product
a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value
good
has tangible attributes that a consumer's five senses can perceive; may also have intangible attributes consisting of its delivery or warranties and embody more abstract concepts, such as becoming healthier or wealthier; can be divided into nondurable and
nondurable good
an item consumed in one or a few uses, such as food products and fuel
durable good
one that usually lasts over many uses, such as appliances, cars, and mobile phones; personal selling is especially important
services
intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value
idea
a thought that leads to an action, such as a concept for a new invention or getting people out to vote
consumer products
products purchased by the ultimate consumer
business products
products organizations buy that assist directly or indirectly in providing other products for resale; also called B2B products, industrial products, or organizational products
types of consumer products differ in terms of...
effort the consumer spends on the decision, attributes used in making the purchase decision, and frequency of purchase
types of consumer products
convenience products, shopping products, specialty products, unsought products
convenience products
items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort; include staple goods (purchased on a regular basis), impulse goods (purchased without any planning or search effort), and emergency goods (purchased when a
shopping products
items for which the consumer compares several alternatives on criteria such as price, quality, or style; include homogeneous goods (similar in quality but different enough in price to justify comparison shopping for the lowest price) and heterogeneous goo
specialty products
items that the consumer makes a special effort to search out and buy; items like a Rolls Royce automobile and a Rolex watch
unsought products
items that the consumer does not know about or knows about but does not initially want; items like burial plots and life insurance
derived demand
sales of business products frequently result (or are derived) from the sale of consumer products; the sales of business products are often the result of this
types of business products
components and support products
components
items that become part of the final product; include raw materials such as grain or lumber, as well as assemblies or parts, such as a car engine or car door hinges
support products
items used to assist in producing other goods and services (installations such as buildings and fixed equipment, accessory equipment such as tools and office equipment, supplies such as stationery, paper clips, and brooms, and industrial services such as
product item
a specific product that has a unique brand, size, or price
stock keeping unit (SKU)
a unique identification number that defines an item for ordering or inventory purposes
product line
a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range
product mix (product assortment)
all the product lines offered by a company; width refers to the number of different product lines the company carries; length refers to the total number of products in a product line; depth refers to the number of different versions or variants of each pr
ways services are delivered
by people or equipment, by business firms or nonprofit organizations, or by government agencies
four l's of service
the four unique elements that distinguish services from goods: intangibility, inconsistency, inseparability, and inventory
intangibility
services cannot be seen, tasted, felt, heard, or smelled before purchase; can be overcome by using cues to make the service tangible and adding physical evidence and imagery to the abstract offer
inconsistency (variability)
quality depends on who provides the service and when, where, and how; can be overcome by standardizing service production and delivery
inseparability
services cannot be separated from their providers; can be overcome by increasing productivity of providers
inventory (perishability)
services cannot be stored for later sale or use; can be overcome by matching supply and demand
idle production capacity
when the service provider is available but there is no demand for the service
goods-services continuum
organizations offer a range of products from the the tangible (goods-dominant) to the intangible (services-dominant)
levels of newness and innovation in an organization's products
product line extension, significant jump in the innovation or technology, true innovation
product line extension
lowest level of newness and innovation in an organization's products; an incremental improvement of an existing product for a company; usually involves the lowest risk
significant jump in the innovation or technology
second level of newness and innovation in an organization's products
true innovation
third level of newness and innovation in an organization's products; a truly revolutionary new product
continuous innovation
consumers don't need to learn new behaviors; effective marketing mainly depends on generating awareness, so there is no need to reeducate customers
dynamically continuous innovation
only minor changes in behavior are required; the marketing strategy is to educate prospective buyers on the product's benefits, advantages, and proper use
discontinuous innovation
involves making the consumer learn entirely new consumption patterns to use the product; marketing efforts usually involve not only gaining initial consumer awareness but also educating consumers on both the benefits and proper use of the innovative produ
protocol
a statement that, before product development begins, identifies a well-defined target market, specific customers' needs, wants, and preferences, and what the product will be and do
marketing reasons for new-product failures
insignificant point of difference, no economical access to buyers, incomplete market and product protocol before product development starts, not satisfying customer needs on critical factors, bad timing, poor product quality, too little market attractiven
organizational problems in new-product failure
not really listening to the "voice of the consumer," skipping stages in the new-product process, pushing a poorly conceived product into the market to generate quick revenue, encountering "groupthink" in task force and committee meetings, not learning cri
new-product process
the seven stages an organization goes through to identify business opportunities and convert them into salable products or services; stages include new-product strategy development, idea generation, screening and evaluation, business analysis, development
new-product strategy development
the stage of the new-product process that defines the role for a new product in terms of the firm's overall objectives; the firm uses both a SWOT analysis and environmental scanning to assess its strengths and weaknesses relative to the trends it identifi
idea generation
the second stage of the new-product process; involves developing a pool of concepts to serve as candidates for new products, building upon the previous stage's results
open innovation
an organization finds and executes creative new-product ideas by developing strategic relationships with outside individuals and organizations; helps organizations overcome not-invented-here barriers
open innovation relationships
customer and supplier suggestions, employee and co-worker suggestions, research and development laboratories, competitive products, smaller firms, universities, and inventors
