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					CHAPTER 11 AND 12



                                           PRODUCT
                                           The First of the Four “Ps”
                                           of the Marketing Mix




Video for Windows - Creative Labs CD-ROM


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        What is a product?
   Physical objects
   Services
   People’s expertise
   Places
   Membership in an organization
   Ideas
    What is a product?

   “A product is anything that can be
    offered to a market for attention,
    acquisition, use, or consumption
    that might satisfy a want or need.”
   “A product may be defined as
    everything, both favorable or
    unfavorable, that a person or
    organization receives in an
    exchange.”
     Total Product includes:
   Image of the retail store
   Service before and after sale
   Color
   Attachments
   Image of the brand warranty
   Packaging
   Instructions
               The Product


            Core
           Product

          Actual Product

            Augmented Product

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Product     Potential Product
                        The Core Product

             Basic benefits
               Transportation
               Carrying cargo
               Pulling
                capacity
               Excitement
               Image
                enhancement

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Product
                             Actual Product
             Features
             Package
             Brand
             Quality
             Appearance
             Engine size
             Color
             Body styling
             Interior & exterior design
Gifford      Options available
Product
                      Augmented Extras

             Warranty
             Maintenance/service
              contract
             Delivery
             Credit/Financing
             Dealer parts & labor
              department
             Free lubrication & oil
              change
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Product      Get-out-of-jail-free
              card
          Marketers should NEVER sell
           products to consumers!!!
             People buy
              holes, not drills!

             Fashion, status,
              reference
              group’s
              approval, and
              warmth, but not
              coats!
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Product
          Types of Consumer Products

  •Convenience        GOODS - SERVICES
                        CONTINUUM
                       • DURABLE GOODS
  •Shopping

                     •NONDURABLE GOODS
  •Specialty

                              •SERVICES
  •Unsought
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Product
                TYPES OF BUSINESS
                    PRODUCTS
             Installation            •Farm
             Accessories             •Natural

             Raw materials           •Parts
             Components              •Materials
             Professional services
                                      •Maintenance
             Supplies
                                      •Repair
                                      •Operating
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Product
What is a new product?
 (Management Perspective)
       New-to-the-world products
       Product category extensions
       Product line extensions
       Product improvements
       Cost reductions
       Repositioning
               What is a new product?
                  (Consumer Perspective)

             Unique and unfamiliar to
              consumers (Discontinuous
              Innovation)
             Significantly new, but familiar in
              form or use to the consumer
              (Dynamic Continuous Innovation)
             Improvements on an existing
              product or service (Continuous
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Product       Innovation)
Product Assortment
    strategies

   Depth
   Width
   Consistency/Variety
Product lines vs Product mix
  [ extensions & contradictions]

        PRODUCT MIX = All products sold by a
         specific company
        PRODUCT LINE = Products related by
         use or nature
            PRODUCT LINE EXTENSIONS =
             products added to an existing product
             line (Mach 3 razor)
            PRODUCT LINE CONTRADICTIONS
             = Existence of excessive variations
             within a product line (6 sizes of Heads
             & Shoulders Shampoo or 13 flavors of
             ice tea)
                Newness, Technology, Risk
                         Model
      HIGH

