A good, service or idea consisting of a bundle of tangible and intangible attributs that satisfies consumers and is recieved in exchange for money.
Product
A group of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, and distributed through the same type of outlets, or fall within a given price range.
Product Line
A specific product as noted by a unique brand, size, or price.
Product Item
A unique identification number that defines an item for ordering or inventory purposes.
Stock Keeping Unit (SKU)
The number of product lines offered by a company
Product Mix
Two ways to classify products
1. Type of User
2. Degree of Tangibility
Type of User Classifications
1. Consumer Goods
2. Business Goods
Products purchased by the ultimate consumer.
Consumer Goods
Products that assist in directly or indirectly in providing products for resale.
Business Goods
Degree of Tangibility Categories
1. Nondurable Goods (food, fuel, etc.)
2. Durable Goods (appliances, cars, stereos, etc.)
3. Services (healthcare, education, etc.)
Classification of Consumer Goods
1. Convenience Goods
2. Shopping Goods
3. Specialty Goods
4. Unsought Goods
Differences Between Types of Consumer Goods
1. Effort the consumer spends on the decision
2. Attributes used in the purchase
3. Frequency of purchase
Items that a consumer purchases frequently, conveniently, and with a minimum of shopping effort.
Convenience Goods
Items for which a consumer compares several alternatives on criteria, such as price, quality, or style.
Shopping Goods
Items that a consumer makes a special effort to search out and buy.
Specialty Goods
Items that a consumer either does not know about or knows about but does not initially want.
Unsought Goods
Classifications of Business Goods
1. Production Goods
2. Support Goods
Items used in the manufacturing process that become part of the final products
Production Goods
When sales of business and industrial goods frequently result from the sale of consumer goods.
Derived Demand
Items used to assist in producing other goods and services. These include installations, accessory equipment, supplies, and services.
Support Goods
If a product is functionally different from existing products, it can be defined as new.
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Organization's three levels of new products
1. Product Line Extension
2. Significant Jump
3. True Innovation
An incremental improvement of an existing product (e.g., Diet Coke -> Diet Coke Lime).
Product Line Extension
An increase in innovation or technology (e.g., ipod -> ipod touch)
Significant Jump
A truly revolutionary new product (e.g., ipad)
True Innovation
Consumer's three levels of new products
1. Continuous Innovation
2. Dynamically Continuous Innovation
3. Discontinuous Innovation
New products that no new behaviors need to be learned (e.g., Toothpaste w/ whitening).
Continuous Innovation
New products that only require minor changes in behavior (e.g., Facebook changes its platform).
Dynamically Continuous Innovation
New products that make the consumer learn entirely new consumption patterns in order to use the product (e.g., When wireless routers came out, nearly 1/3 of consumers returned them because they were too difficult to setup).
Discontinuous Innovation
Eight Marketing Reasons for New-Product Failures
1. Insignificant point of difference
2. Incomplete market and product protocol before development
3. Not satisfying customer needs on critical factors
4. Bad timing
5. Too little market attractiveness
6. Poor product quality
7. Poor execution of the marke
A precise statement that, before product development begins, identifies:
- A well-defined target market
- Specific customers' needs, wants, and preferences
- What the product will be and do
Protocol
Organizational Reasons for Failure
- Not listening to the "voice of the consumer"
- Skipping steps in the new product process
- Pushing a poorly conceived product for quick revenue
- "Groupthink"
- Not learning from past failures
The stages a firm goes through to identify business opportunities and convert them to a salable good or services
New Product Process
Steps in New Product Process
1. New Product Strategy Development
2. Idea Generation
3. Screening and Evaluation
4. Business Analysis
5. Development
6. Market Testing
7. Commercialization
The stage of the new product process that defines the role for a new product in terms of the firm's overall corporate objectives.
Uses SWOT analysis and environmental scanning to identify factors to exploit.
New Product Strategy Development
The stage of the new product process that involves developing a pool of concepts as candidates for new products.
New product ideas are generated by customers, suppliers, employees, basic R&D, and competitors.
Idea Generation
The stage of the new product process that involves internal and external evaluations of the new-product ideas to eliminate those that warrant no further effort.
Screening and Evaluation
Approaches to Screening and Evaluation
1. Internal Approach
2. External Approach
When a firm internally evaluates the technical feasibility of the proposal and whether the idea meets the objectives defined in the new-product strategy development step.
Internal Approach
Using concept tests to test a new-product idea with consumers.
External Approach
External evaluations that consist of preliminary testing of the new-product idea (rather than the actual product) with consumers.
Concept Tests
The stage of the new product process that involves specifying the product features and marketing strategy and making the necessary projections to commercialize a product.
Business Analysis
A full-scale operating model of the product under development.
Prototype
The stage of the new product process that involves turning the idea on paper into a prototype.
Development
The stage of the new product process that involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy.
Market Testing
Offering a product for sale on a limited basis in a defined area.
Used to determine whether consumers will actually buy the product and to try different ways of marketing it.
Test Market
A technique that simulates a full-scale test market but in a limited fashion.
Participants are questioned to on usage, reasons for purchase, and important qualities of the product class being tested.
Simulated Test Markets
The stage of the new product process that involves positioning and launching a new product in full-scale production and sales.
Commercialization
Introducing a product sequentially into geographical areas of the U.S., to allow production levels and marketing activities to build up gradually to minimize the risk of new-product failures.
Regional Rollouts
A payment a manufacturer makes to place a new item on a retailer's shelf.
Slotting Fee
A penalty payment a manufacturer makes to compensate a retailer for sales its valuable shelf space failed to make.
Failure Fee
When cross-functional team members conducting the simultaneous development of both the product and the production process stay with the product from conception to production.
Parallel Development