Developing and Managing Products Unrestricted • Sustain growth • Increase revenue/profit • Replace obsolete items Why introduce new products? • New-to-the-world: discontinuous innovations • New product lines: enter an established market • Product line additions • Improvements or revisions • Repositioned products: existing products • Lower-priced products: like competition, but at a lower price Categories of new products 1. New product strategy 2. Idea generation 3. Idea screening 4. Business analysis 5. Development 6. Test marketing 7. Commercialization 8. New product New product development process • “Plan that links the new product development process with the objectives of the: • Marketing department • Business unit • Corporation” • Should specify the role the new products will play in the organization’s overall strategy New product strategy • Sources of new-product ideas • Customers • Employees • Distributors • Competitors • Research and development • Consultants • Other experts Idea generation • Screening: • Eliminates ideas that are inconsistent with organizational strategy or are inappropriate for some other reason • Concept test: • Test to evaluate a new-product idea, usually before any prototype has been created • Involves consumer reactions to product descriptions or visual representations of the proposed new product Idea screening and concept test Demand Cost Sales Profitability Business analysis stage • “The stage in the product development process in which a prototype is developed and a marketing strategy is outlined” • Involves: • Prototype • Marketing strategy • Packaging, branding, and labeling • Promotion, price, and distribution strategy • Examining manufacturing feasibility Development • Team oriented approach • Marketing, R&D, engineers, production, and suppliers • Shortens process and reduces costs Development • Test marketing: • “Limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation.” • Alternatives to test marketing: • Scanner-based research • Simulated market testing • Online test marketing Test marketing • Decision to market a product involves: • Ordering production materials and equipment • Starting production • Building inventories • Shipping the product to field distribution points • Training the sales force • Announcing the product to the trade • Advertising to potential customers Commercialization Why do some products fail? • No discernible benefit compared to existing products • Poor match between product features and customer desires • Overestimation of market size • Incorrect targeting • Too high or too low prices • Inadequate distribution Reasons for product failure Diffusion of Innovation Spread of new products Complexity Compatibility Relativeadvantage Observability Trialability Product characteristics and rate of adoption Product life cycles • Hi.

1. Developing and Managing
Products
Unrestricted
• Sustain growth
• Increase revenue/profit
• Replace obsolete items
Why introduce new products?
• New-to-the-world: discontinuous innovations
• New product lines: enter an established market
• Product line additions
• Improvements or revisions
• Repositioned products: existing products
• Lower-priced products: like competition, but at
a lower price
Categories of new products
1. New product strategy
2. Idea generation

2. 3. Idea screening
4. Business analysis
5. Development
6. Test marketing
7. Commercialization
8. New product
New product development process
• “Plan that links the new product development
process with the objectives of the:
• Marketing department
• Business unit
• Corporation”
• Should specify the role the new products will
play in the organization’s overall strategy
New product strategy
• Sources of new-product ideas
• Customers
• Employees
• Distributors
• Competitors
• Research and development

3. • Consultants
• Other experts
Idea generation
• Screening:
• Eliminates ideas that are inconsistent with
organizational strategy or are inappropriate for some
other reason
• Concept test:
• Test to evaluate a new-product idea, usually before
any prototype has been created
• Involves consumer reactions to product descriptions
or visual representations of the proposed new
product
Idea screening and concept test
Demand Cost
Sales Profitability
Business analysis stage
• “The stage in the product development process
in which a prototype is developed and a

4. marketing strategy is outlined”
• Involves:
• Prototype
• Marketing strategy
• Packaging, branding, and labeling
• Promotion, price, and distribution strategy
• Examining manufacturing feasibility
Development
• Team oriented approach
• Marketing, R&D, engineers, production, and suppliers
• Shortens process and reduces costs
Development
• Test marketing:
• “Limited introduction of a product and a marketing
program to determine the reactions of potential
customers in a market situation.”
• Alternatives to test marketing:
• Scanner-based research
• Simulated market testing
• Online test marketing
Test marketing

