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Chapter 9

Chapter 9. Creating the Product. What is a Product?. Anything tangible or intangible that, through the exchange process, satisfies consumer or business customer needs. Products can be: physical goods, services, ideas, people, or places. Product Layers (Fig. 9.1). Durable Goods

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Chapter 9

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  1. Chapter 9 Creating the Product

  2. What is a Product? • Anything tangible or intangible that, through the exchange process, satisfies consumer or business customer needs. • Products can be: • physical goods, • services, • ideas, • people, or • places

  3. Product Layers (Fig. 9.1)

  4. Durable Goods Provide Long-Term Benefits (cars, furniture, appliances) Classification of ProductsHow Long the Products Will Last High InvolvementDecisions Nondurable Goods Provide Short-Term Benefits (newspapers, food) Low Involvement Decisions

  5. Classification of ProductsHow Consumers Shop for the Product • Shopping Products • Considerable time & effort in selection • Moderately brand loyal • Comparison shop • Clothing, appliances, services • Convenience Products • Frequently purchased with little effort • Low priced • Must be convenient • Staples, impulse, emergency • Specialty Products • Significant purchase efforts • Brand loyalty • Unique characteristics important to buyer • Big Bertha golf club, Rolex • Unsought Products • Little awareness or interest until need arises • Require much advertising & • personal selling • Retirement plans, insurance

  6. Classification of Convenience Products • Staples • basic or necessary items that are available almost everywhere, e.g. milk, bread, gas • Impulse Products • products that people often buy on the spur of the moment, e.g. magazines, gum, candy • Emergency Products • products that people purchase when we’re in dire need, e.g. bandages, umbrellas

  7. Business-to-Business Products Component Parts Equipment Processed Materials MRO Products Products Used in the Production of Other Goods & Services Business Services Raw Materials

  8. Understanding Innovations • Products that consumers perceive to be new and different from existing products. • Critical to the success of a company because of the: • technological products that are introduced and become obsolete quickly, and • high cost of new product development and the higher cost of new product failure, and • contributions to society.

  9. Types of Innovations Discontinuous Innovations Totally New Product Requires Much Learning Airplane, Car, TV Dynamically Continuous Innovations Significant Change to an Existing Product; Requires Some Learning Tapes - CD - DVD Degree of Newness Continuous Innovations Modification to an Existing Product Knockoffs Honey Nut Cheerios

  10. Developing New Products • Successful new product introduction is becoming more difficult because: • costs of research and development are huge so development is limited, and • products are outdated quickly giving less time to recover R&D costs, and • retailers charge large fees to stock a new product.

  11. Stages in New Product Development Planning & Development Visionary Phase Testing & Improving the Product

  12. Generate Ideas • Identify product ideas which will provide customer benefits compatible with company mission. • Estimate potential technical and commercial success. • Estimate potential for profit: • potential demand, • expenditures required, • marketing costs. Screen Product Concepts Business Analysis Visionary Phase

  13. Planning and Development Technical Development Design Product & Manufacturing Process Commercial Development Develop a Marketing Plan

  14. Testing and Improving the Product Improve Make Improvements in Marketing Mix as Needed Test Marketing Develop Evidence of Potential Success in the Real Market Commercial Launch Full-Scale Implementation of Entire Marketing Plan

  15. Product Adoption process by which a consumer or business customer begins to buy and use a good, service, or idea. Diffusion of Innovations process by which the use of a product spreads throughout a population. Adoption and Diffusion Processes

  16. Adoption Pyramid (Fig. 9.4)

  17. Categories of Adopters (Fig. 9.5)

  18. Product Factors Affecting the Rate of Adoption Observability How visible is the new product and its benefits? Relative Advantage Does the new product provide superior benefits? Product Characteristics Compatibility Does the new product fit the existing values, customs & practices? Trialability Is the new product easy to sample? Complexity Is the new product easy to understand?

  19. Chapter Summary • Explain the layers of a product. • Describe the classification of products. • Explain the importance of new products. • Describe how firms develop new products. • Explain the process of product adoption and the diffusion of innovations.

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