1. CHAPTER 8 Creating the Product
M A R K E T I N G
Real People, Real Choices
CHAPTER 8 Creating the Product

2. Chapter Objectives
Explain the layers of a product
Describe the classifications of products
Explain the importance of new products
Describe how firms develop new products
Explain the process of product adoption and the diffusion of innovations

3. The Core Product
Consists of all the benefits the product will provide for consumers or business customers
A customer purchases a 1/2” drill bit. What does he want?
A 1/2” hole!
Marketing is about supplying benefits, not products

4. The Actual Product
Consists of the physical good or delivered service that supplies the desired benefit
Example:
A washing machine’s core product is the ability to get clothes clean, but the actual product is a large, square, metal apparatus
Actual product also includes appearance, styling, packaging, & the brand

5. The Augmented Product
Consists of the actual product plus other supporting features such as warranty, credit, delivery, installation, & service
Have you heard: “sell the sizzle not the steak?”

6. Classifying Consumer Products
By how long they last
Durable
Nondurable
By how consumers buy them
Convenience
Shopping
Specialty
Unsought

7. Classifying Business Products
By how products are used
Equipment
Maintenance, repair, operating
Raw materials
Processed materials
Specialized services
Component parts

8. Convenience Products
Good or service that consumers purchase frequently with a minimum of comparison and effort
Types of convenience products
staples
impulse products
emergency products

9. Shopping Products
Good or service for which consumers will spend time & effort gathering information on price, product attributes, & product quality
Consumers compare alternatives before purchase
Types of shopping products
attribute-based shopping products
price-based shopping products

10. Specialty Products
Goods or services bought with much consumer effort in an extended problem-solving situation
Consumers insist upon a particular item and will not accept substitutes
Rolex Watch: real or fake?

11. Unsought Products
Goods or services for which a consumer has little awareness or interest until a need arises
Require a good deal of advertising or personal selling to interest people
1-800-Metlife

12. It’s New and Improved
What is a new product?
According to the FTC, a new product is one that is entirely new or changed significantly and that product may be called new for only six months
From a marketing perspective, new is anything a customer perceives as new & different

13. New Product Development
Idea Generation
Product Concept Development & Screening
Marketing Strategy Development
Business Analysis
Technical Development
Market Testing
Commercialization

14. Step 1: Idea Generation
Sources of new ideas
customers
salespeople
service providers
anyone with direct customer contact

15. Step 2: Product Concept Development
Expand ideas into more complete product concepts
Describe what features the product should have and benefits those features will provide for consumers
Evaluate the chance for technical and commercial success

16. Step 3: Marketing Strategy Development
Develop a marketing strategy that can be used to introduce the product to the marketplace
Identify the target market
Estimate its size
Determine how the product can be positioned
Plan pricing, distribution, and promotion expenditures necessary for roll-out

17. Step 4: Business Analysis
Assess how the new product will fit into the firm’s total product mix
Evaluate whether the product can be a profitable contribution for the organization’s product mix

18. Step 5: Technical Development
Work with engineers to refine the design and production process
Develop one or more prototypes
Evaluate prototypes with prospective customers
If applicable, apply for a patent

19. Market Testing
Try out the complete marketing plan (product, price, place, and promotion) in a small geographic area that is similar to larger target market
Traditional test marketing is expensive and gives competition a chance to evaluate the new product
Simulated test markets eliminate competitive viewing and cost less

20. Commercialization
Launch the product!
Full scale production
Distribution
Advertising
Sales promotion
and more

21. Issues for Discussion
Should knockoffs be illegal? Who is hurt by knockoffs? Is the marketing of knockoffs good or bad for consumers?
What are some new products that have made our lives better? That have been harmful to consumers or to society? Should there be a way to monitor new products that are introduced?