module 6 ppt
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8/7/2019 module 6 ppt.
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8/7/2019 module 6 ppt.
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To gain an understanding of:
` The meaning of total ³product´ and ³new´ product
` Classification of business and consumer products andits relevance to marketing planning
` Product innovation` The product-development process
` When to add new products to a product line
` The adoption and diffusion process for products
` Organizational structures for product planning anddevelopment
8/7/2019 module 6 ppt.
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` it is more than physical products; includesservices, places, persons, and ideas
` it is easy to visualize the products of Esso, butmore difficult to describe those of the Toronto
Symphony, UNICEF, or the Salvation Army` some products are sold only to consumers, while
others are sold to organizations
` whether a product is a consumer product or abusiness product depends on how it is used
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Consumer products can be classified by thebuying behaviour of the consumers:
`̀ Convenience goodsConvenience goods are bought with little timeand effort, such as milk, bread, a chocolate bar.
`̀ Shopping goodsShopping goods are those where extensivecomparison is the norm-- cars, furniture,clothes.
`̀ Specialty goodsSpecialty goods are those for whichconsumers have a strong brand preference.BMW, Armani.
`̀ Unsought goodsUnsought goods are those now unknown tothe consumer or, if known, undesired.
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`̀ raw materialsraw materials: unprocessed, become part of other manufactured products
`̀ manufactured parts and materials:manufactured parts and materials: processed
products that become part of other products`̀ installations:installations: major buildings and equipment
`̀ accessory equipment:accessory equipment: used in operations, includecomputers, desks, tools
`̀ operating suppliesoperating supplies: low value, used by most firms,convenience products for businesses
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` Products go through life cycles-- you need newones coming on stream.
` Profits highest when products new.`
Consumers more selective: they look carefullyat each purchase. Also a little jaded.` High failure rates in the 75% range.` Leads to new products:
Innovative= truly unique Improved, with valuable new benefits Imitative, another ³me too´ product.
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1. Ford¶s Edsel automobile.2. Dupont¶s Corfam synthetic leather.3. Polaroid¶s Polavision.4. United Artist¶s Heaven¶s Gate western movie.5. RCA¶s Videodisc.
6. Time¶s TV-Cable Week magazine.7. IBM¶s PCjr.8. New Coke.9. R.J. Reynolds¶ Premier cigarette.10. Nutrasweet¶s Simplesse fat substitute.
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` companies must be constantly modifyingexisting products and developing new ones;the marketplace demands it
` how new is new? most new products are
modifications of or extensions to existing ones` the introduction of a new product is a strategic
decision which should be guided by thecompany¶s goals and a new product
introduction strategy
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Identify
the strategic
role of newproducts,
then...
Identify
the strategic
role of newproducts,
then...
1.
Idea
generation
1.
Idea
generation
2.
Screening
of ideas
2.
Screening
of ideas
3.
Business
analysis
3.
Business
analysis
4.
Prototype
development
4.
Prototype
development
5.
Market
Tests
5.
Market
Tests
6.
Commer-
cialization
6.
Commer-
cialization
The New Product Development Process
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` there must be adequate market demand: this isnecessary but not sufficient for success
` must satisfy key financial criteria` must be compatible with environmental
standards` must fit with the company¶s marketing structure` should also be compatible with production
capabilities, satisfy legal requirements, and fitwith corporate goals and objectives
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CompanyGoals
Product Strategy Examples
Defend marketshare
Introduce addition to
existing produce
line/ revise existing
product
Pizza Hut¶s ³Big
New Yorker´ and
³Stuffed Crust´
pies
Strengthen
reputation asan innovator
Introduce a r eally
new product - not just an extension of
an existing product
Digital cameras
introduced bySony, Canon,
and other firms
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` different new products are adopted by consumersat different rates
` the individual consumer goes through certain
stages before adopting a new product` marketers must be interested in first creating
awareness, then interest, then trial, before theconsumer is considered an adopter
` some people are genuine innovators, while otherswait and try later; some never adopt
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`̀ Adoption process:Adoption process: The decision-making activity of an individual through which the new product isaccepted.
`̀ Diffusion:Diffusion: The process by whichan innovation is spread through a
social system over time.
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`̀ awareness:awareness: customer is exposed to the product`̀ interest:interest: interest and information seeking
`̀ evaluation:evaluation: assessment of the advantages anddisadvantages of the new product
`̀ trial:trial: customer tries the product in low-risksituation; may be a sample or test drive
`̀ adoption:adoption: customer decides to buy the product
`̀ confirmation:confirmation: customer decides to stay with the
product; attempts dissonance reduction
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` Researchers have identified five categories of
individual adopters for new products:
I nnovator s ² 3% of the mar ket.
Ear ly adopter s ² 13% of the mar ket. Ear ly major ity ² 34% of the mar ket.
Late major ity ² 34% of the mar ket.
Laggar ds ² 16% of the mar ket.
` In addition, some individuals ² nonadopters
² never accept the innovation.
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E valuation of new safer baseball for youngsters:
1. Relative advantage²superior to current balls interms of safety but not tradition.
2. Compatibility²coincides with cultural valuesand experiences of parents but not of coaches.
3. Complexity²no problem understanding.
4. Trialability²ball can be easily tested.
5. Observability²can see a youngster who¶s hit
with the new ball dust off and trot to first base.
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