New_Recording_4

Product Classification

• Consumer Products Categories: Classified based on consumer effort and involvement.

Convenience Products

• Characteristics:

  • Low cost items.

  • Purchased frequently with low effort required.

• Examples:

  • Health and beauty products, food items, small household maintenance items.

• Consumer Decision Making:

  • Aligns with low involvement buying decisions; minimal consideration needed before purchase.

Shopping Products

• Characteristics:

  • Comparison shopping is key; higher effort required from consumers.

• Buying Process:

  • Consumers evaluate options based on comfort, size, color, style (like upholstery material) before purchase.

  • Typical items: furniture (e.g., couches) where comfort and style are prioritized.

• Example Considerations:

  • How comfortable it is (testing by sitting), size fitting in the designated space, color matching, durability, and special features (like stain resistance).

Specialty Products

• Characteristics:

  • Typically premium-priced and consumer seeks them specifically.

• Consumer Behavior:

  • Willing to go to lengths to acquire these products (e.g., travel long distances).

• Example:

  • Hearts on Fire diamonds, known for clarity and unique cutting, which makes them appear larger than their carat weight.

  • Premium pricing: typically twice as much for branded vs non-branded diamonds due to perceived value and exclusivity.

Unsought Products

• Characteristics:

  • Not actively sought; often associated with products consumers may not be aware of or do not think about purchasing.

• Examples:

  • Life insurance policies and products from new technologies, often hard to market due to lack of consumer interest or awareness.

• Consumer Decision Making:

  • Typically requires extended decision-making involvement; significant education needed to familiarize consumers with the product.

New Product Development Process

• Overview:

  • Structured process to guide product ideas from inception to market, eliminating ideas at each stage to refine quality.

Idea Generation

• Sources:

  • Market research, employee feedback, competitor analysis, consumer feedback (surveys).

• Company Initiatives:

  • Companies like Starbucks utilize social media for idea submissions; 3M encourages employee innovation time.

Screening Phase

• Goal:

  • Eliminate ideas that do not align strategically or do not fit resource availability (time, budget).

• Examples:

  • Pharmaceutical companies focusing on diabetes treatments due to market needs.

Concept Testing

• Focus:

  • Developing product sketches, identifying features, and understanding consumer needs/priorities.

• Example:

  • Developing comfort-focused designs (e.g., Nike Monarch shoe) based on consumer preferences.

Business Analysis

• Evaluation Metrics:

  • Costs of production vs. sales price vs. projected demand.

• Examples:

  • Toyota’s Prius strategic introduction despite initial losses to capture market share.

Product Development

• Activities:

  • Prototype development, material testing, safety evaluations, and wear testing.

• Example of Testing Techniques:

  • Drop testing for durability, zipper tests for functionality on products like backpacks.

Test Marketing

• Purpose:

  • Launch product in controlled areas to evaluate market reception.

• Considerations:

  • Examine the entire marketing mix, including placement, pricing, and promotion.

• Example:

  • Peoria as a test market due to its diverse demographics.

Commercialization

• Launch Strategies:

  • Full-scale launch (simultaneous nationwide, high investment) vs. gradual regional rollout (minimized risk).

• Example:

  • Consumer packaged goods often use regional rollout strategies to manage costs and sales data.

Challenges and Failures in New Product Launches

• Statistics:

  • Approx. 30,000 new products introduced annually; roughly 80% fail in the first year.

• Reasons for Failure:

  • Misalignment with consumer needs, incorrect pricing, ineffective marketing strategies, changing consumer preferences.

• Example:

  • Clorox ReadyMop failed against Swiffer due to higher perceived price without substantive differences.

• Market Timing:

  • Products may hit markets when consumer interest has waned.