Product Development

1. Product Development Chapter 5 BMI3C

2. Day 1 – Response Journal In your opinion, what was the most important product ever invented? Why? *** Save As April 22 in your Response Journal folder ***

3. Marketing & Product Development Market Research • _________________________ reveals what consumers want and points toward business opportunities • Before deciding to provide a new product or service that will satisfy consumers’ wants and needs, businesses must ask themselves 2 questions; • Can we produce it? • Can we sell it?

4. Marketing & Product Development Production & Design Department • It is the ________________________________ that answers Can we produce it?,based on info gathered during market research The department needs to determine … • If the company has the facilities and technology to create the product? • What it will cost to produce the product or service? • This info will later help the marketing department set the price

5. Marketing & Product Development Marketing Department • It is the _________________________ that answers Can we sell it? The department needs to … • Conduct consumer testing, and then give the results to production and design team • Gather production data, which helps set the price • Research the competition • Develop the marketing mix; which includes the positioning, distribution, and promotional strategies

6. Marketing & Product Development Infrequent Ongoing • All businesses need to engage in product development at the beginning of a new venture • For many businesses, product development then becomes an ________________ activity after the business is underway • E.g. Barber Shop – read paragraph 3 on page 166 • For many other businesses, product development is an ______________, major marketing activity • E.g. Bombardier – read paragraph 4 on page 166

7. Marketing & Production Cooperation Feasibility Study • The cooperation needed between the marketing and production departments is complex and constant • To start, a company will conduct a __________________, which determines if a business opportunity is possible, practical and viable • E.g. Company Z – read paragraph 2 & 3 on page 167 • All businesses perform some kind of feasibility studies, however some are more formal and complex than others

8. Invention or Innovation? Idea • Product development starts with an _____ that is based on solving a problem for the consumer • E.g. Shipping – read paragraph 1 & 2 on page 170

9. Inventing New Products Inventions • ____________ are the creation of a completely new product, method or process • Businesses use inventions to create original solutions to meet consumer needs • E.g. the wheel, gas-powered engines, the telephone, the refrigerator, ATMs – read paragraph 3 on page 171

10. An Example of Invention inFORM

11. Innovating Existing Products Innovation • An ______________ is a product or service that uses new technology, items or processes to change … • An existing product or service • The methods used to produce the product or service • The methods used to distribute the product or service

12. Innovating Existing Products Improve Competitive Market • There are more innovators than inventors • Innovators take existing products or services and ___________ them in some way • Most innovations develop as a result of the ______________________; one business tries to become better than another business at something in an attempt to create a competitive advantage • E.g. Shipping companies – read paragraph 2 on page 172

13. Name the Innovation Earle Dickson’s wife was always cutting her fingers in the kitchen while preparing food At that time a bandage consisted of separate gauze and adhesive tape that you would cut to size and apply Earle felt this type of bandage was insufficient and developed what commonly used product?

14. An Example of Innovation Old El Paso Commercial

15. Invention or Innovation?? Brilliant Kid Inventions

16. Day 1 – Assigned Work Answer questions 1a, 1b and 2aon page 178

17. Day 2 – Response Journal Review the list of Canadian Inventions in Figure 5.7 on page 171, and see if you can find any common factors. What kinds of products do Canadians tend to invent?Why do you think Canadians invent in these areas? *** Save As Apr 23 in your Response Journal folder ***

18. Product Development • Marketers use innovations and inventions to make a profit • Sometimes the marketer and the inventor are the same person, but this is not common • Inventors usually sell or license their ideas to others who know how to develop it in the marketplace • On the other hand, innovatorsare much more likely to also be marketers • Due to the fact that they are motivated to improve the product in order to gain an edge over the competition and increase profit

19. The Stages of Product Development Below are the stages a marketer must go through to bring a new product to the market; Idea Generation Market research reveals whether consumers want a new or modified product Wise marketers listen to customers Often marketers will ask “how do we make this product or service better?”

