1. Chapter 9: Designing and Managing Products
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

2. What is a Product?
A Product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.
Includes:
Physical Objects
Services
Events
Persons
Places
Organizations
Ideas
Combinations of the above
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

3. Facilitating Products
Core Product
Facilitating Products
-must be present for the gust to use the core service
Supporting Products
-Add value to the core product
Augmented Product
-physical environment, accessibility, interactions, physical environment
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

4. Chapter 9: Figure 9-1: Product levels
Source: Gronroos, “Developing the Service Offering - A source of Competituive Advantage,” in Add Value to Your Service, C. Suprenant, ed., Chicago: American Marketing Association.
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

5. Elements that enhance positioning and create augmented products
Atmosphere
Customer interaction with service delivery system
Customer interaction with other customers
Customer co-production
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

6. Brand Brands are among a company’s most valuable assets
A Brand represent what the is and stands for
A Brand implies trust , consistency, and a defined set of expectations
The strongest brands own a place in the customer’s mind
From Scott Davis, Brand Asset Management
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

7. Branding Advantages of Brand Names Brand Equity Consistency
Quality & Value
Attributes
Identification
Advantages of
Brand Names
Brand
Equity
High Brand
Loyalty
Strong Brand
Association
Name Awareness
Perceived Quality
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

8. Conditions That Support Branding
Product is easy to identify
Product is perceived to be the best value for the price
Quality and standards are easy to maintain
Demand is enough to support branding effort
There are economies of scale
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

9. New Product Development Process
Marketing
Strategy
Development
Business
Analysis
Product
Development
Concept
Development
and Testing
Market
Testing
Idea
Screening
Commercialization
Idea
Generation
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

10. New Product Development Process Step 1. Idea Generation
Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From:
Customers
Competitors
Distributors
Suppliers
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

11. New Product Development Process Step 2. Idea Screening
Process to spot good ideas and drop poor ones as soon as possible.
Many companies have systems for rating and screening ideas which estimate:
Market Size
Product Price
Development Time & Costs
Unit Costs
Rate of Return
Then, the idea is evaluated against a set of general company criteria.
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

12. New Product Development Process Step 3. Concept Development
1. Develop New Product Ideas
into Alternative Detailed
Product Concepts
New Product Development Process Step 3. Concept Development
2. Concept Testing - Test the
New Product Concepts with
Groups of Target Customers
3. Choose the One That Has the
Strongest Appeal to Target
Customers
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

13. New Product Development Process Step 4. Marketing Strategy
Part One Describes Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part Two Describes First-Year:
Product’s Planned Price
Distribution
Marketing Budget
Part Three Describes Long-Term:
Sales & Profit Goals
Marketing Mix Strategy
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

14. Step 5. Business Analysis Step 6. Product Development
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
Step 5. Business Analysis Step 6. Product Development
If No, Eliminate
Product Concept
If Yes, Move to
Product Development
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

15. Product Development Process Step 7. Test Marketing
Budget Levels
Product
Test Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings.
Atmosphere
Positioning
Branding
Advertising
Elements that May be Test Marketed by a Company
Pricing
Location
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

16. New Product Development Process Step 8. Commercialization
Commercialization is the Introduction of the New Product into the Marketplace.
When is the
Right Time to
Introduce
Product?
Where to
Launch a
New
Product?
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

17. Product Development through Acquisition
Large companies will sometimes buy a small companies rather than develop their own new companies.
Sometimes, companies purchase distressed chains to turn them around. For example, Pepsico purchased KFC and Taco Bell.
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

18. Sales and Profits Over the Product’s Life From Inception to Demise
Product Life Cycle
Sales and Profits Over the Product’s Life From Inception to Demise
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth
Maturity
Decline
Losses/
Investments ($)
Sales and
Profits ($)
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product Policy HOA Chapters 10 and 12

19. Product Deletion Process
Source: Martin Bell, Marketing Concepts and Strategy, 3rd ed., p.267, 1979, Houghton Mifflin Company; used by permission, Mrs.. Marcellette (Bell) Chapman.
Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458