Marketing Management Chapter 8

Chapter 8

attributes

including features, functions, benefits, and uses

offering

a generic term used by marketers to denote the range of possibilities of product attributes and sources of product value

good

tangible product

core product

consists of all the benefits the product will provide for consumers or business customers

actual product

the physical good or the delivered service that supplies the desired benefit

augmented product

the actual product plus other supporting features, such as a warranty, credit, delivery, installation, and repair service after the sale. Marketers know that adding these supporting features to a product is an effective way for a company to stand out from the crowd

durable goods

consumer products that provide benefits over a period of months, years, or even decades, such as cars, furniture, and appliances

non-durable goods

products that provide value only for a short time because they are consumed

convenience product

a nondurable good or service that consumers purchase frequently with a minimum of comparison and effort e.g. gallon on milk

staple products

a type of convenience product: basic or necessary items that are available almost everywhere. Most consumers don’t perceive big differences among brands

consumer packaged good or fast moving good

a low-cost good that we consume quickly and replace frequently

impulse products

product bought on the spur of the moment

geofencing marketing

the use of global positioning system (GPS) or radiofrequency identification (RFID) technology to create a virtual geographic boundary, enabling software to trigger a response when a mobile device enters or leaves a particular area. So if you’re Walgreens and have stores chock full of lovely and tempting impulse product treats, wouldn’t you want to ping a shopper on entry about the 3 for $2 special on single candy bars in order to generate some incremental sales?

shopping products

goods or services for which consumers will spend time and effort to gather information on price, product attributes, and product quality, alternatives are considered

specialty products

products with unique characteristics that are important to buyers at almost any price. can be related to luxury and/or environmental concerns

unsought products

goods or services (other than convenience products) for which a consumer has little awareness or interest until a need arises

equipment

the products an organization uses in its daily operations

maintenance, repair, and operating products (MRO)

goods that a business customer consumes in a relatively short time

raw materials

products of the fishing, lumber, agricultural, and mining industries that organizational customers purchase to use in their finished products. For example, a food company transforms soybeans into tofu

processed materials

transformed raw materials from their original state

specialized services

services that are essential to the operation of an organization but do not contribute to production of products

component parts

manufactured goods or subassemblies of finished items that organizations need to complete their own products. For example, a computer manufacturer needs silicon chips to make a computer, and an automobile manufacturer needs batteries, tires, and fuel injectors

innovation (new product)

anything that customers perceive as new and different

creativity

a phenomenon in which something new and somehow valuable is created

design thinking

a process that draws upon logic, imagination, intuition, and systemic reasoning to explore possibilities of what could be—and to create desired outcomes that benefit the end user (the customer)

ideation

idea generation through a process characterized by the alternation of divergent and convergent thinking, typical of the design-thinking process

divergent thinking

means coming up with as many new ideas as possible and exploring new “out-of-the-box” alternatives. To achieve divergent thinking, it is important to have a diverse group of people involved in the process

convergent thinking

moves toward a more analytical focus on the different ideas in order to come to a decision on the best choice, a process that ensures the design-thinking process will achieve the desired outcome and not just be an exercise in throwing ideas on the wall.

wicked problems

a flashy term to denote that these are the sorts of problems that, if not creatively and systematically addressed, can lead to organizational failure

process steps in design thinking

1. empathize- gain deep understanding of problem space and users

2. define- articulate problem, risks, and assumptions

3. ideate - generate solution ideas and eval best approach

4. create a “just realistic enough” prototype

5. test with real users to see how prototype performs

types of innovations

continuous, discontinuous, dynamically continuous

continuous innovation

a modification to an existing product, such as when Samsung and others reinvigorated the TV market by offering thinner sets that featured high-definition viewing.

knockoff

a new product that copies, with slight modification, the design of an original product

dynamically continuous innovation

a pronounced modification to an existing product that requires a modest amount of learning or change in behavior to use it. Here’s a great example: The history of audio equipment is a series of dynamically continuous innovations

discontinuous innovation

a totally new product that creates major changes in how people live

convergence

which means the coming together of two or more technologies to create new systems that provide greater benefit than the original technologies alone. Once again, smartphones illustrate this concept of convergence well given the multifunctional nature of those devices today

disruptive innovation

an innovation that creates a new market and value chain and eventually disrupts an existing market and value chain, displacing established market-leading firms, products, and alliances

first mover advantage

being the first firm to move into a market with a new product, perhaps a disruptor

R&D

a well-defined and systematic approach to how they innovate

steps of new product development

idea generation, product concept development and screening, marketing strategy development, business analysis, technical development, test marketing, and commercialization

value co-creation

the process by which an organization creates worth through collaborative participation by customers and other stakeholders in the new product development process

product concept development and screening

2nd step of product development, when marketers test product ideas for technical and commercial success

technical success

whether the new product is technologically feasible—is it possible to actually build this product?

commercial success

whether anyone is likely to buy the product

business analysis

assessment of a product’s commercial viability

technical development

a firm’s engineers work with marketers to refine the design and production process

prototype

test versions of a product

test marketing

known as running a market test. This usually means the firm tries out the complete marketing plan—the distribution, advertising, and sales promotion—in a small slice of the market that is similar to the larger market it ultimately hopes to enter with full force

simulated market test

imitates the introduction of a product into the marketplace. These simulations allow the company to see the likely impact of price cuts and new packaging—or even to determine where in the store it should try to place the product.

commercialization

This means the launching of a new product into the market, and it requires full-scale production, distribution, advertising, sales promotion

crowdfunding

where innovative websites such as Kickstarter, Indiegogo, and Crowdfunder continue to grow in popularity as fundraising mechanisms for entrepreneurs and small companies

product adoption

the process by which a consumer or business customer begins to buy and use a new good, service, or idea

diffusion

how the use of a product spreads throughout a population

tipping point

in the context of diffusion, it is a moment of truth to see if slow sales when the product is introduced reach a spike and reach an unprecedented level

adoption pyramid

reflects how a person goes from being unaware of an innovation through stages from the bottom up of awareness, interest, evaluation, trial, adoption, and confirmation

media blitz

a massive advertising campaign that happens over short period of time

bleeding-edge technology

one that is not yet ready for release to the market as a whole, potentially because of issues related to reliability and stability, but is in a suitable state for beta testing (usage and feedback from a small number of users) and user feedback

innovators

This segment is extremely adventurous and willing to take risks with new products. Innovators are typically well educated, younger, better off financially than others in the population, and worldly

early adopters

buy product innovations early in the diffusion process but not as early as innovators.

early majority

roughly 34 percent of adopters, avoid being either first or last to try an innovation. They are typically middle-class consumers and are deliberate and cautious

late majority

about 34 percent of the population, are older, are even more conservative, and typically have lower-than-average levels of education and income

laggards

16 percent of adopters, are the last in a population to adopt a new product. Laggards are typically lower in income level and education than other adopter categories and are bound by tradition

relative advantage

describes the degree to which a consumer perceives that a new product provides superior benefits

compatibility

the extent to which a new product is consistent with existing cultural values, customs, and practices

complexity

the degree to which customers find a product difficult to understand