Product And Service Concept PDF

CHAPTER FOUR PRODUCT AND SERVICE CONCEPT Abebaw W., 2022 1  Product Technology Technology: is the application of scientific knowledge to a new product, process, or service. is the generation and utilization of goods and services Innovation: is a change in method or...

CHAPTER FOUR PRODUCT AND SERVICE CONCEPT Abebaw W., 2022 1  Product Technology Technology: is the application of scientific knowledge to a new product, process, or service. is the generation and utilization of goods and services Innovation: is a change in method or technology; a positive, useful departure from previous ways of doing things. Abebaw W., 2022 2  Cont’d… Product Technology Classified into three classes. High-tech products Mid-tech products Low-tech products Abebaw W., 2022 3  Cont’d… 1. High-tech product: such products tend to be more of “state of the art” products reflecting current levels of technological advancement. Digital CD players  Computerized materials  Satellite systems etc. Abebaw W., 2022 4  Cont’d… 2. Mid-tech products: this class contains a majority of the products that we are familiar with.  Cosmetics  Fertilizers and nutrients  Publishing  Power supplies  Fax machines etc. Abebaw W., 2022 5  Cont’d… 3. Low- tech products: such products are ones that generally are understood to be developed as a result of small changes or improvements in existing products. Office furniture, Plastic toys Clothing and textiles, Printer ribbons  Candy and cookie  Building supplies etc. Abebaw W., 2022 6  What is a Product? A product is a solution to customers’ problems. It is anything that can be offered to the market for attention, acquisition, use, or consumption that might satisfy a want or need.  Successful entrepreneurs aims at satisfying and delighting customers, to do this they must produce product and deliver service. Abebaw W., 2022 7  Cont’d… A product is a combination of the physical characteristic as well as the way people think and feel about it. a set of tangible and intangible attributes. includes goods, services, idea, information, place, person, etc.  Abebaw W., 2022 8  Cont’d…  Entrepreneurial success is about identifying human and social needs; overt, covert, apparent or even dormant and finding products to meet them.  In order to identify the opportunities, it is necessary to scan the customers’ environment for identifying the unfulfilled needs opportunities.  Abebaw W., 2022 9 Goods:- are commodities, or tangible items that satisfies some human needs and want. Services:- are intangible Things of value that satisfies human needs and wants. Abebaw W., 2022 10  Product Classifications Products are classified into different type based up on different parameters these are: durability & tangibility and ultimate user. I. Based On Durability And Tangibility Durable  Non-durable  Service Abebaw W., 2022 11  Cont’d… II.Based on ultimate user a. Cconsumer's goods  Convenience good  Shopping good  Specialty good  Unsought good Abebaw W., 2022 12  Cont’d… b. Industrial goods Material and parts Capital items Supplies and business services Abebaw W., 2022 13 Service Characteristics Abebaw W., 2022 14 Experience:- by organizing several services and goods, one can create, stage, and market experiences. Persons :- Due to a rise in testimonial advertising, celebrity, marketing has become a business. Abebaw W., 2022 15 Places:- Cities, states, regions, and countries compete to attract tourists. Properties:- can be categorized as real properties or financial properties. Real property is the ownership of real estates, whereas financial property relates to stocks and bonds. Abebaw W., 2022 16 Events:- can be trade shows, company anniversaries, entertainment award shows, sporting events, health camps, and so on. Organizations:- actively work to build image in the minds of their target public. Abebaw W., 2022 17 Information:- can be produced and marketed as a product. Educational institutions, encyclopedias, non- fiction books, specialized magazines and newspapers market information. Idea:- Every market offering has a basic idea at its core. Abebaw W., 2022 18  New Product Development Process Product development: the process through which companies react to market signals, respond to changes in customer demand, adopt new technologies, foray into new areas, and ensure continuous growth.  The reasons to develop a new product includes: Customers want new products and choices,  competitors launch new attacks Abebaw W., 2022 19  New Product Development Process  Technology advancement gives access to modify existing products etc.  economic conditions change Once ideas emerge from idea source or creative problem solving, further development and refinement is required.  