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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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Presentation on theme: "McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved."— Presentation transcript:

1 McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Recognize the terms that pertain to products and services. LO1 Identify the ways to classify consumer and business products. LO3 LO2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO: Describe four unique elements of services. LO4 Explain the significance of newness and consumer learning to new products and services. 9-2

3 Describe the factors affecting the success or failure of a new product or service. Explain the purposes of each step of the new-product process. LO6 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO: LO5 9-3

4 APPLES NEW-PRODUCT INNOVATION MACHINE 9-4

5 Apples Innovation Machine iCloud: Where the Digital Lifestyle is Heading APPLES NEW PRODUCTS 9-5

6 WHAT ARE PRODUCTS AND SERVICES? A LOOK AT GOODS, SERVICES, AND IDEAS LO1 Goods Services Nondurable Goods Durable Goods Products Ideas 9-6

7 FIGURE 9-A FIGURE 9-A The service continuum shows how offerings can vary in their balance of products and services 9-7

8 WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING PRODUCTS LO2 Business Products Consumer Products 9-8

9 WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING PRODUCTS LO2 Consumer Products Convenience Products Shopping Products Specialty Products Unsought Products 9-9

10 FIGURE 9-1 FIGURE 9-1 How a consumer product is classified affects which products consumers buy and the marketing strategies used 9-10

11 WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING PRODUCTS LO2 Business Products Components Support Products Derived Demand Supplies Industrial Services Installations Accessory Equipment 9-11

12 WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING SERVICES LO2 Delivery by People or Equipment Delivery by Business Firms or Nonprofit Organizations Delivery by Government Agencies 9-12

13 FIGURE 9-2 FIGURE 9-2 Services can be classified as equipment-based or people-based 9-13

14 WHAT ARE PRODUCTS AND SERVICES? THE UNIQUENESS OF SERVICES LO3 Four Is of Services Intangibility Inseparability Inconsistency Inventory Idle Production Capacity Idle Production Capacity Product/Service Offering Core Supplementary 9-14

15 WHAT ARE PRODUCTS AND SERVICES? THE UNIQUENESS OF SERVICES LO3 Assessing Service Quality Gap Analysis Monitoring Service Failure 9-15

16 FIGURE 9-3 FIGURE 9-3 The five dimensions of service quality 9-16

17 WHAT ARE PRODUCTS AND SERVICES? THE UNIQUENESS OF SERVICES LO3 Customer Contact Audits Customer Contact Audit Service Encounters A Customers Car Rental Activities 9-17

18 FIGURE 9-B FIGURE 9-B Customer contact audit for a car rental agency (green boxes = customer activity; orange boxes = employee activity) 9-18

19 Product Item Product Line Product Mix Stock Keeping Unit (SKU) WHAT ARE PRODUCTS AND SERVICES? PRODUCT ITEMS, LINES, MIXES, CLASSES AND FORMS LO3 9-19

20 WHAT ARE PRODUCTS AND SERVICES? PRODUCT ITEMS, LINES, MIXES, CLASSES AND FORMS LO3 Product Class Product Form 9-20

21 Little Remedies How does a broad product line benefit both consumers and retailers? LO3 9-21

22 NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT? LO4 Newness: Compared to Existing Products 9-22

23 MARKETING MATTERS Feature Bloat: Geek Squad to the Rescue! LO4 9-23

24 Newness: The Consumers Perspective Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation Newness in Legal Terms NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT? LO4 9-24

25 FIGURE 9-4 FIGURE 9-4 The degree of newness in a new product affects the amount of learning effort consumers exert to use the product 9-25

26 Product Line Extension Jump in Innovation Newness: The Organizations Perspective NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT? LO4 9-26

27 Brand Extension True Innovation Newness: The Organizations Perspective NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT? LO4 9-27

28 Purina Elegant Medleys What are the potential benefits and dangers of product line extensions? LO4 9-28

29 FIGURE 9-C FIGURE 9-C What it takes to launch one commercially successful new product 9-29

30 FIGURE 9-D FIGURE 9-D What separates new-product winners and losers 9-30

31 Marketing Reasons for New-Product Failures Insignificant Points of Difference No Economical Access to Buyers Not Satisfying Customer Needs on Critical Factors Incomplete Market and Product Protocol Before Product Development Starts NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHY PRODUCTS & SERVICES SUCCEED OR FAIL LO5 9-31

32 Marketing Reasons for New-Product Failures Bad Timing Poor Product Quality Poor Execution of the Marketing Mix Too Little Market Attractiveness NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHY PRODUCTS & SERVICES SUCCEED OR FAIL LO5 9-32

33 Not Listening to the Voice of the Consumer Skipping Stages in the New-Product Process What Were They Thinking? Organizational Problems in New-Product Failure Marketing a Poorly Conceived Product Too Quickly Encountering Groupthink in Meetings Not Learning Lessons From Past Failures Avoiding the NIH Problem NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHY PRODUCTS & SERVICES SUCCEED OR FAIL LO5 9-33

