marketing 03/04

Product Classification

• Consumer products: Classified based on the effort a consumer spends to acquire them.

Convenience Products

• Characteristics: Low cost, frequent purchases.

• Categories: Include health and beauty items, food, and small household products.

• Consumer Decision Making: Involves low involvement and decision-making ease.

• Example: Small items bought regularly (e.g., snacks, toiletries).

Shopping Products

• Characteristics: Require comparison shopping.

• Consumer Decision Making: High involvement, takes more effort in decision-making.

• Example: Furniture (e.g., couches); consumers assess comfort, size, color, and material (leather vs. upholstery).

Specialty Products

• Characteristics: Premium priced, brand-specific, sought after by consumers.

• Consumer Behavior: Consumers willing to travel for a specific brand (e.g., Hearts on Fire diamonds).

• Example: High-end diamonds with specific cuts that enhance appearance and create a brand identity.

Unsought Products

• Characteristics: Not actively sought by consumers; can be new technologies or products that arise from necessity.

• Example: Life insurance; often avoided due to negative associations.

Levels of Product Development

Idea Generation

• Sources of Ideas: Market research, competitor analysis, consumer feedback via surveys.

• Example: Post-it notes originated from an employee's exploration of adhesive.

Screening Phase

• Evaluation Factors: Strategic fit, resource allocation (time, money), market opportunities, timing of trends.

• Example: Pharmaceutical companies focusing resources on diabetes treatments due to rising health risks.

Concept Testing

• Process: Flesh out product details, including name and features. Test product viability through sketches and preliminary designs.

• Example: Designing a new shoe with comfort and functionality for target demographics such as older customers.

Business Analysis

• Focus: Analyze costs, pricing strategies, and potential revenue.

• Example: Toyota’s Prius sold at a loss initially to capture market recognition in hybrid vehicles.

Product Development

• Activities: Create prototypes, conduct material testing, ensure safety standards.

• Example: Wear testing for backpacks to assess function and durability.

Test Marketing

• Purpose: Launch in controlled settings to evaluate market response and refine marketing mix.

• Example: Frito Lay potentially running tests in specific regions (Peoria) before full-scale launches.

Commercialization

• Development: Decide on launch strategy: full-market rollout or regional launch.

• Example: Companies might launch products initially in regions with established brand loyalty (e.g., Coke in the Southeast).

Factors Influencing New Product Failure

• Market Fluctuations: Changes in consumer preferences or economic conditions can impact product success.

• Test Marketing Errors: Poor sampling and feedback can lead to misjudged market readiness.

• Marketing Mix: Pricing and distribution errors can derail even good products.

Company Strategies

Risk Diversification

• Rationale: Companies like Campbell's offer diverse product lines to hedge against failing preferences.

Product Portfolio Management

• Concept: Evaluate depth (varieties in a category) and width (number of categories offered) of a product line.

• Example: Clorox products include several lines within household, cleaning, and food categories.

Conclusion

• The process of developing new products requires significant analysis, testing, and often innovation to succeed in a competitive market. Companies need to constantly adapt to consumer demands while managing risk.