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Unit 3. “ Product Development”. What is a Product? Consumer Markets Product Design Process Product Planning Product Mix. Product. A good, service, or idea sold to satisfy wants/needs Can be simple or complex
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Unit 3 “Product Development” What is a Product? Consumer Markets Product Design Process Product Planning Product Mix
Product • A good, service, or idea sold to satisfy wants/needs • Can be simple or complex • Features – physical characteristics of product; used to enhance benefits wanted by consumers • Benefits – the value or usefulness a consumer gets from a product • Consumers know best what they want! Marketers are the “eyes, ears, and mouth” of a company. What does this mean?
How Products are Viewed • by Businesses – tangible items their customers buy • by Consumers – a means of satisfying their wants/needs (it’s durable, attractive, safe, tasty, convenient, etc). • Consumers buy the idea of what that product will do for them. • Consumers decide on a restaurant using factors like menu, taste, speed & quality of service, atmosphere, location, and price.
Business Consumers vs Final Consumers Some products are sold to businesses. Some products are sold to consumers. Some products are sold to BOTH. • Ex: Bananas – restaurant, family lunches What other products can you sell to both businesses and consumers?
Final Consumers – buy products for personal use. • Consumer Market • Convenience Goods • Shopping Goods • Unsought Goods • Specialty Goods
Business Consumers – buy goods to use themselves or to use in the making of other goods/services for resale. • Business Markets • Capital Equipment • Operating Equipment • Supplies • Raw Materials • Component Parts
Product Design Process • Basic product – same as competitors • Enhanced product • Features & Options • Packaging • Image (icon, logo, etc) • Extended product • Services & Warranties • Related items you buy separately **Improvement in design can improve Demand.
Product’s Life Cycle (or its life span) also helps planning Product Planning Strategy Consider: • Type of competition in marketplace (direct, indirect, intense, nonexistent). • Economic conditions. • Strengths/Weaknesses of own business.
Product Life Cycle Sales & Profits TIme
Influences on the PLC • Keep up with consumer needs (features, etc). • Fashion/trends change
Marketing Supports Product Development • Companies want to build a “bridge” to reach their potential customers: new product development. • Support for this “bridge” comes in 3 forms: • Gathering information to determine wants/needs- (customer surveys & feedback, market research & analysis, etc) • Designing marketing strategies (4Ps) • Testing the strategies before entering marketplace – (prototype, focus groups, limited distribution, etc)
What is “New”? Companies come up with “NEW” products to keep customers satisfied and to help maintain a profit. • New … or Modified/Improved? • Federal TradeCommission regulates use of “new.” • “Entirely new or changed in a noticeable way.” • Six-month time limit Note: ____% of new products fail!!!
Product Mix (Assortment) – the combination and make up of all the products a company has to offer. Includes 3 Parts: Product Mix • Product Line – group of similar product items (soda). • Can expand # of products easily by: • Varying quantity – singles, 12-pak, 1liter, 12 oz, etc • Varying quality – items priced by amount of features & options included; from basic to fully loaded.
2. Packaging – for what purpose? • Information – identifies product, gives details • Promotion – attractive & attention-getting • Convenience – makes easier to carry and use.
Brand – anything that IDs a product or company. Brand Name – NIKE Brand Mark – Trademark – legal protection of the brand Licensed Brand – well-known name or symbol sold for use on other companies’ products. 3. Branding
Product Mix Strategies • Expansion – adding additional product items or lines; for current or new customers’ sake; beat competition. • Contraction – removal of some items or lines; business decision; losing profitability or lost consumer appeal. • Alteration – make changes to items or lines (style, flavor, packaging, size, pricing, etc). • TradingUp – add a higher priced item or line; enhance company image, attract new target market. • TradingDown – add a lower priced item or line; attract new target market or meet competition.