Chapter 5Chapter 5Product DevelopmentProduct Development

Mr. RaposoMr. Raposo

King City Secondary SchoolKing City Secondary School

Game PlanGame Plan

Presentations (retail websites)Presentations (retail websites) Its not easy being green!Its not easy being green! NatureanthemNatureanthem Toyota Toyota Prius-HybridSynergyPrius-HybridSynergy Drive Drive Chapter 5.1 handout Chapter 5.1 handout Bombardier-discussion & question #2Bombardier-discussion & question #2 Chapter 5 PowerPointChapter 5 PowerPoint

Chapter OverviewChapter Overview

5.1 Marketing and Product Development5.1 Marketing and Product Development 5.2 Invention of Innovation?5.2 Invention of Innovation? 5.3 The Stages of Product Development5.3 The Stages of Product Development 5.4 Product Development & Utility5.4 Product Development & Utility 5.5 Product Development & the Marketing 5.5 Product Development & the Marketing

ConceptConcept

5.1 Marketing and Product 5.1 Marketing and Product DevelopmentDevelopment

2 questions asked before developing a product:2 questions asked before developing a product: ““Can we produce it?” (Production) and “Can we sell it?” Can we produce it?” (Production) and “Can we sell it?”

(Marketing)(Marketing) Marketers use the production data to develop a price Marketers use the production data to develop a price

strategy, then research the competitive market to strategy, then research the competitive market to develop positioning strategies, distribution channels and develop positioning strategies, distribution channels and promotional planspromotional plans

Product development is ongoing and major marketing Product development is ongoing and major marketing activityactivity

Feasibility study –Feasibility study – a study used to determine if any a study used to determine if any business opportunity is possible, practical, and viablebusiness opportunity is possible, practical, and viable

All businesses use a feasibility study before developing a All businesses use a feasibility study before developing a new product or a new business venturenew product or a new business venture

5.2 Invention of Innovation?5.2 Invention of Innovation?

InventionInvention – new devices, methods or processes – new devices, methods or processes developed from study and experimentation, developed from study and experimentation, done to meet consumer needsdone to meet consumer needs

InnovationInnovation – is a product or service that uses – is a product or service that uses new technology, items, or processes to change new technology, items, or processes to change the methods used to produce products or to the methods used to produce products or to change the ways used to distribute themchange the ways used to distribute them

- Inventors tend to sell or license their ideas to - Inventors tend to sell or license their ideas to others who how to develop products for the others who how to develop products for the marketplacemarketplace

5.3 The Stages of Product 5.3 The Stages of Product DevelopmentDevelopment

1.1. Idea GenerationIdea Generation – – brainstorming whether an brainstorming whether an innovation or invention is to be innovation or invention is to be donedone

2.2. Idea ScreeningIdea Screening – Not all ideas – Not all ideas good, need to look at each idea good, need to look at each idea to see if it is worthwhileto see if it is worthwhile

3.3. Concept Development –Concept Development – Designing of a prototype Designing of a prototype (sample of what the product (sample of what the product might look like), market testedmight look like), market tested

4.4. Market StrategyMarket Strategy – Use previous – Use previous observations or conducting new observations or conducting new market researchmarket research

5.5. Feasibility Study Feasibility Study – Looking at – Looking at the features and design of the the features and design of the product that the consumers want, product that the consumers want, materials determine the price, and materials determine the price, and calculate costs to determine calculate costs to determine productsproducts

6.6. Product DesignProduct Design – Looks at – Looks at market preferences, versatility, market preferences, versatility, and the extras that are neededand the extras that are needed

7.7. Test MarketingTest Marketing – Test – Test acceptance of the product, if acceptance of the product, if positive will launch product, if not, positive will launch product, if not, will make the necessary changeswill make the necessary changes

8.8. Market EntryMarket Entry – Product enters – Product enters the product life cycle, and the the product life cycle, and the consumer determines how long consumer determines how long the product lasts on the marketthe product lasts on the market

