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PRODUCT DEVELOPMENT
JOE BOB’sAMAZING CAT FOOD
“ All products are mortal”
(Part 2 of 2)
Organizing to Develop and Manage Products
Product manager … is responsible for a product, a Product manager … is responsible for a product, a product line, or several distinct products that make up a product line, or several distinct products that make up a groupgroup
Brand manager … is responsible for a single brandBrand manager … is responsible for a single brand Market manager … is responsible for all the marketing Market manager … is responsible for all the marketing
activities that serve a group of customersactivities that serve a group of customers Venture team …is a cross-functional group that creates Venture team …is a cross-functional group that creates
entirely new products. Team entirely new products. Team members come from different members come from different functional areas of the organization.functional areas of the organization.
Keys in Business Success
1. Calculated Risk Taking1. Calculated Risk Taking
- investing money- investing money
- P (B) of failure - success- P (B) of failure - success
2. Borrowing Ideas2. Borrowing Ideas
3. Specialty Products3. Specialty Products
- imaginative services- imaginative services
4. Structured Marketing Mix4. Structured Marketing Mix Assumption: target market problem solutionAssumption: target market problem solution
& skilled personnel& skilled personnel
SUCCESS
(Sales&Mktg. Exe. Inst., 1974)
Total Product Concept,Three Perspectives
EXPLICIT IMPLICIT EXTERNAL
Brand
Package
Warranty
Symbolism
Communication
Satisfaction
Social Effects
Pollution
Claim OnResources
Management Consumer Society View View View+ +
Product Differentiation...is creating products so that customers perceive them as different from
competing products
Form CreationForm Creation
Idea DemandIdea Demand
AcceptanceAcceptance Estimation Estimation
Profit
(A Manager’s View) a
Product design and features Product design and features - - style is the physical appearance, style is the physical appearance, ……
Product qualityProduct quality - - level and consistency of durability, …level and consistency of durability, …
Product support servicesProduct support services
- - Delivery, installation, … Delivery, installation, …
SPORTSDRINK
Sports Drink
Product Differentiation Through Quality, Design, and Support Services
HorizonOrganic
Milk
BordenMilk
Branding is fundamental to differentiation.
Influenced by Marketing Mix &Influenced by Marketing Mix &
* Available technology* Available technology
* Government standards* Government standards
* Level of competition* Level of competition
* “* “Consumer expectations”Consumer expectations” define product qualitydefine product quality
Product Differentiation through Quality
MARKETING
MIX
Principle:Principle: avoid promotions that “avoid promotions that “overpromiseoverpromise” benefits” benefits
Product QualityProduct Quality is the ability (characteristic) to is the ability (characteristic) to perform as expected in satisfying customer needsperform as expected in satisfying customer needs
Quality’s Lagging RolePercentage of Companies That Consider These
Criteria of Primary Importance in Compensating Senior Managers
0
5
10
15
20
25
30
35
40
45
50
Hospitals Autos Computers Banking
QualityPerformance
IndividualPerformance
Profit
Product Differentiation by Design
Product attributes (Product attributes (tangible or intangibletangible or intangible) separate ) separate your product from othersyour product from others
Colored paperclips that don’t rust
Product designProduct design allows functional allows functional performance of tasks & may provide a performance of tasks & may provide a competitive advantagecompetitive advantage
Product Differentiationthrough support services
Product Support ServicesProduct Support Services Are human or mechanical efforts that add Are human or mechanical efforts that add
value to a product such as financing, value to a product such as financing, warranties, guarantees, repairs & training.warranties, guarantees, repairs & training.
Are a competitive advantage when all other Are a competitive advantage when all other product features are equally matched by product features are equally matched by competitorscompetitors
Product Positioning is creating a desired product concept based on consumer perceptions.
Segmentation Segmentation isis grouping of grouping of people by needs or wants.people by needs or wants.
Positioning: Positioning: is the way consumers perceive the brand relative to its competitors caused by how how a product is marketed to attract a product is marketed to attract the targeted segment the targeted segment ID competitive advantage byID competitive advantage by
- Differentiating the product &Differentiating the product &- Stressing salient characteristicsStressing salient characteristics
Hypothetical Perceptual Map for Pain Relievers
Perceptual maps show marketers how closely products are conceptually positioned by consumers to “ideal points,” to their own products, and to competitors’ products.
