ch.9
Introduction
Class begins with a brief discussion on attendance and starting the session.
Reminder of the quiz scheduled for that day.
Mention of upcoming marketing plan project due at the end of the semester.
The project will involve group work, including a presentation and a paper.
It accounts for 20% of the final grade, detailed in the syllabus.
Information on a guest speaker, the IT person, to be invited for the second week of April to discuss resources.
Revised Schedule
A revised schedule for the next four chapters (10, 11, 12, 13) has been provided.
Videos and PowerPoint presentations related to these chapters will be available.
An apology for an audio issue in the CBS News video segment about Peloton will be addressed in hard copy PowerPoints.
Reminders for assignments due during the instructor's absence:
Four video recaps.
An online quiz that is open-book.
Chapter Nine Overview
Focus today is on new products, starting with a review of product concepts from Chapter 8.
Product Concepts
Definition of a Product:
Anything offered in a market for attention, acquisition, use, or consumption to satisfy a need or want.
Includes tangible products and services (intangible benefits).
Starbucks Example:
Their product is not just coffee; it’s centered around an experience, referred to as "the third space" for socializing and working.
Product Structure
Core Product:
The fundamental benefit or need served by the product.
Actual Product:
Attributes including brand name, design, features, packaging, and quality level.
Augmented Product:
Delivery, credit, after-sales service, warranties, and product support.
Product Line
Definition:
A group of closely related products serving a similar function, sold to the same customer group (e.g., Nike shoes).
Consumer Products Categories:
Convenience Products: Regular purchases with little thought (e.g., fast food).
Shopping Products: Infrequent purchases with pre-purchase research (e.g., cars, appliances).
Specialty Products: Require special effort; strong brand preference (e.g., luxury goods).
Unsought Products: Little awareness; infrequently purchased (e.g., life insurance).
New Product Origins
Acquisition
Methods to obtain new products:
Acquisition: Buying entire companies or their patents.
Example:
Kraft Heinz merging produces Kraft Macaroni and Cheese and Heinz Ketchup.
General Mills acquiring Annie's products.
Kellogg's acquiring RXBars.
Definition of Acquisition: Buying either a whole company or its product patents.
New Product Development
Involves creating original products or modifying existing ones within a company.
Examples of New Products:
Tesla: New market entrant disrupting the automotive industry.
iPhone: Revolutionary product perceived as a handheld computer rather than just a phone.
GoPro: Its utility in recreational activities before evolving and facing competition from smartphones.
Drones: Rapid technological advancements leading to new applications including deliveries.
New Product Development Process: Eight Steps
Idea Generation:
Sources of ideas include R&D, customer feedback, competitor analysis, internal employee suggestions, and external design firms.
Idea Screening:
Assessing the feasibility of ideas based on three criteria:
Is it real?: Assessing need and desire for the product.
Can it win?: Evaluating competitive advantages and market differentiation.
Is it worth it?: Analyzing profit potential and ROI.
Product Concept Development:
Development of detailed versions of product ideas and consumer perception mapping.
Marketing Strategy Development:
Initial marketing and distribution strategies designed for the new product.
Business Analysis:
Reviewing sales, cost, and profit projections to meet company objectives.
Product Development:
Actual physical production of the new product for market testing.
Test Marketing:
Realistic product and marketing program testing in selected markets; assessment of feasibility.
Commercialization:
Actual market introduction of the product, considering timing, location, and promotion strategies.
Test Marketing Examples
Starbucks App:
Initial bugs are corrected under real-world usage scenarios leading to better functionality.
McDonald's McPlant Burger:
Rejected following competition introduction of the Impossible Whopper during testing.
The product life cycle
Includes four stages: Introduction, Growth, Maturity, and Decline.
Introduction Stage: Slow sales growth, high promotional costs, little to no profit.
Growth Stage: Increasing sales and profits, attracting new competitors.
Maturity Stage: Slowed sales growth with heightened competition and the need for continued promotion.
Decline Stage: Sales decline and difficult decisions involving maintaining, harvesting, or dropping the product.
Examples of modifying existing products to maintain stature in the market during maturity, as seen with Quaker Oats.
Additional Considerations in Product Development
Public policies, regulations, patents, safety, and ethical considerations play critical roles.
Notable case: Volkswagen's emissions scandal, leading to serious consequences and legal ramifications for unethical practices in product development.
Consideration for international product service marketing and localization versus standardization of products across different markets.
Discussion Activity
Students tasked with discussing successes/failures of new products based on provided examples and their internet research.
Cited failures include Amazon Fire Phone, popular fads include Beanie Babies and fidget spinners.
Conclusion
Review main points to prepare students for the quiz, emphasizing the importance of understanding the new product introduction process and related concepts.