CHAPTER 8Creating the Product

M A R K E T I N GReal People, Real Choices

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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

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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

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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

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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?”

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Classifying Consumer Products

• By how long they last– Durable– Nondurable

• By how consumers buy them– Convenience– Shopping– Specialty– Unsought

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Classifying Business Products

• By how products are used– Equipment– Maintenance, repair, operating– Raw materials– Processed materials– Specialized services– Component parts

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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

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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

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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?

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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

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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

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New Product Development

• Idea Generation• Product Concept Development &

Screening• Marketing Strategy Development• Business Analysis• Technical Development• Market Testing• Commercialization

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Step 1: Idea Generation

• Sources of new ideas– customers– salespeople– service providers– anyone with direct customer contact

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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

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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

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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

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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

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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

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Commercialization

• Launch the product!– Full scale production– Distribution– Advertising– Sales promotion– and more

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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?