                                                  •PRODUCT CATEGORY
                                                  EXTENSION
                                                             •NEW-TO-THE-
               •REPOSITIONING                                     WORLD PRODUCTS
               EXISTING PRODUCTS
                                               •PRODUCT LINE
                                               EXTENSIONS
                                  •PRODUCT IMPROVEMENTS
      LOW
                      •COST REDUCTIONS
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Product      HIGH    Technology Similarity to Existing Products       LOW
                    CHARACTERISTICS OF A
                   POTENTIALLY SUCCESSFUL
                     PRODUCT INCLUDE...
             RELATIVE ADVANTAGE is an
              enhanced bundle of benefits or
              clear-cut advantages over
              existing offerings
             COMPATIBILITY WITH
              EXISTING CONSUMPTION
              PATTERNS requires similar
              usage, consumption behaviors,
              values, attitudes, beliefs,
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              tastes,etc. as existing offerings
Product
                        CHARACTERISTICS OF A
                       POTENTIALLY SUCCESSFUL
                         PRODUCT INCLUDE...
             TRIALABILITY is the opportunity
              for buyer testing through sampling
              or divisibility of the product
             OBSERVABILITY is the
              opportunity for buyers to see the
              newness
             SIMPLE TO UNDERSTAND, USE,
              OPERATE, or provides a
              significant benefit that offsets the
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Product
          REASONS FOR PRODUCT
           FAILURES INCLUDE......
              Failure to satisfy the
               previous five conditions
              Inadequate or superior
               Planning
              Poor execution
              Technical problems
              Poor timing
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Product
          LET’S TRY APPLYING THESE
                  CONCEPTS
          Based upon the articles you have read about
          bicycle innovations, design the next
          breakthrough bike for the advanced, on-
          road, recreational buyer. Join into groups of
          not more than five individuals WHO YOU
          DO NOT KNOW and create the physical
          product. Be as specific as possible. What is
          the core, actual, augmented and planned
          product? Be sure to start with an existing
          problem and a benefit that will solve this
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          problem. First define your target market!
Product
                 PRODUCT PORTFOLIO
                     CONCEPT
         The PPC stresses that the cash flows
          for the complete mix of products
          should be considered rather than
          concentration on isolated problems of
          the individual products.
            Yes….but




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Product
                   THE GOODS-SERVICES
                       CONTINUUM
          SERVICES        NONDURABLE       DURABLE
                           GOODS           GOODS

           •Dental care    •Chewing gum     •Autos
           •Tax advice     •Paper towels    •Chair
                           •Soap
           •Education                       •Snow shovel



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Product
          Product Obsolescence

              Technical
               obsolescence
              Fashion
               obsolescence
              Functional
               obsolescence

              Planned vs
               unplanned
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Product        obsolescence
                    PRODUCT’S
              ENVIRONMENTAL IMPACT
                   AND SAFETY
             Biodegradability
             Secondary use
             Pollution potential
             Recyclable
             Use of natural
              resources
             Child safety
             Protection against
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              wrongful use of
Product       product
          HOW DOES A MARKETER USUALLY GO
          ABOUT DEVELOPING A NEW PRODUCT
            CONCEPT: A FIVE STEP PROCESS

          IDEA GENERATION
           SCREENING
           BUSINESS ANALYSIS
          DEVELOPMENT
           COMMERCIALIZATION


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Product
             A planned, ongoing          Product
              process                      development
             Primary research             department
             Secondary research          Consultants
             Marketing intelligence      General public
             Employees, channel
              members, competitors,
              customers
             Brainstorming
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Product
             Clear definition of      Do we have the
              SWOT                      resources to
             What business             successfully
              are we in?                introduce the
             Corporate goals           product?
              and objectives           Potential financial
             Is there a real           payoff (ROE,ROI,
              need for the              GMROI, BEP,
              product?                  ROS)
             Stakeholder              Compatibility with
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              concept testing           existing products?
Product
             Tactical Plans           What impact
             Product features          would the new
             Market and                product have on
              production research       TOTAL sales,
                                        profits, market
             Sales and profit          share, and ROI
              forecasts                 (cannibalization)?
             Resource                 Would current
              requirements              stakeholders
             What is the likely        benefit from the
Gifford       demand for the            product?
Product
              product?                             CONTINUED -->
             Impact on image and
              overall image?
             How might competitor’s
              respond?
             What is the risk of
              failure? Is the
              company willing to take
              the risk?
             New facilities needed?
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Product
             Creation of prototype        Supply chain
             Production engineering        development
             Continued R & D              Final government
                                            approvals if
             Concept testing with          required
              prototypes
                                           ------------
             Decisions concerning
              pricing, promotion, and      Test marketing
              distribution                  (field or in-house)

