MT 219 Marketing Unit Five New Product Development And Services

New Product Development Process Idea Generation – ideas come from many sources Idea Screening – need to avoid “go” or “no go” error Concept testing – process of consumer feedback Business Analysis – what is the potential for sales, costs, and profits? Product Development – lengthy and expensive Test Marketing – realistic settings Commercialization – when, where, and how

Capitalizing on Existing Products Line Extensions- can be simple or complex Product Modifications -Quality -Function -Aesthetics

Differentiating Products Quality – level and consistency Design and Style Features Customer support Hopefully develop a USP- Unique Selling Proposition

Positioning Where a product lives in a consumers mind relative to competition -Important- This is a perception or feeling of consumer- not important what a marketer thinks it is.

Bases for Positioning Benefits Features Toward competition- amount of distance in consumer’s mind Away from competition- Same as above Into another category-Oatmeal as cholesterol reducer and not hearty cereal User- Remember those variables? Lifestyle- Again, those variables.

Repositioning Can be based on features, product modification, market change, function, etc. Must be done very carefully or customers will be lost- New Coke Examples of successes- Target

Services Intangible products involving a deed, performance, or effort that cannot be physically possessed -Haircuts -Concerts -Tax preparation -Annual doctors’ physicals

Characteristics of Services 1.Intangibility – A service that is not physical and cannot be touched. - Lawyer consulting fee 2.Inseparability – Being produced and consumed at the same time. - Plastic surgery 3.Perishability – The inability of unused service capacity to be stored for future use. - Unused concert tickets for yesterday ’ s Hannah Montana concert. 4.Heterogeneity – Variation in quality. - Customer service at McDonald ’ s. (May get great service today with a certain employee at lunch and horrible service tomorrow with a different employee at breakfast.) Can you think of services that fit each category ?

Issues related to service intangibility Difficult for customers to evaluate No physical possession Difficult to advertise and display Pricing is problematic and subjective Service process not always protected by patents

Issues related to service perishability Services cannot be stored or inventoried Unused capacity is lost forever Demand may be time sensitive Balancing supply and demand is difficult

Issues related to heterogeneity Quality difficult to control Standardization is a problem Services vary from provider to provider Services can vary from the same provider Reputation is crucial Reason for grading rubrics …take subjectivity out.

Issues related to service inseparability Does not allow for mass production Customer participation required Other customers can affect process Difficult to distribute

Any Questions? Thank you for attending! See you next week!