Section 5.1 Product Design

Product Defined Can be tangible or intangible Essential component of the marketing mix Products can be goods or services

Product Item and Line Product Item: Specific model or size of a product Nike Air Flight Shoe is a product item Nike Air athletic shoes are product line

Product Classification Consumer Goods: purchased and used by the ultimate consumer for personal use Business Goods: purchased by organizations for use in their operation Depending on the intended use of the product, the same product could be both a consumer good and a business good

Example Purchase Nike shoes in retail store Shoes considered a consumer good Retail store buys Nike shoes from outlet Shoes considered a business good You buy from outlet and they are a consumer good

Point of Difference Organizations design their products to make them stand out in the market place They need to have a point of difference A unique product characteristic or benefit that sets the product apart from a competitor’s product Product planning is crucial to the success of a product

Steps in New Product Development Step 1: SWOT Analysis Strengths Weaknesses Opportunities Threats Step 2: Idea Generation New ideas come from many sources Consumers Employees Research and Development The competition

Steps in New Product Development Step 3: Screening and Evaluation Evaluation and screening of the new product Focus Group Panel of 6-10 consumers who discuss their opinions about a topic under the guidance of a moderator Moderator asks specific questions to get the panel members to talk about their ideas and opinions Step 4: Business Analysis Financial Aspects of making and marketing the product are assessed

Steps in Product Development Step 5: Development Development of actual product Prototype: the first model of the product Companies test its production capabilities to see if the product can be produced at a reasonable cost Step 6: Test Marketing Product is tested in the market place. Product is offered for sale in a small geographic area Marketers test all aspects of the marketing mix during this step (product, place, price and promotion)

Steps in Product Development Step 7: Commercialization A process that involves producing and marketing a new product The company offers the product in the marketplace for sale to the final consumer Regional rollouts: involve launching a new product in certain geographic areas over a set time period