the product development process is divided into five major stages. Abebaw W., 2022 20  Product Development Process The major Four Stages are: Idea Generation Incubation  Implementation  Diffusion Abebaw W., 2022 21  Product Development Process Model of this process Implementation Diffusion Idea Generation Generation Incubation Idea Progress from Full production Ideas for new Preliminary First prototype, And market Product/process Design, Ideas for new Limited targeting prototype Product/process Actual design manufacturing, testing Transition Commercialization Commitment Product proposal Market tests, Justify product, Screening, Planning Legal Feasibility study Production capacity considerations Development, commercialization testing Major steps in new product development (NPD) process Abebaw W., 2022 23  Cont’d… 1. Idea Stage: finding as many ideas as possible the purpose is to create a large number of ideas  Ideas for new products can be obtained from basic research. 2. Idea Screening: to eliminate unsound concepts prior to devoting resources.  first idea-reducing stage  the purpose is to spot good ideas and drop poor Abebaw W., 2022 24 ones.  Cont’d… 3. Concept Stage: developing attractive ideas into product concepts.  calls for testing product concepts with an appropriate group of target consumers,  then getting the consumers reactions.  the concepts can be in words or picture description. Abebaw W., 2022 25  Cont’d… 4. Market strategy Development: initial marketing strategy Market size, structure, customer behavior.  Planned price, distribution strategy, and marketing budget.  Long run sales and profit goals, marketing mix strategy. Abebaw W., 2022 26  Cont’d… 5. Business Analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives.  a prediction about whether the product is likely to be profitable or not. Abebaw W., 2022 27  Cont’d… 6. Product Development Stage  engineering develops the product concept into a physical product. determine consumer reaction to the physical product by using consumer panel. the panel of potential customers can also be given a sample of the product. Abebaw W., 2022 28  Cont’d… Consumer testing can take variety of forms as bringing consumers in to laboratory  giving them samples to use in their homes 7. Test Marketing Stage A market test can be done to increase the certainty of successful commercialization.  This last step in the evaluation process, the test marketing stage, provides actual sales results. Abebaw W., 2022 29  Cont’d… The goals are to test the new product is more authentic consumer settings.  to learn how large the market is and  how consumers and dealers react to handling, using and repurchasing the actual product. Abebaw W., 2022 30 Product Life cycle Abebaw W., 2022 32 32  New Product Development Reasons for new product failure Overestimation of market size  Poor design  Incorrect positioning  Wrong timing  Priced too high  Ineffective promotion  Management influence  High development costs  Competition Abebaw W., 2022 33  Product Protection Intellectual property - a legal definition of ideas, inventions, artistic works and other commercially viable products created out of one's own mental processes.  Intellectual property is protected by such legal means as: Patents  Copyrights  Trademark registrations. Abebaw W., 2022 34  Product Protection Patent – an exclusive right granted for an invention – a product or process that provides a new way of doing something, or that offers a new technical solution to a problem. A patent is a contract between an inventor and the government in which the government, in exchange for disclosure of the invention, grants the inventor the exclusive right to enjoy the benefits resulting from the possession of the patent. 35  Product Protection Patents are exclusive property rights that can be sold, transferred, willed, licensed, or used as collateral. What can be Patented? Processes Methods of production, research, testing, analysis, technologies with new applications. Machines Products, instruments, physical objects. Abebaw W., 2022 36  Product Protection Manufactures Combinations of physical matter not naturally found (products). Composition of matter Chemical compounds, medicines, etc. Protection is valid for a period of 10 years in Ethiopia. Abebaw W., 2022 37  Trademarks Trade mark - are distinctive word, name, symbol or motto identified with a company’s product or service and registered by government offices. Trademarks unlike patents are periodically renewed (7 years) unless invalidated by cancellations, abandonment, or other technical registration/renewal issues. Abebaw W., 2022 38 Product protection Cont’d…. Trademark Abebaw W., 2022 39  Copyright Copyrights provide exclusive rights to creative individuals for the protection of literary or artistic productions. protects original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture. Abebaw W., 2022 40  Copyright It does not protect an idea, but the particular mode for an expression of that idea is protected.  Usually copyrights are valid for the life of the inventor plus a few decades( or plus 50 years).  Among the things that need to be protected through copyrights are: Music, books, software, scripts, articles, poems, sculptures, models, maps, and Abebaw W., 2022 41 blueprints.  Cont’d… In Ethiopia, the revised copyright law was enacted in July 2004. The law severely punishes those who infringe others‘ copyright, whether intentionally or with negligence, with imprisonment of up to 10 years and material and moral compensation of Birr 100,000 minimum. Abebaw W., 2022 42