What is a Product Consumer Markets Product Design Process Product Planning Product Mix Unit 3 Product A good service or idea sold to satisfy wantsneeds Can be simple or complex Features ID: 565570
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“Product Development”
What is a Product?Consumer MarketsProduct Design ProcessProduct PlanningProduct Mix
Unit 3Slide2
ProductA good, service, or idea sold to satisfy wants/needsCan be simple or complexFeatures – physical characteristics of product; used to enhance benefits wanted by consumersBenefits
– the value or usefulness a consumer gets from a productConsumers know best what they want!
Marketers are the “eyes, ears, and mouth” of a company. What does this mean?Slide3
How Products are Viewedby Businesses – tangible items their customers buyby Consumers – a means of satisfying their wants/needs (it’s durable, attractive, safe, tasty, convenient, etc).Consumers
buy the idea of what that product will do for them.Consumers decide on a restaurant using factors like menu, taste, speed & quality of service, atmosphere, location, and price.Slide4
Business Consumers vs Final ConsumersSome products are sold to businesses.Some products are sold to consumers.Some products are sold to BOTH.
Ex: Bananas – restaurant, family lunchesWhat other products can you sell to both businesses and consumers?Slide5
Consumer MarketConvenience GoodsShopping GoodsUnsought Goods
Specialty GoodsFinal Consumers –
buy products for personal use.Slide6
Business MarketsCapital EquipmentOperating EquipmentSuppliesRaw Materials
Component PartsBusiness Consumers –
buy goods to use themselves or to use in the making of
other
goods/services for resale.Slide7
Product Design Process**Improvement in design can improve Demand.
Basic product – same as competitors
Enhanced product
Features & Options
Packaging
Image (icon, logo, etc)
Extended product
Services & Warranties
Related items you buy separatelySlide8
Product Planning Strategy
Product’s Life Cycle (or its life span) also helps planning
Consider:
Type of competition in marketplace (direct, indirect, intense, nonexistent).
Economic conditions.
Strengths/Weaknesses of own business.Slide9
PLC StageCharacteristics
Focus on meeting customer interest - features & benefits
Prices are high
Little or no competition
Demand has to be created
Slow sales at first
Customers have to be prompted to try product
No profit
at this stage; limited distribution
Public awareness increases
Sales increase
Costs reduced due to mass production
Profits begin to rise
Competition increases
Price decreases to be competitive
Product Life CycleSlide10
PLC StageCharacteristics
Costs get lower as production increasesSales peak & market is saturatedPrices drop due to competitionBrand & feature differentiation is emphasized Battle to maintain market share
Consumer interest fades
Marketing efforts reduced
Sales decline
Costs of production rise again
Price must be reduced to maintain sales
Little to no profit
Product Life CycleSlide11
TIme
Sales & Profits
Product Life CycleSlide12
Influences on the PLC Keep up with consumer needs (features, etc). Fashion/trends change
12Slide13
Marketing Supports Product DevelopmentCompanies want to build a
“bridge” to reach their potential customers: new product development.Support for this “bridge” comes in 3 forms:
Gathering information to determine wants/needs- (customer surveys & feedback, market research & analysis, etc)
Designing marketing strategies (4Ps)
Testing the strategies before entering marketplace – (prototype, focus groups, limited distribution, etc) Slide14
Companies come up with “NEW” products to keep customers satisfied and to help maintain a profit.
What is “New”?
New … or Modified/Improved?
F
ederal
T
rade
C
ommission regulates use of “new.”
“Entirely new or changed in a noticeable way.”
Six-month time limit
Note
: ____% of new products fail!!!Slide15
Product MixProduct Mix (Assortment) – the combination and make up of all the products a company has to offer.
Includes 3 Parts:Product Line –
group of similar product items (soda).
Can expand # of products easily by:
Varying quantity
– singles, 12-pak, 1liter, 12 oz, etc
Varying quality
– items priced by amount of features & options included; from basic to
fully loaded.Slide16
2. Packaging – for what purpose? Information – identifies product, gives details
Promotion – attractive & attention-gettingConvenience – makes easier to carry and use. Slide17
3. BrandingBrand –
anything that IDs a product or company.Brand Name – NIKEBrand Mark –
Trademark
– legal protection of the brand
Licensed Brand
– well-known name or symbol sold for use on other companies’ products.Slide18
Product Mix StrategiesExpansion – adding additional product items or lines; for current or new customers’ sake; beat competition.Contraction – removal of some items or lines; business decision; losing profitability or lost consumer appeal.
Alteration – make changes to items or lines (style, flavor, packaging, size, pricing, etc).Trading Up – add a higher priced item or line; enhance company image, attract new target market.Trading Down – add a lower priced item or line; attract new target market or meet competition.