20. The Stages of Product Development Idea Screening Not all ideas are good ones Companies need to test consumer reaction to the new idea and look at the competitive situation in the market Many factors need to be taken into account

21. Not All Ideas Are Good Ones…

22. The Stages of Product Development Prototype Concept Development At this stage, a ____________is made; a sample of what the product will look like, and how it will operate The prototype is then tested to see whether it works properly It is also market-tested to see if consumers like it

23. The Stages of Product Development Market Strategy Use market research to establish who the primary and secondary market is The company then develops marketing strategy and plan to target the primary market

24. The Stages of Product Development • Feasibility Study • This step is often done at same time as steps 4 and 6 • The feasibility study is conduct to ensure that the product is something … • The company can make and sell • That consumers want and at a price they are willing to pay • That will produce a profit for the company

25. The Stages of Product Development • Product Design • Takes into account the preferences of primary market • What do they want the product look like? What materials would they prefer the product be made out of? What do they want the product to be able to do? • Also includes features such as warranty, instruction manual and packaging

26. The Stages of Product Development Test Marketing Used to test consumer acceptance of the product Marketers get the product into the hands of consumers who fit their primary market profile. They then have them use it for a period of time. Afterwards they complete a survey and make suggestions for improvement If the responses from the test market are positive, the company will launch the product

27. The Stages of Product Development Product Life Cycle Market Entry Start of the ___________________ The product is introduced to the market It is now up to the consumers to determine how long the product will last in the market

28. Day 2 – Assigned Work • Complete the Canadian Inventions Worksheet (posted on ClassNet) • Read Not-for-Profit Organizations on pages 178-179 and answer the 2 corresponding questions

29. Day 3 – Response Journal In your opinion, what is the best designed product that you have bought? Explain. In your opinion, what is the best packaged product you have bought? Explain. *** Save As April 24 in your Response Journal folder ***

30. Product Development & Utility Innovation Utility • Most businesses focus on product _____________ when they develop new products • A company might innovate by changing a product they already sell, or they might copy another company’s product but change it slightly • Product development provides new or different value to a product or service. It influences the value equation by adding ________; what is added to a product to make it valuable, giving consumers something they did not have before • Value could be created by adding a benefit (easy-to-open can), a difference (lemon-flavoured cola) or by providing info on a new use for an existing product

31. Product Development & Utility A company can innovate a product or service by changing/improving one or more of the 5 types of utility listed below; • Form • Information • Place • Time • Possession

32. 1. Form Utility Form Utility Form Function Form follows Function • _____________ is the relationship between a product or service’s form and it’s function • ____________ refers to the product’s “look” or type of service provided • _____________ is what the product or service is intended to do • Usually, ________________________: what the product does dictates what it looks like • Also, affected by innovations in production and technology

33. 1. Form Utility • Form utility can add value to a product by making it more attractive Form utility also takes into consideration… • Materials used • Scent • Flavour • Colour • Design • Packaging

34. 1. Form Utility A. Materials Used • New technology provides new materials that can be used in product innovations • E.g. new plastics are more environmentally friendly B. Scent • For some products, simply changing the scent of a product can be an innovation • E.g. soap, hand lotion, perfume, floor cleaners, bug repellant, candles, etc. • Some marketers even try to develop products with no scent at all, to add value for those consumers suffering from fragrance sensitivity

35. 1. Form Utility Flavourists C. Flavour • _____________ are scientists who use new technology to create artificial flavours that simulate the original • Because of the work of flavourists, we have almond-flavoured coffee, strawberry-flavoured milk, ketchup-flavoured chips, etc. • Fast food restaurants often compete on flavour • E.g. do you prefer the taste of the Big Mac or the Whopper?

36. 1. Form Utility D. Colour • Today’s consumer demands colour and a variety of them • Manufacturers have responded by developing products that come in a multitude of colours • E.g. cars, linens, paint, carpet, clothes, etc. • Many consumers are influences by the latest colour trends especially when purchasing clothing and home décor • Read In the News … on page 183

37. 1. Form Utility Ergonomic Beauty E. Design • A product’s design is perhaps the most important part of its form utility • Often, a badly designed product will have little or no utility • E.g. a toaster that always burns or doesn’t toast your bread • Today’s consumers are also demanding more _____________ products; products that are designed for maximum comfort, efficiency, safety and ease of use • E.g. an ergonomic keyboard, an ergonomic shovel, etc. • Many consumers also consider __________ another design benefit, with many consumers willing to pay more for attractive looking cars, clothing, furniture, etc.

