MKT 340 Ch09 ppt(4)

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Recognize the terms that pertain to
products and services.LO1
Identify the ways to classify consumer
and business products.
LO3
LO2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:
Describe four unique elements of
services.
LO4
Explain the significance of “newness”
and “consumer learning” to new
products and services.
9-2

Describe the factors affecting the
success or failure of a new product or
service.
Explain the purposes of each step of
the new-product process.LO6
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:
LO5
9-3

APPLE’S NEW-PRODUCT
INNOVATION MACHINE
9-4
Apple CarPlay
Ad

WHAT ARE PRODUCTS AND SERVICES?
A LOOK AT GOODS, SERVICES, AND IDEAS
LO1
 Goods
 Services
• Nondurable
Goods
• Durable
Goods
 Products
 Ideas
9-5

FIGURE 9-1 Services now contribute about
twice the value to the U.S. gross domestic
product than goods do

FIGURE 9-A The service continuum shows
how offerings can vary in their balance of
products and services
9-7

CLASSIFYING PRODUCTS
LO2
 Business Products
 Consumer Products
9-8

LO2
 Consumer Products
• Convenience Products
• Shopping Products
• Specialty Products
• Unsought Products
9-9

FIGURE 9-2 How a consumer product is
classified affects which products
consumers buy and the marketing strategies
used
9-10

LO2
 Business Products
• Components
• Support Products
• Derived Demand
 Supplies
 Industrial
Services
 Installations
 Accessory
Equipment
9-11

CLASSIFYING SERVICES
LO2
 Delivery by People or Equipment
 Delivery by Business Firms or
Nonprofit Organizations
 Delivery by Government Agencies
9-12

FIGURE 9-3 Services can be classified as
equipment-based or people-based
9-13

THE UNIQUENESS OF SERVICES
LO3
 Four I’s of Services
• Intangibility • Inseparability
• Inconsistency • Inventory
 Idle Production Capacity
 Product/Service Offering
• Core • Supplementary
9-14

LO3
 Assessing and Improving
Service Quality
• Gap Analysis – compare expectations to
the actual experience
• Monitoring Service Failure
• Use market research to improve
9-15

LO3
 Customer Contact Audits
• Customer Contact Audit
• Service Encounters
• A Customer’s Car Rental Activities
9-16

FIGURE 9-B Customer contact audit for a
car rental agency (green boxes = customer
activity; orange boxes = employee activity)
9-17
Hertz Ad

 Product Item
 Product Line
 Product Mix
• Stock Keeping Unit (SKU)
PRODUCT CLASSES, FORMS, ITEMS, LINES, AND MIXES
LO3
9-18

PRODUCT CLASSES, FORMS, ITEMS, LINES, AND MIXES
LO3
 Product Class (Industry
where product belongs)
 Product Form (Different
shapes, types)
9-19
Crapola Ad

MARKETING MATTERS
Feature Bloat: Geek Squad to the Rescue!
LO4
9-20
Geek Squad
Video

NEW PRODUCTS AND WHY
THEY SUCCEED OR FAIL
WHAT IS A NEW PRODUCT?
LO4
 Newness:
Compared to Existing Products
9-21
Playstation Video

 Newness: The Consumer’s Perspective
• Continuous Innovation
• Dynamically Continuous Innovation
• Discontinuous Innovation
 Newness in Legal Terms
LO4
9-22

FIGURE 9-4 The degree of “newness” in a
new product affects the amount of learning
effort consumers exert to use the product
9-23

• Product Line Extension
• Jump in Innovation
 Newness: The Organization’s Perspective
LO4
9-24

• Brand Extension
• True Innovation
 Newness: The Organization’s Perspective
LO4
9-25

Product Line ExtensionsLO4
9-26
Purina Web site
Example:
Purina Elegant Medleys
What are the potential benefits and
dangers of product line extensions?

FIGURE 9-C What it takes to launch one
commercially successful new product
9-27

FIGURE 9-D What separates new-product
winners and losers
9-28

 Marketing Reasons for New-Product Failures
• Insignificant Points of Difference
• No Economical Access to Buyers
• Not Satisfying Customer Needs on
Critical Factors
• Incomplete Market and Product Protocol
Before Product Development Starts
WHY PRODUCTS & SERVICES SUCCEED OR FAIL
LO5
9-29

 Marketing Reasons for New-Product Failures
• Bad Timing
• Poor Product Quality
• Poor Execution of the Marketing Mix
• Too Little Market Attractiveness
LO5
9-30

• Not Listening to the “Voice” of the Consumer
• Skipping Stages in the New-Product Process
 What Were They Thinking? Organizational
Problems in New-Product Failure
• Marketing a Poorly Conceived Product Too Quickly
• Encountering “Groupthink” in Meetings
• Not Learning Lessons From Past Failures
• Avoiding the “NIH Problem”
LO5
9-31