5. • Decision to market a product involves:
• Ordering production materials and equipment
• Starting production
• Building inventories
• Shipping the product to field distribution points
• Training the sales force
• Announcing the product to the trade
• Advertising to potential customers
Commercialization
Why do some products fail?
• No discernible benefit compared to existing
products
• Poor match between product features and
customer desires
• Overestimation of market size
• Incorrect targeting
• Too high or too low prices
• Inadequate distribution
Reasons for product failure
Diffusion of Innovation
Spread of new products

6. Complexity Compatibility Relativeadvantage
Observability Trialability
Product characteristics and rate of adoption
Product life cycles
• High failure rates
• Little competition
• Frequent product modification
• Limited distribution
• High marketing and production costs
• Sales increase slowly
• Profits turn negative
• Promotion focuses on awareness and information
• Communication challenge is to stimulate primary
demand
Introductory stage
• Increasing rate of sales
• Entrance of competitors
• Market consolidation
• Initial healthy profits
• Aggressive advertising of the differences between

7. brands
• Wider distribution
Growth stage
• Sales increase at a decreasing rate
• Saturated markets
• Annual models appear
• Lengthened product lines
• Service and repair assume important roles
• Heavy promotions to consumers and dealers
• Marginal competitors drop out
• Niche markets emerge
Maturity stage
• Long-run drop in sales
• Large inventories of unsold items
• Elimination of all nonessential marketing expenses
• Organized abandonment
Decline stage
• Long-run drop in sales
• Large inventories of unsold items
• Elimination of all nonessential marketing expenses
• Organized abandonment
Decline stage

8. Global issues in packaging
Unrestricted
Milk in the US
Milk in Italy
Milk in China
Americans associated refrigeration with freshness; thought this
was weird – read this article
if you’d like to learn more.
Shelf-stable (not refrigerated) milk
Read this article if you want to learn more.
Raw milk vending machines

9. Milk in Canada
Product Concepts
Unrestricted
“everything, both favorable and
unfavorable, that a person receives in an
exchange”
What is a product?
• Convenience: Inexpensive items that merit little
shopping effort
• Shopping: Require comparison shopping
• More expensive and found in fewer stores
• Homogenous vs heterogenous
• Specialty: Particular items for which consumers
search extensively and are reluctant to accept
substitutes
• Unsought: Products unknown to the potential
buyer or known products that the buyer does
not actively seek
Types of consumer products

10. • Product items: Specific versions of a product
that can be designated as a distinct offering
among an organization’s products
• Product lines: Groups of closely related product
items
• Product mixes: All products that an organization
sells
Product terms
Product terms
• Advertising economics
• Package uniformity
• Standardized components
• Efficient sales and distribution
• Equivalent quality
Benefits of product lines
Product modification
Product repositioning
Product line extension

11. Adjustments to
product items,
lines, and mixes
Product contraction
Adjustments to product offerings
• Changing one or more characteristics of a
product
• Quality modification
• Functional modification
• Style modification
• Planned obsolescence
• Practice of modifying products so those that have
already been sold become obsolete before they
need to be replaced
Product modification
• Changing consumer’s perceptions of a brand
• Often motivated by:
• Changing demographics
• Declining sales
• Changes in social environment

12. Repositioning
• Adding additional products to an existing
product line
• Can be overextended if:
• Products added do not contribute to profits
• Manufacturing or marketing resources are
disproportionally allocated
• Items in the line are obsolete
Product line extension
• The opposite of extension – involves removing
products from a line
• Good for:
• Concentrating efforts on most important products
• Reducing wasted effort spent on underperforming
products
• Better allocation of resources
Product line contraction
“name, term, symbol, design, or
combination that identifies a seller’s
products and differentiates them from

13. competitors’ products”
What is a brand?
• Brand name: part of a brand that can be
spoken, including letters, words, and numbers
• Apple
• Nike
• Brand mark: elements of a brand that cannot
be spoken
Branding
Source: Charis Tsevis
Why brand?
• Three main purposes: product identification,
repeat sales, and new product sales
• Brand equity: value of a company or brand
name
• Global brand: brand that gets at least one-third
of its earnings from outside its home country
• Brand loyalty: consistent preference for one
brand over all others

