"Product Development" - Mrs. Mustoe's Webpage

"Product Development" - Mrs. Mustoe's Webpage

Unit 3 Product Development What is a Product? Consumer Markets Product Design Process Product Planning Product Mix MARKETING

South-Western Thomson Product A good, service, or idea sold to satisfy wants/needs Can be simple or complex Features physical characteristics of product; used to enhance benefits wanted by consumers Benefits the value or usefulness a consumer gets from a product Consumers know best what they want! Marketers are the eyes, ears, and mouth of a

company. What does this mean? How Products are Viewed by Businesses tangible items their customers buy by Consumers a means of satisfying their wants/needs (its 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. Business Consumers vs Final Consumers Some products are sold to businesses. Some products are sold to consumers. Some products are sold to BOTH. Ex: Bananas restaurant, family lunches What other products can you sell to both businesses and consumers? Final Consumers buy products for personal use.

Consumer Market Convenience Goods Shopping Goods Unsought Goods Specialty Goods Business Consumers buy goods to use themselves or to use in the making of other goods/services for resale. Business Markets Capital Equipment

Operating Equipment Supplies Raw Materials Component Parts Product Design Process 1. Basic product same as competitors 2. Enhanced product Features & Options Packaging Image (icon, logo, etc)

3. Extended product Services & Warranties Related items you buy separately **Improvement in design can improve Demand. Product Planning Strategy Consider: Type of competition in marketplace (direct, indirect, intense, nonexistent).

Economic conditions. Strengths/Weaknesses of own business. Products Life Cycle (or its life span) also helps planning Product Life Cycle PLC Stage Characteristics 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 Cycle PLC Stage Characteristics Costs get lower as production increases Sales peak & market is saturated Prices drop due to competition Brand & 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 Cycle Sales & Profits TIme Influences on the PLC

Keep up with consumer needs (features, etc). Fashion/trends change 12 Marketing Supports Product Development Companies 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) Companies come up with NEW products to keep customers satisfied and to help maintain a profit. What is New? New or Modified/Improved? Federal Trade Commission regulates use of new. Entirely new or changed in a noticeable way. Six-month time limit

Note: ____% of new products fail!!! Product Mix Product Mix (Assortment) the combination and make up of all the products a company has to offer. Includes 3 Parts: 1. 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. 2. Packaging for what purpose? Information identifies product, gives details Promotion attractive & attention-getting Convenience makes easier to carry and use.

3. Branding Brand anything that IDs a product or company. Brand Name NIKE Brand Mark Trademark legal protection of the brand

Licensed Brand well-known name or symbol sold for use on other companies products. Product Mix Strategies Expansion 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.

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