34 Fingos & Thirsty Dog/Thirsty Cat Why did these products fail? LO5 9-34

35 Avert, Monster in My Room, and Life Saver Why did these products fail? LO5 9-35

36 USING MARKETING DASHBOARDS Which States are Underperforming? Annual Percent Change in Unit Volume by State > 10% 0 to 10% < 0% Change in Growth LO5 9-36

37 FIGURE 9-5 FIGURE 9-5 Seven stages in the new- product process leading to success 9-37

38 THE NEW-PRODUCT PROCESS STAGE 1: NEW-PRODUCT STRATEGY DEVELOPMENT LO6 New-Product Process SWOT Analysis/Scanning Conducted New-Product Strategy Development Strategic Role Defined Protocol Defined Stage Gate Process Service Development Difficult 9-38

39 FIGURE 9-E FIGURE 9-E Strategic roles of most successful new products 9-39

40 THE NEW-PRODUCT PROCESS STAGE 2: IDEA GENERATION LO6 Employee and Co-Worker Suggestions Customer and Supplier Suggestions Crowdsourcing Idea Generation Open Innovation Tide Pods Ad 9-40

41 THE NEW-PRODUCT PROCESS STAGE 2: IDEA GENERATION LO6 Outside Labs Industrial Design Research & Development Laboratories 9-41

42 THE NEW-PRODUCT PROCESS STAGE 2: IDEA GENERATION LO6 Inventors Smaller Firms Universities Competitive Products 9-42

43 THE NEW-PRODUCT PROCESS STAGE 3: SCREENING AND EVALUATION LO6 Internal Approach External Approach Concept Tests Screening and Evaluation Customer Experience Management (CEM) 9-43

44 THE NEW-PRODUCT PROCESS STAGE 4: BUSINESS ANALYSIS LO6 Prototype Business Fit Capacity Management Off-Peak Pricing Business Analysis 9-44

45 THE NEW-PRODUCT PROCESS STAGE 5: DEVELOPMENT LO6 Service Encounters Example: Chobani Yogurt Safety Tests Development 9-45

46 MARKETING MATTERS Marissa Mayer: The Talent Behind Googles Familiar White Home Page LO6 9-46

47 THE NEW-PRODUCT PROCESS STAGE 6: MARKET TESTING LO6 Simulated Test Markets (STMs) Test Marketing When Test Markets Dont Work Market Testing Standard Test Markets Controlled Test Markets 9-47

48 THE NEW-PRODUCT PROCESS STAGE 7: COMMERCIALIZATION LO6 Burger Kings French Fries Risks with Grocery Products Slotting Fee Failure Fee Commercialization Regional Rollouts 9-48

49 Speed as a Factor in New-Product Success Time to Market (TtM) Parallel Development Fast Prototyping THE NEW-PRODUCT PROCESS STAGE 7: COMMERCIALIZATION LO6 9-49

50 GENERAL MILLS WARM DELIGHTS : INDULGENT, DELICIOUS, AND GOOEY! VIDEO CASE

51 VIDEO CASE 9 WARM DELIGHTS 1. What is the competitive set of desserts in which Warm Delights is located? 9-51

52 VIDEO CASE 9 WARM DELIGHTS 2. (a) Who is the target market? (b) What is the point of difference on the positioning for Warm Delights? (c) What are the potential opportunities and hindrances of the target market and positioning? 9-52

53 VIDEO CASE 9 WARM DELIGHTS 3. (a) What marketing research did Vivian Callaway execute? (b) What were the critical questions that she sought research and expert advice to get answers to? (c) How did this affect the products marketing mix price, promotion, packaging, and distribution decisions? 9-53

54 VIDEO CASE 9 WARM DELIGHTS 4. (a) What initial promotional plan directed to consumers in the target market did Callaway use? (b) Why did this make sense to Callaway and her team when Warm Delights was launched? 9-54

55 VIDEO CASE 9 WARM DELIGHTS 5. If you were a consultant to Vivian Callaway, what product changes would you recommend to increase sales of Warm Delights? 9-55

56 Product A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers needs and is received in exchange for money or something else of value. 9-56

57 Services Services are the intangible activities or benefits that an organization provides to satisfy consumers needs in exchange money or something else of value. 9-57

58 Consumer Products Consumer products are products purchased by the ultimate consumer. 9-58

59 Business Products Business products are products organizations buy that assist in providing other products for resale. Also called B2B products or industrial products. 9-59

60 Four Is of Services The four Is of services consists of the four unique elements that distinguish services from goods: intangibility, inconsistency, inseparability, and inventory. 9-60

61 Idle Production Capacity Idle production capacity occurs when the service provider is available but there is no demand for the service. 9-61

62 Product Item A product item is a specific product that has a unique brand, size, or price. 9-62

63 Product Line A product line is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range. 9-63

64 Product Mix A product mix consists of all of the product lines offered by an organization. 9-64

65 New-Product Process The new-product process consists of the seven stages an organization goes through to identify business opportunities and convert them to salable products or services. 9-65

66 Customer Experience Management (CEM) Customer experience management (CEM) is the process of managing the entire customer experience within the firm. 9-66


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