PRODUCT DEVELOPMENT

Chapter 30 and 31

PRODUCT/SERVICE MANAGEMENT Overseeing the design and development

of new productsBenefits to us?

New and improved products on the market More choices to pick from

THINGS TO CONSIDER WHEN DESIGNING A PRODUCT 1. The cost to design the product

2. Will you have a marked for the product?

PRODUCT MIX All of the different products that a

company makes or sells. Example: Nike sells clothes, shoes, sports

products

WHAT PRODUCT MIXES SHOULD YOU CARRY? Objectives of the business –

Carry a variety of products that will make our business a profit

Image the business wants to project -Trendsetting, fashion-conscious, expensive,

low-price

Market business is trying to reach –Kids, teens, Generation X, Baby Boomers

PRODUCT LINE A group of closely related products

manufactured and/or sold by a businessExamples:

Frito Lay makes Ruffles, Doritos, Tostitos

Cereals produced by Kelloggs: Frosted Flakes, Corn Pops

PRODUCT ITEM Is a specific model, brand, or size of a

product within a product line

REASONS COMPANIES DELETE PRODUCT LINES Obsolescence (changing interests and

technology) Loss of appeal – consumer tastes

change Conflict with company objectives Replace with new products – limited

shelf space Lack of profit Conflict with other product lines –

competing with own brands not good

INTRODUCTION STAGE OF PRODUCT LIFE CYCLE Product first introduced Focus on promotion and production Draw attention to the product Least profitable stage of life cycle

because of costs being so high to promote/make

GROWTH – PRODUCT LIFE CYCLE Increasing sales and profits Most knows about and buys the product Competition starts offering products to

compete Advertising focuses more on customer

satisfaction

MATURITY STAGE Sales level off or slow down Product has highest level of competition Most of target market owns product Most of advertising is fighting off

competition

Nintendo Wii

DECLINE STAGE Sales fall Profit may be smaller than costs May sell or license the product Discount the product

POSITIONING PRODUCTS Price and quality – economy line, mid-

priced line, and luxury line based on how they want to be viewed

Features and benefits – Rockport positioned as comfortable shoes (features/benefits)

Competition – How is my product better than theirs

Relation to other products in line – Crayola came out with a washable marker/crayon to go along with the rest of their product line

BRANDS Can be a name, term, design, symbol

that identifies a business or organization and its productsExamples are Coca Cola, McDonalds,

Microsof A brand name is the word, group of

words, letters or numbers representing a brand that can be spokenExamples are: Mountain Dew, SnackWells,

Honda Accord

BRANDS (CONTINUED) A brand mark is the part of the brand

that is a symbol or mark – known as a logoExamples:

Trade name – identifies the company or division of a particular corporationExamples are: Dell, Kellogg’s and Xerox

TRADE CHARACTER Trade character is a brand mark with a

human form or characteristics

TRADEMARKA trademark is a brand name, brand mark, trade name, trade character, or a combination that is given legal protection by the federal government

PACKAGING Two main purposes for protection and

promotion

Promoting and selling the product – make packages attractive, colorful and artistic

PACKAGING Ease of use – consider the way the

consumer uses the product

Providing information: Information about its contents, calories, guarantees, nutritional value and potential hazards

SAFETY Products come in plastic containers

instead of glass now Drugs and food items are in tamper

resistant containers with sealed lids and blisterpacks

HANDLING Prevent tampering while on display Use bubble wrap/packing paper to keep

product from breaking

Environmental packaging – packaging that is reusable, recyclable, safer, and less wasteful

MANUFACTURER BRAND Also known as producer brands – owned

by manufacturers Generate the majority of sales Identify a given product Indicate a standard quality and priceAppeal to customers who want consistent

quality, dependable performance, and status Examples: Kraft, General Electric, Heinz, Keebler

INFORMATION ON A PRODUCT LABEL Brand name Logo Ingredients Directions Special promotional messages Weight Expiration dates

PRIVATE DISTRIBUTOR BRANDS Also known as store or private brands

Owned by wholesalers and retailersAppeal to customers who want quality and

performance at a lower priceCan generate a higher profit marginLead to customer loyalty

Examples: Sears Kenmore and Craftsman brands

Kroger brand of products Great Value – Wal-Mart

GENERIC BRANDS Does not carry a company or brand

namePackaging only has a description of the

productOften priced 30-50% lower than other

manufacturer brandsPriced 10-15% below private distributor

brandsNot heavily advertised or promoted

LABELING LAWS Name and address of manufacturer has

to be on the label Quantity of the contents must be on

label Product weight has to be listed in

traditional American weights and metric weights

Some countries require that labeling is bilingual

FDA LAWS State amount of calories Percentage of daily intake of calories Fat, carbohydrates, sodium, etc.

Contents Health warnings: Such as women who

are pregnant should not drink alcoholic beverages due to increase risk of birth defects

FEDERAL TRADE COMMISSION Care labeling rules: information about

the care of garments related to washing, drying, and ironing.

Environmental information about recyclable contents

Ozone safe information

AGENCIES THAT REGULATE PRODUCTS/BUSINESSES Better Business Bureau – Help customers to

work with businesses to resolve complaints(you can call them to file a complaint)

BBB of Lexington, KY - Principles for Trust Consumer Product Safety Commission –

work with businesses on unsafe products in the marketplace (do recalls on products)

CPSC Home Page | cpsc.gov Federal Trade Commission –

Prevent unfair pricing practices Investigations of false advertising

DIFFERENCE BETWEEN WARRANTIES AND GUARANTEES? Warranty – is a promise or guarantee,

given to a customer that a product will meet certain standards (given a time period)6 month warranty on IPhone

Guarantees – Used in promotional phrases such as “money back guaranteed”, “satisfaction guaranteed”