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Product
                         Field Testing
             Similarity to planned            Availability of
              distribution outlets              research and audit
             Relative isolation from           services
              other cities                     Freedom from
             Availability of appropriate       unusual influences
              media                            Stability of year
             Representation                    round sales
              demographics
                                            TOP TEN TEST CITIES IN USA
             No atypical purchasing
                                            •Detroit       •Indianapolis
              habits
                                            •St. Louis     •Philadelphia
             Not easily “jammed” by
              competitors                   •Charlotte     •Wilmington, NC
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Product
                                            •Fort Worth    •Cincinnati
                                            •Kansas City   •Nashville
             Full scale
              production and
              distribution
             Local, regional,
              national or
              international
              rollout
             Measurement
              and feedback of
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Product
              forecasts and
              benchmarks
          Your new idea ???
          Join a group of five people YOU DO NOT
          KNOW and do some brainstorming
          concerning a new product for Jetski to
          produce. This should be a new concept in
          boating. Come to a collective agreement on
          the best idea after you have at least 15 on the
          table. Think about the process outlined
          above. Do you think this idea will make it to
          the commercialization stage? Why?


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Product
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Product
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Product
                 TYPES OF BRANDS

             MAUFACTURER’S BRANDS = Name is
              owned and advertised by the
              manufacturer or under their guidelines

             DISTRIBUTOR’S OR PRIVATE
              BRANDS = Name is owned and
              controlled by a wholesaler or retailer       Sears
                Private Labels
                Private Stock
                “Generic”
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Product                                                Black & Decker
                          BRANDING DEFINITIONS

             Brand: Any name, term, symbol, sign, design,
              sound, or unifying combination of these that
              identifies one product from another competitive
              product
             Brand Name: the verbal part of the brand
             Logo: a brand name or company name written in
              a distinctive way
             Trademark: A legally protected brand name or
              brand mark. A registered trademark gives a
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Product       marketer proprietary rights to a symbol or name.
                         BRANDING DEFINITIONS

             Service mark: provides the same
              identifying function for services that a
              trademark provides for goods. It can
              also be legally protected by registration
             Generic Name: describes a product or
              an item that is, or has become part of our
              standard vocabulary (scotch tape,
              kerosene, linoleum)

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Product
              SELECTING A BRAND NAME
             Easy to remember and pronounce
             Short and distinctive
             Invokes a positive connotation
             Suggests product function
             Suggests an image
             Communicates attributes and benefits
             Communicates something about the users
             Avoids linguistic traps
             Translates globally well
                                               Jiffy Cake Mix
                                              Passion Cologne
                                              Dust Buster
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Product
          BREADTH OF BRAND NAMES
             FAMILY: a single brand name for a product line
              (Campbell’s Soups)
             INDIVIDUAL: separate brand names for items within a line
              (Snickers, Milky Way, Three Musketeers)

             COMBINATION OF ABOVE: (Kellogg’s Rice Krispies)
             WORLD: ( Levi’s, Marlboro, Coca-Cola )

             Concept of Co-branding

             Brand Equity = Market share or profit margin increases
              due to goodwill that may be licensed to other firms
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Product
          PACKAGING AND LABELING

                Packaging Requirements: See Handout
                Labeling
                   Persuasive labeling
                   Informational Labeling
                       Optional

                       Required by law

                       Universal Product Codes (UPS)

                Warranties (written guarantee)
                   Express (limited or unlimited)
                   Implied
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Product
                          Packaging and Labeling

             In groups of five, take the
              product, package, and label
              you have been given in class
              and redesign the name,
              packaging and labeling. Be
              sure to refer to your notes.
              You will then be asked to
              report to the class on your
              ideas.
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Product
                PRODUCT LIFE CYCLE
             The concept of the PRODUCT LIFE CYCLE is an
              extremely important topic. However, due to a
              need to illustrate many of the dynamics of the
              model, we will use the chalkboard and
              overheads. Key topics will include…
                     The Adoption Process
                     The Diffusion Process
                     Profit and Sales Curves
                     Fads, fashions and styles
                     The marketing mix at each stage
                     Strategic marketing implications
Gifford              Three “Trickle” theories
Product

				
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