2beproduct planning & development9-y6
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Product Planning
andDevelopment
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Chapter GoalsTo gain an understanding of: The meaning of total product and new
product Classification of business and consumer products
and its relevance to marketing planning Product innovation The product-development process When to add new products to a product line The adoption and diffusion process for products Organizational structures for product planning
and development
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What is a Product? it is more than physical products; includes
services, places, persons, and ideas it is easy to visualize the products of Esso, but
more difficult to describe those of theNewYork Symphony, UNICEF, or MEG
Some products are sold only to consumers,while others are sold to organizations
Whether a product is a consumer product or abusiness product depends on how it is used
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Sellers services
Productquality Physical
characteristicsof goods
Price
Brand
Design
PackagingProductwarranty
Sellers reputation
Colour
The Total Product
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Consumer GoodsClassesConsumer products can be classified by thebuying behaviour of the consumers: Convenience goods are bought with little time
and effort, such as milk, bread, a chocolate bar. Shopping goods are those where extensive
comparison is the norm-- cars, furniture,clothes.
Specialty goods are those for which consumershave a strong brand preference. BMW, Armani. Unsought goods are those now unknown to the
consumer or, if known, undesired.
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Classifying Business Products Raw materials : unprocessed, become part of
other manufactured products Manufactured parts and materials: processed
products that become part of other products Installations: major buildings and equipment Accessory equipment: used in operations,
include computers, desks, tools Operating supplies : low value, used by most
firms, convenience products for businesses
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Innovation is Required Products go through life cycles-- you need new
ones coming on stream. Profits highest when products new.
Consumers more selective: they look carefullyat each purchase. Also a little jaded. High failure rates in the 75% range. Leads to new products:
Innovative= truly unique Improved, with valuable new benefits Imitative, another me too product.
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1. Standard 2000 car.2. Duponts Corfam synthetic leather.3. Polaroids Polavision.4. Ra-One movie.5. RCAs Videodisc.6. Times TV-Cable Weekmagazine.
Product Failures
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New Product Development Companies must be constantly modifying
existing products and developing newones; the marketplace demands it
How new is new? most new products aremodifications of or extensions to existingones
The introduction of a new product is astrategic decision which should be guidedby the companys goals and a new productintroduction strategy
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Identifythe strategic
role of newproducts,then...
1.Idea
generation
2.Screening
of ideas
3.Businessanalysis
4.Prototype
development
5.MarketTests
6.Commer-cialization
The New Product Development Process
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The New Product Development Process A new product is best developed
through a series of six stages: The first two stages provide a focus
for generating new-product ideas anda basis for evaluating them. The next three stages deal with ideas
and are the least expensive. In their haste, some companies skip
stages the most common omissionbeing market tests.
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Criteria for New Products
There must be adequate market demand: thisis necessary but not sufficient for success
Must satisfy key financial criteria
Must be compatible with environmentalstandards Must fit with the companys marketing
structure Should also be compatible with production
capabilities, satisfy legal requirements, and fitwith corporate goals and objectives
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Development of New Product Strategy
CompanyGoals
Product Strategy Examples
Defend marketshare
Introduce addition toexisting produceline/ revise existingproduct
Pizza Huts Big New Yorker andStuffed Crustpies
Strengthen
reputation asan innovator
Introduce a really
new product - not just an extension ofan existing product
Digital cameras
introduced bySony, Canon,and other firms
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Adoption-Diffusion Process Different new products are adopted by
consumers at different rates The individual consumer goes through certain
stages before adopting a new product Marketers must be interested in first creating
awareness, then interest, then trial, before theconsumer is considered an adopter
Some people are genuine innovators, whileothers wait and try later; some never adopt
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New Product Adoptionand Diffusion
Adoption process: The decision-making activity of an individual
through which the new product isaccepted. Diffusion: The process by which
an innovation is spread through asocial system over time.
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Adopter Categories
Researchers have identified five categoriesof individual adopters for new products: Innovators 3% of the market. Early adopters 13% of the market. Early majority 34% of the market. Late majority 34% of the market. Laggards 16% of the market.
In addition, some individuals nonadopters never accept the innovation.
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New ProductOrganizationCompanies take a variety of approachesto organizing the new product function: Product-planning committees New-product departments Cross-functional new venture teams Product managers
Many larger firms are replacing theproduct manager with category managers