14. Branding
• Individual branding:
• Using different brand names for different products
• Family branding:
• Marketing several different products under the same
brand name
Branding strategies
• Co-branding:
• Placing two or more brand names on a product or its
package
• Types of co-branding
• Ingredient branding: Identifies the brand of a part
that makes up the product
• Cooperative branding: Occurs when two brands
receiving equal treatment borrow from each other’s
brand equity
• Complementary branding: Suggests usage by
advertising and marketing products that are used
together
Branding strategies

15. • Co-branding:
• Placing two or more brand names on a product or its
package
Branding strategies
• Exclusive rights to use a brand or part of a brand
• Service mark: Trademark for a service
• Must file an intent-to-use with the U.S. Patent
and Trademark Office
• Can cover:
• Sounds (MGM lion)
• Shapes (Nike swoosh)
• Colors or décor
• Slogans
• Abbreviations (Coke, Bud)
Trademarks
• Digital Millennium Copyright Act (DMCA)
explicitly applies trademark law to the digital
world
• Includes financial penalties for those who:
• Violate trademarks
• Register an otherwise trademarked term

16. • Generic product name: Identifies a product by
class or type and cannot be trademarked
Trademarks
• Purposes:
• Contains and protects products
• Promotes products
• Facilitates storage, use, and convenience of
products
• Facilitates recycling and reduces environmental
damage
Packaging
• Persuasive labeling
• Focuses on a promotional theme or logo
• Consumer information is secondary
• Informational labeling
• Helps consumers make proper product selections
• Lowers a consumer’s cognitive dissonance after
the purchase
Labeling

17. • Universal Product Codes (UPC)
• Series of thick and thin vertical lines (bar codes)
readable by computerized optical scanners
• Help retailers track customer purchases and
inventories
UPCs (bar codes)
• Warranty: Confirmation of the quality or
performance of a good or service
• Express warranty: Written guarantee
• Implied warranty: Unwritten guarantee that the
good or service is fit for the purpose for which it
was sold
Product warranties
Global issues in branding
Global issues in packaging
Write Up 2
For this project, you will do write-up throughout the semester.
You will find an article in a recent edition of Bloomberg
Business week. It should be something that you find interesting.

18. Then, you’ll analyze the content and put together a short
(approximately one page, no more than 2 pages) write-up in
which you report your analysis.
Each write-up should include:
Basic information:
· The date of publication
· The title and author of the article
· Page numbers on which the article can be found
· A (brief) summary of the article
Analysis:
· How does this article relate to what we’ve discussed in class?
Why would a marketing professional be interested in the article,
and how would they apply it to the marketing decisions they
make? Be sure to use course terms. Part of your grade will
include how well and correctly you use course terms when
discussing your article.
· Why do you think this article was published in this magazine?
Consider how it connects to the broader business world. If your
major is not marketing, it may be helpful to consider what value
someone in your major would get from the article if they were
to read it.
MKTG 3723 – Penghao Wang

19. Reflection 3
Use this assignment to reflect upon what you’ve read and
learned over the course of this module. Also use it as an
opportunity to ask for clarification on any topics you didn’t
fully understand, or questions that came up while you were
working. Think of it as the participation and discussion you
might do in a face-to-face class. I’ll clarify things and answer
your questions just like I would in class or office hours. Full
credit will be given to reflections that seem thought-out and
well-considered.
1. First Impressions: List thoughts or ideas that came to mind as
you did the work for the week.
2. Key Terms: List words and concepts you felt were important
this week.
3. Questions: List any questions that came to mind while you
completed the work this week. These questions can be about the
content, a topic related to the content, or about assignments or
the format of the class.
Marketing Research
Unrestricted
“the process of planning, collecting, and
analyzing data relevant to a marketing
decision”

20. What is marketing research?
• Gathering and presenting
factual statementsDescriptive
• Explaining dataDiagnostic
• Addressing “what if”
questionsPredictive
Roles of marketing research
• Guides decision making and helps identify
opportunities
• Helps managers trace problems
• Helps managers understand relationships and
isolate issues
• Helps managers more effectively and accurately
serve customers
Managerial uses of marketing research
The marketing research process

