacturer's, private, co-brands and generic brands.

Branding Strategies: 1. Generic Brand

• A generic brand is a product without a brand.
• Product contents frequently use black lettering on white packages.
• A generic brand may mimic a branded product
• Generic brands are priced lower and don't advertise.

Branding Strategies: 2. Manufacturer's Brand

• A manufacturer's brand involves a brand created by producers of national repute and distributed globally.
• Well-known brands include Levi's jeans, Dell computers, Ford, IBM, McDonald's, and Bank of America.

Branding Strategies: 2a. Family Brand

• A family brand promotes different products with a brand name involving marketing use of a brand name image.
• Family brands have the advantages of brand awareness and association.
• An unsuccessful extension dilute an established brand name or create a negative brand image.

Branding Strategies: 2b. Individual Brand

• An individual brand assigns a brand to each product within a company's product mix.
• A key benefit in individual branding is that product failures won't damage other products.

Branding Strategies: 3. Private Brand

• A private brand involves creating a brand created by a distributor, or middleman.
• These middlemen includes wholesalers, dealers or retail stores who are all distributors.
• The manufacturer doesn't identify himself on the product.

Branding Strategies: 4. Co-Brand

• A co-brand uses one or more partnering brands with a single product
• the objective is to combine the prestige of two partnering brands to increase price customers are willing to pay

Packaging: 4 Uses of Packaging

• Preserve and protect the product - basic but obvious step in packaging.
• They are handled several times from the manufacturing site to the final consumer.
• Facilitate use and convenience - easy shipping, storage, and stocking on shelves.
• Handle easily, open/reseal, store conveniently, and have a long shelf life.
• Convenient products to use sells better.
• Attract customer's attention to the products on the shelves .
• Package design, shape, color, and texture must influence the customers.
• Packaging to show that they are environmentally sound.
• Increased effort placed on recycling and using eco-friendly and safe materials.

Importance of Labels

• Labeling has to two main goals of informing and persuade.
• Labels must used to promote the quality of the product for them to be purchased easier and promote
• Many times this includes a brand logo which helps for recognition and differentiation
• Labels must also help inform the consumer about all key features and benefits. This gives power to the purchasing decisions

Value of Labels

• If the label comes to represent consistent quality and dependability, the label can perpetuate a positive brand-name image.