Copyright 2000 Prentice Hall9-1 Chapter 9 Creating the Product.

Copyright 2000 Prentice Hall9-1

Chapter 9

Creating the Product


What is a Product? Anything tangible or intangible that,

through the exchange process, satisfies consumer or business customer needs.

Products can be:– physical goods,– services,– ideas,– people, or – places


Product Layers (Fig. 9.1)


Classification of ProductsHow Long the Products Will Last

Durable GoodsProvide Long-Term Benefits(cars, furniture, appliances)

Durable GoodsProvide Long-Term Benefits(cars, furniture, appliances)

Nondurable GoodsProvide Short-Term Benefits

(newspapers, food)

Nondurable GoodsProvide Short-Term Benefits

(newspapers, food)LowInvolvement

Decisions

High InvolvementDecisions


Classification of ProductsHow Consumers Shop for the Product

Shopping ProductsShopping Products

> Considerable time & effort in selection> Moderately brand loyal> Comparison shop

Clothing, appliances, services

Convenience ProductsConvenience Products

> Frequently purchased with little effort> Low priced> Must be convenient

Staples, impulse, emergencySpecialty ProductsSpecialty Products

> Significant purchase efforts> Brand loyalty> Unique characteristics important to buyer

Big Bertha golf club, Rolex

Unsought ProductsUnsought Products

> Little awareness or interest until need arises>Require much advertising & personal selling

Retirement plans, insurance


Classification of Convenience Products

Staples– basic or necessary items that are available

almost everywhere, e.g. milk, bread, gas Impulse Products

– products that people often buy on the spur of the moment, e.g. magazines, gum, candy

Emergency Products– products that people purchase when we’re

in dire need, e.g. bandages, umbrellas


Business-to-Business Products

MRO Products

MRO Products

EquipmentEquipmentComponent PartsComponent Parts

Business ServicesBusiness ServicesRaw MaterialsRaw Materials

Processed Materials

Processed Materials

Products Used in the

Production of Other Goods &

Services


Understanding Innovations

Products that consumers perceive to be new and different from existing products.

Critical to the success of a company because of the:– technological products that are introduced

and become obsolete quickly, and– high cost of new product development and

the higher cost of new product failure, and– contributions to society.


Dynamically Continuous Innovations

Significant Change to an Existing Product; Requires Some Learning

Tapes - CD - DVD

Dynamically Continuous Innovations

Significant Change to an Existing Product; Requires Some Learning

Tapes - CD - DVD

Continuous InnovationsModification to an Existing Product

KnockoffsHoney Nut Cheerios

Continuous InnovationsModification to an Existing Product

KnockoffsHoney Nut Cheerios

Discontinuous InnovationsTotally New Product

Requires Much LearningAirplane, Car, TV

Discontinuous InnovationsTotally New Product

Requires Much LearningAirplane, Car, TV

Types of InnovationsD

eg

ree

of

Ne

wn

ess


Developing New Products

Successful new product introduction is becoming more difficult because:– costs of research and development are

huge so development is limited, and– products are outdated quickly giving less

time to recover R&D costs, and– retailers charge large fees to stock a new

product.


VisionaryPhase

VisionaryPhase

Planning & DevelopmentPlanning &

Development

Testing &Improving the

Product

Testing &Improving the

Product

Stages in New Product Development


Generate IdeasGenerate Ideas

Screen Product Concepts

Screen Product Concepts

Business AnalysisBusiness Analysis

Identify product ideas which will provide customer benefits compatible with company mission.

Estimate potential technical and commercial success.

Estimate potential for profit:– potential demand,–expenditures required,–marketing costs.

Visionary Phase


Commercial Development

Develop a Marketing

Plan

Commercial Development

Develop a Marketing

Plan

Technical Development

Design Product &Manufacturing

Process

Technical Development

Design Product &Manufacturing

Process

Planning and Development


Test MarketingTest MarketingDevelop Evidence of

Potential Successin the Real Market

Test MarketingTest MarketingDevelop Evidence of

Potential Successin the Real Market

ImproveImproveMake Improvements in

Marketing Mix as Needed

ImproveImproveMake Improvements in

Marketing Mix as Needed

Commercial LaunchCommercial LaunchFull-Scale Implementation

of Entire MarketingPlan

Commercial LaunchCommercial LaunchFull-Scale Implementation

of Entire MarketingPlan

Testing and Improving the Product


Adoption and Diffusion Processes

Product Adoption– process by which a

consumer or business customer begins to buy and use a good, service, or idea.

Diffusion of Innovations– process by which the

use of a product spreads throughout a population.


Adoption Pyramid (Fig. 9.4)


Categories of Adopters (Fig. 9.5)


ObservabilityHow visible is the

new product and its benefits?

CompatibilityDoes the new product fit the existing values,customs & practices?

TrialabilityIs the new product easy to sample?

Relative AdvantageDoes the new product

provide superior benefits?

ProductCharacteristics

ProductCharacteristics

Product Factors Affecting the Rate of Adoption

ComplexityIs the new product

easy to understand?


Chapter Summary

Explain the layers of a product. Describe the classification of products. Explain the importance of new products. Describe how firms develop new

products. Explain the process of product adoption

and the diffusion of innovations.

Copyright 2000 Prentice Hall9-1 Chapter 9 Creating the Product.

Documents

n n products

existing products

materials products

classification of products

product slide

ttechnological products

new products n n successful

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