Market Market EntryEntry

Test Test MarketingMarketing

Product DesignProduct Design

Feasibility StudyFeasibility Study

Market StrategyMarket Strategy

Concept DevelopmentConcept Development

Idea ScreeningIdea Screening

Idea GenerationIdea Generation

5.3 The Stages of Product Development5.3 The Stages of Product Development

5.4 Product Development & Utility5.4 Product Development & Utility

Product Development and UtilityProduct Development and Utility Utility Utility – What is added to a product to – What is added to a product to

make it valuable to the market, and which make it valuable to the market, and which influences the value equationinfluences the value equation

5.4 Product Development & Utility5.4 Product Development & Utility

Form UtilityForm Utility – relationship between a product or services form and its – relationship between a product or services form and its function, referring to the look, the function, scent, flavour, colour, design and function, referring to the look, the function, scent, flavour, colour, design and packagingpackaging

FunctionFunction – what product is intended to do, form follows function since what – what product is intended to do, form follows function since what the product is meant to do will often dictate what it looks likethe product is meant to do will often dictate what it looks like

Information UtilityInformation Utility – provides consumers with instructions, directions, and – provides consumers with instructions, directions, and user manuals, usually delivered by advertising and from othersuser manuals, usually delivered by advertising and from others

Place UtilityPlace Utility – makes it possible for the consumer to purchase the product, – makes it possible for the consumer to purchase the product, the easier the product is to find, the more place utility it has. (I.e. having a the easier the product is to find, the more place utility it has. (I.e. having a ski shop near a ski resort)ski shop near a ski resort)

Time UtilityTime Utility – when the product or service is available when the consumer – when the product or service is available when the consumer wants it (i.e. having pumpkins for Thanksgiving and Halloween)wants it (i.e. having pumpkins for Thanksgiving and Halloween)

Possession UtilityPossession Utility – easy to purchase, fairly reasonable in price (i.e. – easy to purchase, fairly reasonable in price (i.e. providing credit to consumers, ease of use to purchase the product)providing credit to consumers, ease of use to purchase the product)

5.5 Product Development & the 5.5 Product Development & the Marketing ConceptMarketing Concept

The marketing concept is the idea that The marketing concept is the idea that consumes and competitors should be consumes and competitors should be considered in every important business decisionconsidered in every important business decision

Product Mapping –Product Mapping – conducting research to see conducting research to see what consumers like and dislike about the what consumers like and dislike about the existing products and what is missing. Usually existing products and what is missing. Usually involved is a group of products on a table and involved is a group of products on a table and ask research participants to group the items ask research participants to group the items using the most common factors that they using the most common factors that they perceive.perceive.

5.5 Product Development & the 5.5 Product Development & the Marketing ConceptMarketing Concept

Marketing Opportunity Analysis (MOA) –Marketing Opportunity Analysis (MOA) – situational analysis that defines opportunities or situational analysis that defines opportunities or market situations for a specific brand, with three market situations for a specific brand, with three distinct parts.distinct parts. Overall Market – what all competitors areOverall Market – what all competitors are Indirect Competition - group the competitive brands Indirect Competition - group the competitive brands

by featuresby features Direct Competition – identify all competitive brands Direct Competition – identify all competitive brands

that compete for a share of the same market that compete for a share of the same market MP = N x P x Q MP = N x P x Q (number of possible buyers X average (number of possible buyers X average

selling price X average number of items that are purchased selling price X average number of items that are purchased in a year)in a year)

5.5 Product Development & the 5.5 Product Development & the Marketing ConceptMarketing Concept

- Need to do a cost-benefit analysis to - Need to do a cost-benefit analysis to compare the estimated costs of an action compare the estimated costs of an action with the estimated benefits that are likely with the estimated benefits that are likely or intended to produceor intended to produce

HomeworkHomework

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