Designing and Managing ProductsConcepts related to Chapter 9

What is a Product? A product is anything that can be offered to a

market for attention, acquisition, use or consumption that might satisfy a want or need

Includes physical objects, services, places, organizations, and ideas.

Product LevelsBased on Consumer Perspective

1.Core product - actual productWhat are they buying?

2.Facilitating products - services that must be present for the core product to be in place

Ex. Security, register, check-in/check-out3.Supporting products - extra products to add value to core product, to differentiate from competitors

Ex. Area maps, spa, valet service, etc.4.Augmented products- delivery piece of the products

Ex. Accessibility, atmosphere, customer interaction, etc.

Augmented Product• Accessibility - must add value

• Ex. Hours of operation• Atmosphere: The Physical Environment

Multidimensional: Visual, aural, olfactory, tactilehttp://travel.usatoday.com/hotels/post/2009/10/hotel-lobby-fragrance-will-it-pass-smell-test-in-bad-economy/620000421/1 Do this to:

Create attention, messages, effects, and mood• Customer Interaction with the Service Delivery System

Joining stage Consumption phase Detachment phase

• Customer Interaction with Other Customers• Why is this important?• Examples?

• Customers as Employees Self-service technologies (SSTs). Examples?

Product levels(Adapted fromC. Gonroos, “Developing theService Offering—A Source of Competitive Advantage,” inAdd Value to Your Service,C. Surprenant, ed., Chicago:American Marketing Association,1987, p. 83.)

at what level are these products?

.

Brand Decisions

• Brand: Name, term, sign, symbol, design, or a combination of these elements

• One of a company’s most valuable assets• Represents what the company is and what it stands for• Implies trust , consistency, and expectations• The strongest brands own a place in customers’ minds• Develops mental structures to help consumers make

decisions• Multi-branding http://www.yum.com/brands/

• Co-branding – different ownership

What are these brands and what do they represent?

New Product Development Process

IdeaIdeaGenerationGeneration

ConceptConceptDevelopmentDevelopmentand Testingand Testing

MarketingMarketingStrategyStrategy

DevelopmentDevelopment

IdeaIdeaScreeningScreening

BusinessBusinessAnalysisAnalysis

ProductProductDevelopmentDevelopment

MarketMarketTestingTesting

CommercializationCommercialization

Product Life-Cycle (PLC) stagesIn your groups, describe what happens in your stage.1.Product Development2.Introduction3.Growth4.Maturity5.Decline

TimeProduct

Develop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

Sales and Profits Over the Product’s Life From Inception to Demise

Product Life Cycle

Phase 1 and 2• Product development begins when the company finds

and develops a new product idea During development, sales are zero and the

company’s investment costs add up • Introduction is a period of slow sales growth as the

product is being introduced into the market Profits are nonexistent at this stage due to high

product introduction expenses

Phase 3, 4 and 5• Growth is a period of rapid market acceptance and

increasing profits• Maturity is a period of slowdown in sales growth because

the product has achieved acceptance by most of its potential buyers

Profits level off or decline due to increased marketing outlays to defend the product against competition

• Decline is the period when sales fall off quickly and profits drop

http://finance.yahoo.com/news/pf_article_113424.htmlhttp://www.cleveland.com/pdgraphics/index.ssf/2009/10/move_to_online_causes_decline.htmlhttp://www.wwwmetrics.com/travel.htm

(Martin Bell, Marketing Concepts and Strategy, 3rd ed., p.267, 1979, Houghton Mifflin Company; used by permission, Mrs.. Marcellette (Bell) Chapman. )

Product Deletion Process

Conclusion• Develop a strong brand• What do customers think about your brand?• What is your brand supposed to mean?• Adapt, migrate or die!