Marketing Principles 5-6 - Product and New Prod Development

nguyp035's version from 2016-05-11 19:56

Section 1

Question Answer
A product is...anything that can be offered to the market for attention, acquisition, use or consumption, that might satisfy a need or want, includes physical objects, services, places, ideas.
A product could therefore be...a physical object, service, location (delivery), organization (event), idea (ad creative), experience (film) - or combination
Core product consists of...core benefits provided to consumers e.g. entertainment, working tool, a hole..
Actual product consists of...physical goods or delivered service that supplies the desired benefits. - physical feature could vary (colour, size, design,weight,brand)
Augmented product = actual product + additional benefits/features and peripheral services (e.g. installation, warranty) - differentiates.

Section 2

Question Answer
Connecting STP and ProductProducts offering can be physical (tangible), service (intangible), symbolic (perceptual) - it must satisfy needs and wants of customers in targeted segment
Customers have...distinct feelings about products and exhibit distinct purchase behaviour
Types of product classification
a) how long they last
DURABLE VS NON-DURABLEhigh involvement for durable goods, spending effort to gain information (e.g. FAQ, forums, AIDA analysis) & low involvement for non-durable goods (e.g. snacks, based on past experience and brand image, repeat purchase)
Aida analysisAwareness, Interest, Desire, Action (steps before purchasing)
CONVENIENCE PRODUCTSnon-durable, little comparison and effort, purchased frequently e.g. staples, considerably good quality, fair price, accessible, meet needs, emergency product, impulse buy (chewing hums, bandage, milk)
b) how consumers purchase them
SHOPPING PRODUCTSlots of time and effort, based on price, features and quality, less loyal to brand (unbranded shoes, crisps)
SPECIALTY PRODUCTScustomers will not accept substitutes, unique features, distinct (e.g. iPhone)
UNSOUGHTlittle interest until need arises e.g. life insurance, lempsip max- little awareness of need for product
Summary of products(1) identify layers (2) see how different in terms of durability and how they are purchased (3) add to a time horizon

Section 3

Question Answer
Product Life Cycle are...different for different industries/products (grow up and eventually die)
Introductionlow sales, negative profit, single player, high cost, lots of promo - early adopters
Growth stagerapid sales increase, peak profit, falling cost, co player joins
Maturitypeak and decline profit, price falls, remainder of ads, competitors attracted to market
Decline stagelow sales, profit, decrease ads, market shrinks
What does the shape of the sales curve depend on?product type, marketing environment influences
Bringing in STPtarget market could change at each stage, marketing mix may also change
Length of stage depends on...many factors e.g. competition. - life cycle caused by strategies of all players in industry - hard to identify stages currently at

Section 4

Question Answer
What is a new product?anything customers perceive as new and different = innovation
Innovation differs in of newness (The more novel the innovation, the slower the diffusion)
Innovation continuum based on...the amount of disruption or change
Continuous innovationa modification of an existing product - does NOT have to learn anything to benefit from it (Faster CPU) - mostly
Dynamically continuous innovationa MAJOR modification of an existing product - do BIT of learning to benefit (mp3 to ipod)
Discontinuous innovationMAJOR changes to the way we live. - requires A LOT of learning to benefit - internet, smartphones, social network
How do we know the 'newness' of a product?Is it new to the world?, new product line? 'taste the difference', an extension? 'cherry coke', improved? 'CPU' re positioned? Skoda
The New product development process (NPD) (7 Steps)...provides a systematic way of screening successful products, reduce new prod failure rates, results in production of marketing plan for each prodct
1 - Idea generationfrom sources such as customers, salespeople e.g. module feedback survey, those with alternative perspective
A focus group is...a form of qualitative research in which a group of people (from same segment) are asked about their perceptions, opinions and beliefs towards prod/service/packaging etc.
2 - Developing the product conceptexpand ideas into complete product concepts, describe features and benefits, evaluate success rate
3 - Developing marketing strategyThink about how it can be introduced to the market place - follow STP approach + 4P
4 - Business analysisEvaluate whether the product is profitable for product mix - consider demand/resources
5 - Technical developmentwork with engineers to refine design and production - prototypes - patent
6 - Test marketTry out marketing plan, 4Ps in small area similar to target market (traditional = expensive and expose product) (simulated = based on historic info)
7 - Commercializationlaunching product - full scale production - distribution (give no time for comp reaction) - advertise - sales and promo
Adoption is...the process by which a consumer/business customer begins to buy and use new goods, services or idea
Diffusion describes how...the use of a product spreads throughout a population - rate at which new products are adopted
6 Stages of adoption 1 - Awarenessconducting mass advertising campaign
2 - Interestprospective adopters start to see how anew product might satisfy their needs, open to info about innovation
3 - Evaluationprospective consumers weighs cost and benefits of new product
4 - Trialdemos, samples
5 - Adoptionfollow up, feedback
6 - Confimationconsumers weights expected vs actual benefit, and cost.
5 stages of Diffusion
Innovatorsare those who purchase products that are untested and expensive (like owning something new and untried e.g. new camera/phone)
Early Adoptersare those who start to show an interest and innovators inform them about the benefits of the product (influential in groups they interact with - seen as experts)
Early Majorityare those who purchase during the growth stage
Late Majorityare those who purchase during the growth stage
Laggardsthose who purchase products at the end of their life cycle

Section 5

Question Answer
Factors affecting rate of adoption (5)(has a major impact on the rate) - factors that can affect the adoption rate of a product
1 - Relative advantageproduct innovation perceived as better than existing alternatives - positively correlated with innovation adoption rate - exists when a new product offers better performance
2 - CompatibilityInnovation is perceived to fit into a persons way of doing things - greater compatibility = more rapid rate of adoption - Overcome incompatibility by advertising (Blu ray disks)
3 - ComplexityMore complex product = slow rate of adoption - overcome perception by demonstrations, personal selling (e.g. iPhone, iOS)
4 - TrialabilityAn innovation can be used on a limited basis prior to making commitments - trials reduces risks of consumer being dissatisfied with product (Microwave 1970, oculus rift, 3d tv in store)
5 - ObservabilityUser or other people can observe positive effects of usage - higher visibility = rapid adoption rate (grapeseed oil, tesla)
Why do most new products fail?Innovation can be costly, high exit rates, failing to offer unique benefits, underestimate competition, design not as good
Up to 90% new products failincorrect position in market, over priced, not advertised, slow timing, distribution issues, overestimated market size