Fingos & Thirsty Dog/Thirsty Cat
Why did these products fail?
LO5
9-32

Monster in My Room and Life Saver
Why did these products fail?
LO5
9-33

USING MARKETING DASHBOARDS
Which States are Underperforming?
Annual Percent Change in Unit Volume by State
> 10%0 to 10%< 0%
Change in Growth
LO5
9-34

FIGURE 9-5 Seven stages in the new-
product process leading to success
9-35

THE NEW-PRODUCT PROCESS
STAGE 1: NEW-PRODUCT STRATEGY DEVELOPMENT
LO6
 New-Product Process
• SWOT Analysis/Scanning Conducted
 New-Product Strategy Development
• Strategic Role Defined
• Protocol Defined
• Stage Gate Process
• Service Development Difficult
9-36

FIGURE 9-E Strategic roles of most
successful new products
9-37

STAGE 2: IDEA GENERATION
LO6
 Employee and Co-Worker Suggestions
 Customer and Supplier Suggestions
• Crowdsourcing
 Idea Generation
• Open Innovation
9-38
Life is Good

LO6
• Outside Labs
• Industrial Design
 Research & Development Laboratories
9-39
IDEO Gourmet
Café Salad Packaging

LO6
 Inventors
 Smaller Firms
 Universities
 Competitive Products
9-40
EPS Whole
Tree Havester

STAGE 3: SCREENING AND EVALUATION
LO6
• Internal Approach
• External Approach
 Concept Tests
 Screening and Evaluation
 Customer Experience Management (CEM)
9-41

STAGE 4: BUSINESS ANALYSIS
LO6
 Prototype
 Business Fit
 Capacity Management
 Off-Peak Pricing
 Business Analysis
9-42
Google Driverless Car

STAGE 5: DEVELOPMENT
LO6
• Service Encounters and Delivery
• Example: Google’s Driverless Car
• Safety Tests
 Development
9-43

STAGE 6: MARKET TESTING
LO6
• Simulated Test Markets (STMs)
• Test Marketing
• When Test Markets Don’t Work
 Market Testing
• Standard Test Markets
• Controlled Test Markets
9-44

STAGE 7: COMMERCIALIZATION
LO6
 Burger King’s French Fries
 Risks with Grocery Products
• Slotting Fee
• Failure Fee
 Commercialization
• Regional Rollouts
9-45

 Speed as a Factor in New-Product Success
• Time to Market (TtM)
• Parallel Development
• Fast Prototyping
STAGE 7: COMMERCIALIZATION
LO6
9-46

X-1: BREAKING THE BARRIERS OF SOUND
WITH NEW-PRODUCT DEVELOPMENT
VIDEO CASE 9
X-1 Video Case

VIDEO CASE 9
X-1
1. What are the points of
difference, or unique attributes,
for X-1 products?
2. What are X-1’s primary target
markets?

VIDEO CASE 9
X-1
3. Describe the new-product
development process used
by X-1. What are the
similarities and differences
to the process described in
Figure 10-3?

VIDEO CASE 9
X-1
4. Which of the eight reasons for
new-product failure did X-1
avoid to ensure success of X-
1’s products?
5. Identify one new-product idea
you would suggest that X-1
evaluate.

CUSTOMER CONTACT AUDIT
FOR A SERVICE
IN-CLASS ACTIVITY 9-1

Customer contact audit for a car rental (green
boxes = customer activity; orange boxes =
employee activity)

USING METHOD 6-3-5 TO FIND
NEW-PRODUCT IDEAS
FOR MAGNETIC POETRY
IN-CLASS ACTIVITY 9-2

ICA 9-2
Magnetic Poetry’s Little Boxes of Words
Magnetic
Poetry
Example:
Use Method 6-3-5 to find New Product Ideas
For Magnetic Poetry’s
Little Boxes of Words

Product
A product is 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.
9-58

Services
Services are the intangible
activities or benefits that an
organization provides to satisfy
consumers’ needs in exchange
money or something else of value.
9-59

Consumer Products
Consumer products are products
purchased by the ultimate
consumer.
9-60

Business Products
Business products are products
organizations buy that assist in
providing other products for
resale. Also called B2B products
or industrial products.
9-61

Four I’s of Services
The four I’s of services consists
of the four unique elements that
distinguish services from goods:
intangibility, inconsistency,
inseparability, and inventory.
9-62

Idle Production Capacity
Idle production capacity occurs
when the service provider is
available but there is no demand
for the service.
9-63

Product Item
A product item is a specific
product that has a unique brand,
size, or price.
9-64

Product Line
A product line is 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.
9-65

Product Mix
A product mix consists of all of
the product lines offered by an
organization.
9-66

New-Product Process
The new-product process
consists of the seven stages an
organization goes through to
identify business opportunities
and convert them to salable
products or services.
9-67

Customer Experience Management
(CEM)
Customer experience
management (CEM) is the
process of managing the entire
customer experience within the
firm.
9-68

MKT 340 Ch09 ppt(4)

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