21. • Determines what information is needed
and how it can be obtained efficiently and
effectively
Marketing
research problem
• Defines the specific information needed to
solve a marketing research problem
Marketing
research objective
• Broad-based problem that uses marketing
research in order for managers to take
proper actions
Management
decision problem
The marketing research process
“data previously collected for any purpose
other than the one at hand”
What is secondary data?
Internal corporate information
Government agencies
Trade and industry associations

22. Business periodicals
News media
Sources of secondary data
Social media data
• “The exponential growth in the volume, variety,
and velocity of information and the
development of complex new tools to analyze
and create meaning from such data”
• Where do we collect it?
• Data visualization uncovers meaning and
patterns
Big data
• Research design specifies:
• Research questions that must be answered
• How and when to gather data
• The way to analyze data
• Project budget is finalized after the research
design is approved
Planning the research design

23. “data collected for the first time and used
to solve the particular problem under
investigation”
What is primary data?
Forms of survey research
• Encourage an answer phrased in the
respondent’s own words
Open-ended
questions
• Ask the respondent to make a
selection from a limited list of
responses
Closed-ended
questions
• Closed-ended questions designed to
measure the intensity of a
respondent’s answer
Scaled-response
questions

24. Questionnaire design: question types
State the survey’s purpose at the
beginning of the interview
Avoid leading questions
Avoid asking two questions in one
Interview design
One-way mirror
observations Mystery shoppers
Behavioral
targeting (BT)
Observation research
• Study of human behavior in its natural context
• Involves observation of behavior and physical
setting
• Goal is to gain insight into culture and behavior
of a community
Ethnographic research

25. • Involves manipulation of a variable to
understand and isolate the effects
• Will one package design be more effective than
another? Why?
Experiments
• Sample: subset from a larger population
• Universe: the population of interest, from which
the sample will be drawn
Samples
Samples
Measurement
error
Measurement
error
Occurs when there is a difference
between the information desired and the
information provided
Sampling

26. error
Occurs when a sample does not represent
the target population
Frame
error
Occurs when a sample drawn from a
population differs from the
target population
Random
error
Occurs when the selected sample is
an imperfect representation of
the overall population
Types of errors
• Some primary data are collected by marketing
research field service firms
• Data analysis
• Purpose is to interpret and draw conclusions from
the collected data
• Techniques used to organize data
• One-way frequency counts and cross-tabulations
• Hypothesis testing, measures of association, and

27. regression analysis
Collecting and analyzing the data
Collecting and analyzing the data
• Researchers are required to present written and
oral reports
• Contents of a report
• Concise statement of the research objectives
• Brief explanation of research design
• Summary of major findings
• Conclusion with recommendations
• Follow up
• Researcher should determine why management
did or did not carry out the recommendations
Preparing and presenting the report
Administer surveys
Conduct focus groups
Other types of marketing research
Uses of internet for research

28. • Web survey systems (Qualtrics, Survey Monkey)
• Google consumer surveys
• Online panel providers (Amazon Mturk)
• Web communities
• Mobile surveys (30% of interview responses)
Tools for internet research
• Tracks scanner data from retailers and examines
sales trends
• Can also track individual level purchases
• Neuromarketing:
• Studies physical responses to marketing stimuli
Scanner-based research
Eye tracking
• Do you already know a lot about your market?
• Is it worth doing the research?
• When the expected value of research
information exceeds the cost of generating the
information

29. When should we do research?
Using CRM for data
Assignment 3 (Chapter 8)
1. Go to the American Airlines website and explore the
American Airlines Advantage loyalty program. This link will
take you directly to the loyalty program page, but you will
likely to need to click around and visit other pages for all the
relevant information.
a) List and briefly describe the target market segments you see,
as they pertain to the loyalty program.
b) What bases for segmentation is American Airlines using?
c) Why do you think so? Provide specific details that link the
loyalty program to the bases in your explanation.
2. Look at the American Airlines ads below, continue to browse
their website, and take a look at some of their recent press
releases.
a) How do you think they are trying to position American
Airlines?
b) What positioning base(s) are they using?
c) Why do you think so?
3. Now, create a positioning map featuring American Airlines
and 4 of their closest competitors. You may choose the
competitors and the dimensions for your map. See Exhibit 8.3
on page 151 for an example. How you create your map is up to
you – you can use Word’s shapes tools, create it in PowerPoint,
or draw it by hand – but please put your image directly into this
document.