38. 1. Form Utility F. Packaging • An innovative package can create a whole new industry itself • E.g. the twist-off cap, the resealable bag, the plastic bottle and the Tetra Pak, were all innovations in packaging that added form utility to thousands of products • Innovations can also occur in package use • E.g. packaging your product in a recyclable container is an environmentally friendly innovation that is also good for the product’s reputation and sales • Innovators who package existing products in new containers create a new product • E.g. yogurt now packaged in squeeze tube doesn’t require refrigeration or a spoon and can be taken anywhere

39. Day 3 – Assigned Work Complete the Form Utility Worksheet(posted on ClassNet) Complete questions 1a, 2a and 2b on page 188

40. Day 4 – Response Journal Why do you think certain companies have started offering online shopping, 24/7 customer service, and extended store hours? Note: think about the concept of utility when writing your answer. *** Save As April 25 in your Response Journal folder ***

41. 2. Information Utility Information Utility Advertising • A product has value to a consumer only when the consumer knows the product exists and what benefits it offers • ________________________provides the consumer with instructions, directions and user manuals • Also includes providing consumers with 1-800- numbers to call, FAQs on the company website, etc. if they require assistance • _____________ also delivers info utility • Many consumers read ads to determine what products are available, where and at what price

42. 3. Place Utility Place Utility E-commerce • Marketers add _______________ to a product when putting the product where the consumer can purchase it • The easier the product is to find, the more place utility it has • E.g. Skis in BC – read example in paragraph 1 on page 186 • One way to increase place utility is through ______________; selling your product or service over the Internet

43. 4. Time Utility Time Utility Seasonal Products • Businesses add ______________ by providing their product or service when the consumer wants it • E.g. Auto Repair Shop – read paragraph 1 on page 187 • Businesses can provide time utility by offering internet shopping, extended store hours, being open 24 hours, etc. • Time utility for ___________________ also adds to their value • E.g. selling bathing suits and lawn mowers before the summer starts, shovels and mitts before winter, etc.

44. 5. Possession Utility Possession Utility • Goods and services have _________________ when it is easyfor the consumer to purchase • E.g. an expensive watch has no possession utility to a consumer who can’t afford it • Businesses can add possession utility by allowing customers to pay using their credit card or debit card • Businesses can also add possession utility by offering discounts, payment plans, layaway, etc.

45. Product Development & the Marketing Concept Marketing Concept The ______________________ is the idea that consumers and competitors should be considered in every important business decision No business decisions are more important than decisions surrounding product development, and therefore should not be made without considering the consumer and competitors

46. Product Development & the Marketing Concept To properly study the consumer’s and competition’s place in the product development process, a business can use one of the following tools; • Product Mapping • A Marketing Opportunity Analysis • A Benefit Analysis

47. Product Mapping Product Mapping • _______________________ groups similar products into categories to create competitive segments, and then uses those segments to create a market for a specific product • Product Mapping involves conducting research in the below 3 areas… • What similar products/services already in the market • What do consumers like and dislike about the existing products/services • What is missing from the market • E.g. snack food – read page191 paragraph 3

48. Product Mapping • To conduct a product map, consumers are given a number of similar products and asked to group them using the most common factors they perceive each to have • E.g. Pain reliever – read paragraph on page 191 • Consumers are then asked to place the given products on a rating scale using the common factors they outlined in the step above • See Figure 5.26 on page 193 • Product mapping can also demonstrate the individual product attributes that consumers like or dislike • E.g. read paragraph 2 on page 192

49. Product Mapping Are Are Not • The process of product mapping is used to show marketers what existing products _______, but more importantly what they ___________ • The goal of product mapping is to … • Uncover what the existing products in the market lack and then • Create a new innovation, improving on what already exists

50. Day 4 – Assigned Work • Complete the Product Mapping Worksheet • Answer question 3a on page 188 • Provide 5 examples of products or services that illustrate the 5 types of utility • E.g. a pop in the school vending machine has place utility, a 24 – 7 grocery store has time utility, etc.