module 6 ppt

8/7/2019 module 6 ppt.

http://slidepdf.com/reader/full/module-6-ppt 1/19



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



` 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



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.



`̀ 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



` 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.



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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10

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



` 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



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



` 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



`̀ 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.



`̀ 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



` 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.

module 6 ppt

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