30. 1
Segmenting and Targeting
Unrestricted
• People or organizations with needs or wants and the ability
and willingness to buy
Market
• Subgroup of people or organizations sharing one or more
characteristics that cause them to have similar product needs
Market segment
• Process of dividing a market into meaningful, relatively
similar, and identifiable segments or groups
Market segmentation
Some important terms
• Identify groups with similar needs
• Provides marketers with information for
designing specific marketing mixes
• Helps satisfy customer wants and needs

31. (as directed by the marketing concept)
Why segment?
• Substantiality
• Identifiability and measurability
• Accessibility
• Responsiveness
Criteria for successful segments
“characteristics of individuals, groups, or
organizations, to divide a total market into
segments”
What are segmentation bases?
• Segmenting markets by region, market size,
market density, or climate
Geographic segmentation
• Segmenting markets by age, gender, income,
ethnic background, and/or family life cycle
Demographic segmentation

32. • Segmenting markets by personality, motives,
lifestyles, geodemographics
• Geodemographics combines geographic,
demographic, and lifestyle segmentations (like
college students)
Psychographic segmentation
• Groups customers into market
segments according to the benefits
they seek from the product
Benefit
segmentation
• Divides a market by the amount of
product bought or consumed
Usage-rate
segmentation
• Principle holding that 20 percent of
all customers generate 80 percent of
the demand
80/20 principle
Benefit and usage-rate segmentation

33. Source: Jennifer Marsh, BSU Foundation
Usage-rate segmentation
ProducersProducers ResellersResellers
GovernmentsGovernments InstitutionsInstitutions
B2B Segmentation Bases
• Company characteristics:
• Geographic location
• Type of company
• Company size
• Product use
• Purchasing strategies of buyers
• Influenced by the personal characteristics of buyers
B2B Segmentation Bases
• Business customers who place an order with the
first familiar supplier to satisfy product and delivery
requirements
Satisficers
• Business customers who consider numerous
suppliers, both familiar and unfamiliar, solicit bids,

34. and study all proposals carefully before selecting
one
Optimizers
B2B Segmentation: Purchasing strategies
• Selecting a market or product category for study
• Choosing a basis or bases for segmentation
• Selecting segmentation descriptors
• Profiling and analyzing segments
• Selecting markets
• Designing, implementing, and maintaining
appropriate marketing mixes
Steps in segmenting the market
Source: The Center on Philanthropy, 2008.
Choosing a basis for segmentation
• Age
• Donor status
• Student loan status
• Reason for giving (motive)
Selecting segmentation descriptors

35. Source: The Center on Philanthropy, 2008.
Profiling and analyzing segments
• Alumni
• 70% of which are “non-donors”
• Mostly recent graduates – Millennial generation
Source: McDearmon, 2009.
Selecting the target market
• Place
• Promotion
• Price
• Product
Design and implement the marketing mix
• Positioning
• Process
Present ideas
to Board
1 month:
Approval by
Board

36. 2-3 months:
Delegation by
Strategic
Planning
Committee
3rd month or
so: Approval
of plan by
Board
4-10th
months:
Development
and Hiring
1 year:
Promotion,
website
updated,
mailings sent
Other factors to consider
• “A group of people or organizations for which an
organization designs, implements, and
maintains a marketing mix”

37. • Strategies for selection:
• Undifferentiated targeting
• Concentrated targeting
• Multisegment targeting
Selecting a target market
• Views the market as one big market
with no individual segments and thus
uses a single marketing mix
Undifferentiated
targeting strategy
• Selects one segment of a market for
targeting marketing efforts
Concentrated
targeting strategy
• Chooses two or more well-defined
market segments and develops a
distinct marketing mix for each
Multisegment
targeting strategy
Selecting a target market
“When sales of a new product cut into sales
of a firm’s existing products”

