Product Development

1. Product Development Chapter 30 and 31

2. Product/Service Management • Overseeing the design and development of new products • Benefits to us? • New and improved products on the market • More choices to pick from

3. Things to consider when designing a product • 1. The cost to design the product • 2. Will you have a marked for the product?

4. Product Mix • All of the different products that a company makes or sells. • Example: Nike sells clothes, shoes, sports products

5. What product mixes should you carry? • Objectives of the business – • Carry a variety of products that will make our business a profit • Image the business wants to project - • Trendsetting, fashion-conscious, expensive, low-price • Market business is trying to reach – • Kids, teens, Generation X, Baby Boomers

6. Product line • A group of closely related products manufactured and/or sold by a business • Examples: • Frito Lay makes Ruffles, Doritos, Tostitos • Cereals produced by Kelloggs: Frosted Flakes, Corn Pops

7. Product item • Is a specific model, brand, or size of a product within a product line

8. Reasons companies delete product lines • Obsolescence (changing interests and technology) • Loss of appeal – consumer tastes change • Conflict with company objectives • Replace with new products – limited shelf space • Lack of profit • Conflict with other product lines – competing with own brands not good

9. Introduction Stage of product life cycle • Product first introduced • Focus on promotion and production • Draw attention to the product • Least profitable stage of life cycle because of costs being so high to promote/make

10. Growth – Product life cycle • Increasing sales and profits • Most knows about and buys the product • Competition starts offering products to compete • Advertising focuses more on customer satisfaction

11. Maturity Stage • Sales level off or slow down • Product has highest level of competition • Most of target market owns product • Most of advertising is fighting off competition • Nintendo Wii

12. Decline Stage • Sales fall • Profit may be smaller than costs • May sell or license the product • Discount the product

13. Positioning products • Price and quality – economy line, mid-priced line, and luxury line based on how they want to be viewed • Features and benefits – Rockport positioned as comfortable shoes (features/benefits) • Competition – How is my product better than theirs • Relation to other products in line – Crayola came out with a washable marker/crayon to go along with the rest of their product line

14. Brands • Can be a name, term, design, symbol that identifies a business or organization and its products • Examples are Coca Cola, McDonalds, Microsof • A brand name is the word, group of words, letters or numbers representing a brand that can be spoken • Examples are: Mountain Dew, SnackWells, Honda Accord

15. Brands (continued) • A brand mark is the part of the brand that is a symbol or mark – known as a logo • Examples: • Trade name – identifies the company or division of a particular corporation • Examples are: Dell, Kellogg’s and Xerox

16. Trade character • Trade character is a brand mark with a human form or characteristics

17. Trademark A trademark is a brand name, brand mark, trade name, trade character, or a combination that is given legal protection by the federal government

18. Packaging • Two main purposes for protection and promotion • Promoting and selling the product – make packages attractive, colorful and artistic

19. Packaging • Ease of use – consider the way the consumer uses the product • Providing information: Information about its contents, calories, guarantees, nutritional value and potential hazards

20. Safety • Products come in plastic containers instead of glass now • Drugs and food items are in tamper resistant containers with sealed lids and blisterpacks

21. Handling • Prevent tampering while on display • Use bubble wrap/packing paper to keep product from breaking • Environmental packaging – packaging that is reusable, recyclable, safer, and less wasteful

22. Manufacturer Brand • Also known as producer brands – owned by manufacturers • Generate the majority of sales • Identify a given product • Indicate a standard quality and price • Appeal to customers who want consistent quality, dependable performance, and status • Examples: Kraft, General Electric, Heinz, Keebler

23. Information on a product label • Brand name • Logo • Ingredients • Directions • Special promotional messages • Weight • Expiration dates

24. Private Distributor Brands • Also known as store or private brands • Owned by wholesalers and retailers • Appeal to customers who want quality and performance at a lower price • Can generate a higher profit margin • Lead to customer loyalty • Examples: Sears Kenmore and Craftsman brands • Kroger brand of products • Great Value – Wal-Mart

25. Generic Brands • Does not carry a company or brand name • Packaging only has a description of the product • Often priced 30-50% lower than other manufacturer brands • Priced 10-15% below private distributor brands • Not heavily advertised or promoted

26. Labeling laws • Name and address of manufacturer has to be on the label • Quantity of the contents must be on label • Product weight has to be listed in traditional American weights and metric weights • Some countries require that labeling is bilingual

27. FDA Laws • State amount of calories • Percentage of daily intake of calories • Fat, carbohydrates, sodium, etc. Contents • Health warnings: Such as women who are pregnant should not drink alcoholic beverages due to increase risk of birth defects

28. Federal Trade Commission • Care labeling rules: information about the care of garments related to washing, drying, and ironing. • Environmental information about recyclable contents • Ozone safe information

29. Agencies that regulate products/businesses • Better Business Bureau – Help customers to work with businesses to resolve complaints (you can call them to file a complaint) • BBB of Lexington, KY - Principles for Trust • Consumer Product Safety Commission – work with businesses on unsafe products in the marketplace (do recalls on products) • CPSC Home Page | cpsc.gov • Federal Trade Commission – • Prevent unfair pricing practices • Investigations of false advertising

30. Difference between warranties and guarantees? • Warranty – is a promise or guarantee, given to a customer that a product will meet certain standards (given a time period) • 6 month warranty on IPhone • Guarantees – Used in promotional phrases such as “money back guaranteed”, “satisfaction guaranteed”