Product Positioning and Repositioning Repositioning a Product Repositioning a Product
Adjusting a product’s present position can Adjusting a product’s present position can strengthen/increase its market share and strengthen/increase its market share and profitability.profitability. Repositioning is accomplished by changing the Repositioning is accomplished by changing the
product’s features, price, distribution, or image.product’s features, price, distribution, or image. Adding new products to the Adding new products to the
line may necessitate the line may necessitate the repositioning of older repositioning of older products.products.
Market Positioning Map: Tea-1980s
IcedIced HotHot
Traditional flavorTraditional flavor
Unique flavorUnique flavor
Luzianne Luzianne
LiptonLipton
TetleyTetley
Celestial SeasonsCelestial Seasons
NesteaNestea
Competitive Advantage
Repositioning: Tea - Late 1990s
IcedIced HotHot
Traditional flavorTraditional flavor
Unique flavorUnique flavor
Luzianne Luzianne
LiptonLipton
TetleyTetley
Celestial SeasonsCelestial Seasons
NesteaNestea
Arizona Iced TeaArizona Iced Tea
SnappleSnapple
Lipton RoundsLipton Rounds
Tetley RoundsTetley Rounds
Lipton Natural TeasLipton Natural Teas
Lipton FlavoredLipton Flavored
Competitive Advantage
Re Positioning Strategies
DifferentiationDifferentiation
ProductProduct
Brand Own a word Benefits The people who use the product The way people classify the products
The Brand Race(Positioning)
Dr.Batory#1
BATTLE of the BRANDS
- ID competitive advantage- ID competitive advantage- Stress salient characteristics- Stress salient characteristics- Differentiate product- Differentiate product
Top editors of women’s magazines are being Top editors of women’s magazines are being replaced.replaced.
What Do Women Want-To Read?
• WSJ, 4June2001
Market Changes: The market for women’s Market Changes: The market for women’s magazines has shifted towards more magazines has shifted towards more specialized magazines.specialized magazines.
Older magazines that offer an overview of Older magazines that offer an overview of women’s issues such as beauty, fashion, women’s issues such as beauty, fashion, health, and sex are now finding themselves health, and sex are now finding themselves obsolete.obsolete.
Specialized Magazines
Real Simple – Real Simple – simplifying your lifesimplifying your life
Lucky – shoppingLucky – shopping In Style – FashionIn Style – Fashion Self – Health/BeautySelf – Health/Beauty
Glamour
Bonnie Fuller was fired after Bonnie Fuller was fired after sales fell 11% in 2002.sales fell 11% in 2002.
Under her leadership, the Under her leadership, the magazine started to look too magazine started to look too much like Cosmo, its top much like Cosmo, its top competitor.competitor.
Wants to go back to its old Wants to go back to its old ways of putting out serious ways of putting out serious pieces about health and pieces about health and politics.politics.
Kathy Betts was fired as Kathy Betts was fired as editor in chief editor in chief
Sales had declined over Sales had declined over 7% last year and there was 7% last year and there was a definite increase in staff a definite increase in staff turnover turnover
Under Betts the magazine Under Betts the magazine was starting to lose its was starting to lose its reputation for reputation for sophisticated fashion sophisticated fashion coverage.coverage.
Harper’s BazaarHarper’s Bazaar
Product Deletion
Product Deletion Product Deletion is the process of eliminating a is the process of eliminating a product from the product mixproduct from the product mix Reasons to remove a product:Reasons to remove a product:
Slow sales create higher unit-production costs, Slow sales create higher unit-production costs, inventory costs, and distribution costs.inventory costs, and distribution costs.
To prevent negative To prevent negative feelings from affecting the feelings from affecting the company’s other products.company’s other products.
Product Deletion Process
FIGURE 12.5
Source: Martin L. Bell, Marketing: Concepts and Strategy, 3rd ed., p. 267; Copyright © 1979, Houghton Mifflin Company. Reprinted by permission of Mrs. Martin L. Bell.