BADM1103F07Ch14

1/37Product Development2/37Product Development•Value•Good quality at a fair price•Total Production Offer•Everything that consumers evaluate when deciding whether or not to buy something -the value package 3/37Product Development•Attributes•Tangibleproduct packaging•Intangibleimage created by advertising guarantee reputation of the producer 4/37Product Line and Product Mix•Product Line•A group of products that are physically similar or are intended for a similar market•Product Mix•The combination of product lines offered by a manufacturer5/37Product Development (cont.)•Product Differentiation•The creation of real or perceived product differences6/37Classes of Consumer Goods and Services•Convenience Goods and Services•Products that the consumer wants to purchase frequently and with a minimum of effortcandy, milk, snacks, gas, and bankinglocation, brand awareness, and image7/37Classes… (cont.)•Shopping Goods and Services•Products that the consumer buys only after comparing value, quality, price, and style from a variety of sellerssold through shopping centers where consumers can make comparisonsclothes, shoes, appliances, and auto repair services8/37Classes… (cont.)•Specialty Goods and Services•Consumer products with unique characteristics and brand identitymarketed through specialty magazinesspecialty foods, expensive wine, and jewelry9/37Classes… (cont.)•Unsought Goods and Services•Products that consumers are unaware of, haven’t necessarily thought of buying, or find that they need them to solve an unexpected problememergency car-towing servicesbest sold through personal selling 10/37Classes… (cont.)•Industrial Goods•Products used in the production of other products; also called B2B goodslikely to be sold by salespeople or on the Internet11/37Classes… (cont.)•Categories•Installationsnew factories and heavy equipment•Capital Itemsproducts that last a long time and cost a lot of money •Accessory equipmentcapital items that are not quite as long lasting or expensive as installations•computers and photocopy machines12/37Packaging•Packaging•Plays an important role in customers’ evaluation of the value package•Can change and improve the basic productvisibilityusefulnessattractiveness 13/37Packaging (cont.)•Fair Packaging and Labeling Act•Packaging•Protects the goodshelps handling and storagedeters theftmust be easy to open14/37Packaging (cont.)•Attracts attention•Describes the content•Explains the benefits•Provides information•Indicates price, value, uses15/37Branding•Brand•A name, symbol, or design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors16/37Branding (cont.)•Trademark•A brand that has been given exclusive legal protection for both the brand name and the pictorial design17/37Brand Categories•Manufacturers’ Brand Names•Brand names of manufacturers that distribute products nationally•Dealer (Private-Label) Brands•Products that do not carry the manufacturer’s name, but carry a distributor or retailer’s name instead18/37Branding (cont.)•Generic name vs. Brand Names•nylon, escalator, kerosene, and zipper19/37Brand Categories (cont.)•Generic Goods•Nonbranded products that usually sell at a sizable discount compared to national or private brands•Knockoff Brands•Illegal copies of national brand name goods20/37Brand Equity and Loyalty•Brand Equity•A combination of factors that people associate with a given brand name •Brand Loyalty•The degree to which customers are satisfied, like the brand, and are committed to further purchases21/37Brand… (cont.)•Brand Awareness•How quickly or easily a given brand name comes to mind when a product category is mentioned•Perceived Quality•Influenced by price, appearance, and reputation22/37Brand… (cont.)•Brand Preference•Brand Insistence•Brand Association•The linking of a brand to other favorable images23/37Brand… (cont.)•Brand Manager•A manager who has direct responsibility for one brand or one product line•Responsible for all the elements of the marketing mix 24/37New Product Development•Reasons for failure of new products (86% fail)•Poor positioning•Not enough differences from competitors•Poor packaging25/37Product Development Process•Idea Generation•Product Screening•Product Analysis•Development•Testing•Commercialization26/37Product Development Process•Product Screening•A process designed to decide among the new-product ideas •Product Analysis•Making cost estimates and sales forecasts to get a feeling for profitability of new-product ideas27/37Product Development Process•Product Development and Testing•Product idea –product concepts•Prototype•Concept testingtaking a product idea to consumers to test their reactions 28/37Product Development Process•Commercialization•Promoting the product to distributors and retailers to get wide distribution•Developing advertising and sales campaigns to generate and maintain interest in the product29/37Product Life Cycle•Product Life Cycle•Different stages in the product life cycle call for different strategies•Each stage calls for multiple marketing mix changes30/37Product Life Cycle (cont.)31/37Pricing•Pricing Strategies•Achieving a target profit or return on investment•Building traffic•Achieving greater market share•Creating an image•Furthering social objectives32/37Pricing (cont.)•Cost-based Pricing•Demand-based Pricing•Target Costing•Designing a product so that it satisfies customers and meets the profit margins desired by the firm 33/37Pricing (cont.)•Competition-based Pricing•A pricing strategy based on what all the other competitors are doing•Price Leadership•A procedure by which one or more dominant firms set the pricing practices that all competitors in an industry follow 34/37Break-Even Analysis•Fixed Costs•Remain the same no matter how many products are manufactured/sold •Variable Costs•Break-Even Point (BEP)•Revenues from sales equal all costs35/37Pricing (cont.)•Skimming Price Strategy•A product is priced high to make optimum profit while there is little competition•Penetration Strategy•A product is priced low to attract more customers and discourage competitors36/37Pricing Strategies Used by Retailers•Everyday Low Pricing (EDLP)•Prices lower than competitors and no special sales•High-Low Pricing Strategy•Setting prices higher than EDLP stores, with many special sales37/37Nonprice Competition•Marketers may compete on product attributes other than price•Short-term and long-term pricing objective