customer and supplier suggestions
firms ask their salespeople to talk to customers and ask their purchasing personnel to talk to suppliers to discover new-product ideas
crowdsourcing
involves generating insights leading to actions based on massive numbers of people's ideas; requires a precise question to focus the idea-generation process
employee and co-worker suggestions
employees are encouraged to suggest new-product ideas through suggestion boxes
research and development laboratories
a firm's own research and development laboratories is a source of new products; professional R&D laboratories that are outside the walls of large corporations are also sources of open innovation and provide new-product ideas
industrial design
an applied art that improves the aesthetics and usefulness of mass-produced products for users
competitive products
analyzing the competition can lead to new-product ideas
smaller firms, universities, and inventors
many firms look for outside visionaries that have inventions or innovative ideas that can become products; some sources of this open innovation strategy include smaller nontraditional firms, universities, and inventors
smaller nontraditional firms
small technology firms and even small, nontraditional firms in adjacent industries provide creative advances
universities
many universities have technology transfer centers that often partner with business firms to commercialize faculty inventions
inventors
many lone inventors and entrepreneurs develop brilliant new-product ideas
screening and evaluation
the stage of the new-product process that internally and externally evaluates new-product ideas to eliminate those that warrant no further effort
customer experience management (CEM)
the process of managing the entire customer experience within the company
concept tests
external evaluations with consumers that consist of preliminary testing of a new-product idea rather than an actual product
business analysis
specifies the features of the product and the marketing strategy needed to bring it to market and make financial projections; the last checkpoint before significant resources are invested to create a prototype; assesses the total "business fit" of the pro
prototype
a full-scale operating model of a product
capacity management
integrating the service component of the marketing mix with efforts to influence consumer demand
off-peak pricing
charging different prices for different times of the day or week to reflect the variations in demand for services, enabling service providers to maximize profit
development
the stage of the new-product process that turns the idea on paper into a prototype; the result is a demonstrable, producible product that involves not only manufacturing the product but also performing laboratory and consumer tests to ensure it meets the
market testing
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
test marketing
involves offering a product for sale on a limited basis in a defined area; full marketing campaign in a small number of representative cities; done to determine whether consumers will actually buy the product and to try different ways of marketing it; onl
simulated (or laboratory) test market (STM)
a technique that simulates a full-scale test market but in a limited fashion; test in a simulated shopping environment to a sample of consumers; consumer packaged goods companies often turn to them because of the time, cost, and confidentiality problems o
commercialization
the stage of the new-product process that positions and launches a new product in full-scale production and sales
regional rollout
introducing a new product sequentially into geographical areas to allow production levels and marketing activities to build up gradually to minimize the risk of new-product failure
slotting fee
a payment a manufacturer makes to place a new item on a retailer's shelf
failure fee
a penalty payment a manufacturer makes to compensate a retailer for devoting valuable shelf space to a product that failed to sell
time to market (TtM)
speed in introducing a new product
parallel development
approach in which cross-functional team members who conduct the simultaneous development of both the product and the production process stay with the product from conception to production
fast prototyping
encouraging continuing improvement even after the initial design
product hierarchy
ranges from basic needs to the particular items that satisfy those needs; the six levels include need family (the core need that underlies the existence of a product family), product family (all the product classes that can effectively satisfy a core need
industrial goods classification
materials and parts (raw materials - farm products and natural products; manufactured materials - component materials and component parts), capital items (installation, equipment), supplies and business services (supplies - maintenance and repair items, o
categories of service mix
pure tangible good (has no services that accompany the product - toothpaste), tangible good with services (an offering consisting of the product plus one or more services - the sale of an automobile is supported by a number of related services including f
services marketing mix (three additional P's)
people (because most services are provided by people, the selection, training, and motivating of employees can make huge differences in customer satisfaction), physical evidence (companies try to demonstrate their service quality through physical appearan
service classifications
equipment-based and people-based
equipment-based services
include skilled operators, relatively unskilled operators, and self-service (automated); do not have the same degree of inconsistency concerns as people-based services because people are less directly involved in providing the services
people-based services
include services provided by professionals, skilled laborers, and unskilled laborers; have a higher degree of variability
new
can refer to a product being functionally different than existing products; a company's idea of a new product - anything different from the previous product; from the consumer's point of view - may be classified according to the degree of learning require
other new-product process
stages include idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, market testing, and commercialization
new product categories
new-to-the-world products (create an entirely new market), new product line (allows a company to enter an established market for the first time), additions to existing product lines (to supplement a company's established product lines), improvements of ex
why new products fails
over-championing, overestimated demand, poor design, poor marketing execution, high development costs, high manufacturing costs, strong competitive reaction
challenges in new product development
idea shortage, fragmented markets, social and governmental constraints, cost, capital shortage, need for speed, shorter product life cycles
sales-wave research
test offering trial to sample of consumers in successive periods
controlled test market
a few stores that have agreed to carry new products for a fee
adopter categorization on the basis of relative time of adoption of innovations
innovators (technology enthusiasts who enjoy tinkering with new products), early adopters (visionaries who search for new technologies that might give them a dramatic competitive advantage), early majority (pragmatists who adopt the new technology when it