38. What is cannibalization?
• Companies that successfully implement CRM
tend to customize the goods and services
offered to their customers
• Based on data generated through interactions
between carefully defined groups of customers
and the company
• Can allow marketers to target customers with
extremely relevant offerings
CRM as a targeting tool
Personalization Time savings
Loyalty Technology
CRM as a targeting tool
• Influences potential customers’ overall
perception of a brand, product line, or
organization in general
Positioning
• Means of displaying or graphing the
location of products, brands, or groups

39. of products in customers’ minds
Perceptual
mapping
• Changing consumers' perceptions of a
brand in relation to competing brandsRepositioning
Positioning
Positioning
Attribute Price andquality
Use or
application
Product
user
Product
class Competitor
Emotion
Positioning
Services and Nonprofit
Organization Marketing

40. Unrestricted
“The result of applying human or
mechanical efforts to people or objects.
Services involve a deed, performance, or an
effort that cannot be physically possessed
(owned).”
What is a service?
Shostack’s Continuum
Value creation through intangible elements
• Inability of services to be touched, seen, tasted,
heard, or felt in the same manner that goods can be
sensed
Intangibility
• Production and consumption are simultaneous,
meaning the consumer takes part in productionInseparability
• Variability of the inputs and outputs of services,
which causes services to tend to be less
standardized and uniform than goods

41. Heterogeneity
• Inability of services to be stored, warehoused, or
inventoriedPerishability
Differences between goods and services
• Services can be difficult to evaluate
• Search quality: Can be assessed before purchase
• Experience quality: Can be assessed after use
• Credence quality: Can be difficult to assess without
knowledge or expertise
Differences between goods and services
• Product
• Place (and time)
• Price
• Promotion (and education)
• Process
• Physical environment
• People
The 7 Ps of services marketing
• Ability to perform a service dependably,
accurately, and consistentlyReliability

42. • Ability to provide prompt serviceResponsiveness
• Knowledge and courtesy of employees and their
ability to convey trustAssurance
• Caring, individualized attention to customersEmpathy
• Physical evidence of a serviceTangibles
Components of service quality
People processing
Possession processing
Mental stimulus processing
Information processing
Categories of services
Categories of services
The flower of service
Nonprofit organization marketing

43. “An organization that exists to achieve some
goal other than the usual business goals of
profit, market share, or return on
investment”
What is a nonprofit?
Identifying desired customers
Specifying objectives explicitly or implicitly
Developing, managing, and eliminating programs and
services
Deciding on prices
Scheduling events or programs
Communicating their availability
Nonprofit marketing activities
• Objectives:
• To generate enough funds to cover expenses
• To provide equitable, effective, and efficient services
• Respond to the wants and preferences of users,
donors, politicians, the media, and the general public
Nonprofit marketing

44. • Apathetic or strongly opposed targets
• Vaccinations, counseling
• Pressure to adopt undifferentiated strategies
• May feel the need to serve as many as possible
• May find economies of scale en masse
• Complementary positioning
• Often need to work with other community nonprofits,
rather than directly compete
Target market issues
• Benefit complexity
• Ideas may be difficult to communicate
• Ex: Messages to quit smoking or taking drugs
• Benefit strength
• Benefits to a single individual are often indirect
• Ex: Why give blood?
• Involvement
• People may have very low involvement
• Ex: Prevent forest fires
Product decisions
Product decisions

45. • Distributing goods or service where and when
customers want it is key
• Things to consider:
• Customer privacy
• Special facilities or tools needed
• Ability to provide materials online
• Use of technology
• Portability
Place decisions
• Professional volunteers
• Sales promotion activities
• Public service announcements (PSAs)
Promotion decisions
• Pricing objective is to cover costs and to allocate
resources fairly
• Nonfinancial prices
• Indirect payment (taxes)
• Separation between payment and users
• Below-cost pricing
Pricing decisions