P RODUCTS, S ERVICES, I NNOVATIONS AND B RANDING Kong Chen, Madiha Ahsan, Kim Fettkether, Michael Adams W HAT IS A P RODUCT ? A product is the object that is being traded during a transaction. With this a product can be near anything. It can be: An Idea A Service Goods Or a Hybrid of All 3 T WO T YPES OF P RODUCTS Consumer Products and Business Products Consumer Products are what most people are used to dealing in. Many times they classify as: Convenience Shopping Specialty Unsought C ONVENIENCE Inexpensive products that take very little involvement to decide to purchase. Examples include: Fast Food Milk Toiletries Eggs S HOPPING These arent bought as frequently, generally cost more, and are expected to last longer. Examples are: Refrigerators Cars Furniture Cars S PECIALTY These could fall into Shopping and Convenience but generally have something unique to them that the consumer values. Examples are: Designer Shoes High End Cars Caviar U NSOUGHT The last is one that covers the thing you didnt know you needed until the last minute. Examples are: Life Insurance Headstones Cutting Edge Products B USINESS P RODUCTS These are similar but are many times inputs into a company/persons product. They are: 1. Installations non-portable, facilities and equipment 2. Accessory equipment used for production 3. Raw materials 4. Component parts finished parts to build something else 5. Process materials used to make other thing, but disappears or is used up: Coal or LP 6. MRO supplies Maintenance, Repair & Operating 7. Business services S ERVICES A P RODUCT ? Many times when we think of products, we think of Whole Goods but a Service can also classify as a Product We will cover Services later. P RODUCT L IFE C YCLE During the life of a product or service it will go through 5 main stages: R&D Introduction Growth Maturity Decline R ESEARCH & D EVELOPMENT This is the first stage and is when the initial concept and design of the product takes place. No money is really made at this point. I NTRODUCTION This is when the product is first unveiled and offered to the public. Many times there will be big PR events held or waiting until the next trade show. G ROWTH After the new product has hit the market and made it past the early adopters, the growth section is where the product will either take off or flop. M ATURITY This stage is reached once the growth has taken place and the market has stabilized. Sales may grow, but at a much slower rate. D ECLINE This is when sales start to fall. Either your product was replaced by other products or new innovations reduced your usefulness. S ERVICES AMA: Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods. Most businesses are services businesses. No pure service (or pure product) S ERVICES GDP C OMPOSITION K EY C HARACTERISTICS Intangible Variable Inseparable Perishable M ARKETING I MPLICATIONS Intangibility-tangibalize Inseparability-Careful selection and training Variability-Quality control Perishability-Manage demand and supply D IFFERENCE BETWEEN GOODS AND SERVICES GoodsServices A physical commodityA process or activity TangibleIntangible HomogeneousHeterogeneous Production and distribution are separated from their consumption Production, distribution, and consumption are simultaneous processes Can be storedCannot be stored Transfer of ownership is possibleTransfer of ownership is not possible Quality mainly depends on materials Quality depends on providers 7 P S OF S ERVICES M ARKETING S ERVICE Q UALITIES Search Quality Experience Quality Credence Quality D IMENSIONS OF S ERVICES Q UALITIES Search qualitiesExperience qualities Credence qualities TangibilityAccessCompetence CredibilityCourtesySecurity Reliability Responsiveness Understanding customer Communication B RANDING A process by which company or business is communicated Allows company to differentiate its products and services Establishes a bond with customers and takes position in market B RANDING Name Sign Symbol .and a lot more B RAND E QUITY A name becomes a brand when consumers associates it with set of tangible and intangible benefits A brand is said to have equity difference between the intrinsic and perceived value of the product How much more customers are willing to pay B RAND E QUITY Strong brand equity can result into Profits Future opportunities High consumer awareness Strong brand loyalty Less susceptible to price competitions B RAND N AME S ELECTION Easy to say and remember Distinctive and extendable Benefits of product/service Translates well into other languages W HY IS B RANDING I MPORTANT Sets you apart from competition Tells customers about your business Generates referrals Helps customers know what to expect Provides direction and motivation for employees Increases business value B RAND L IABILITY Customer dissatisfaction United breaks Guitars Product/service failure Volkswagen Questionable practices Nike Social issues Victoria secrets vs. Dove Negative associations Tiger Woods P RODUCT P OSITIONING Who is our Target Market? Two ways to differentiate the product Quality Service P RODUCT : Q UALITY Reliability Quality control Conformance Should be defect free P RODUCT : D RIVER Performance Should function or accomplish tasks as expected Durability Ability to endure Ability to resist wear and tear P RODUCT : E NHANCERS Features Attribute or aspect of the product Serviceability the ease with which corrective maintenance or preventative maintenance can be performed P RODUCT : A ESTHETICS Appearance The way product looks Reputation What consumers think about the product Consumers beliefs or opinions S ERVICE : R EQUIREMENTS Reliability How easily the service is available when needed Assurance Service meets expected or pre-defined quality S ERVICE : D RIVERS Performance Responsiveness Service: Enhancers Extended Services Customer Empathy Service: Aesthetics Appearance Reputation G REAT I NNOVATIONS I NNOVATION Identify a problem Find a solution People buy products to solve a problem Nike improving athlete performance Bill Bowerman worlds lightest shoe 2 W AYS TO V IEW I NNOVATIONS By Influence Changes the life of people using it 2 W AYS TO V IEW I NNOVATION By Benefit Functional Innovations Innovations that are made to be practical, that are different, or better than the other alternatives N EW P RODUCT I NNOVATION Aesthetic (hedonic) Innovations Appeals to our pleasure-seeking or sensory needs Basic Shower Head Design, fashion, feel Many settings T YPES OF C USTOMERS Innovators : Want to be the first to try an innovation. Willing to take risks. Often the first to develop new ideas. Early Adopters: Represent opinion leaders. Enjoy leadership roles. Embrace change opportunities. Early Majority: Rarely leaders, but do adopt new ideas before the average person. Needs to see evidence the innovation works before willing to adopt it. Late Majority: Skeptical of change. Will only adopt an innovation after it has been tried by the majority. Laggards: Bound by tradition and very conservative. Very skeptical of change and hardest group to bring on board. I NNOVATION S UCCESS Relative advantage degree to which new product is perceived as superior to existing substitute Compatibility degree to which new product is considered consistent with customers present needs, values and practices Complexity how hard or easy is to use ie disposable razors Trailability can the product/service be tried on a limited basis free trials Observability can product attributes be observed or imagined I NNOVATION S UCCESS Social Systems/Society Based Modernity Homophily Physical Distance Opinion Leadership I NNOVATION D EVELOPMENT L IFE C YCLE