Business Outline

Amanda Staubitz 1/6/07

Mr. Delman Period 1 Scale

Chapter 11 Outline

BUSINESS

Chapter 11: Developing and Pricing Products

I. What is a product?

i. Product: value package

ii. In developing the marketing mix for any product, whether goods or services, marketers must consider what consumers really buy when they purchase products.

b. The Value Package

i. Feature: tangible and intangible qualities that a company builds into a product

ii. Value package: product marketed as a bundle of value-adding attributes, including reasonable cost

iii. Increasingly buyers expect to receive products with greater value--with more benefits at reasonable costs.

c. Classifying Goods and Services

i. Classifying products according to expected buyers into 2 groups:

1. Consumer Products

2. Industrial Products

ii. Classifying Consumer Products

1. Convenience goods and services: are consumed rapidly and regularly. They are inexpensive and are purchased often.

2. Shopping Goods and Services: are more expensive and are purchased less often than convenience products. Consumers often compare brands, sometimes in different stores.

3. Specialty goods and services: are extremely important and expensive purchases. Consumers usually decide on precisely what they want and will accept no substitutes.

iii. Classifying Industrial Products

1. Expense items: are goods or services that are consumed within a year by firms producing other goods or supplying other services.

2. Capital items: are permanent, expensive, long-lasting, goods and services.

d. The Product Mix

The group of products that a company makes available for sale, whether consumer, industrial or both, is it product mix: Group of products that a firm makes available for sale.

i. Product Lines

1. Product Line: group of products that are closely related because they function in a similar manner or are sold to the same customer group who will use them in similar ways

2. Companies may extend their horizons and identify opportunities outside existing product lines.

3. The result is multiple of diversified product lines.

II. Developing New Products

To expand or diversify product lines firms must develop and introduce streams of new products.

a. The New Product Development Process

i. High mortality rates for new ideas means that only a few new products reach the market.

ii. Speed to market with a product is as important as care in developing it.

1. Product Mortality Rates

a. It is estimated that it takes 50 new product ideas to generate one product that finally reaches the market.

2. Speed to Market

a. Strategy of introducing new products to respond quickly to customer or market changes.

b. The Seven-Step Development Process

1. Product Ideas

2. Screening

3. Concept testing

4. Business analysis

5. Prototype development

6. Product testing and test marketing

7. Commercialization

c. Variations in the Process for Services

1. Service ideas: the search for service ideas includes defining the service package: identifying the tangible and intangible features that characterize the service and stating service specifications.

2. Service Process Design: Instead of Prototype development, services require a three-part service process design: Three Aspects (process selection, worker requirements, facilities requirements) of developing a service product

d. The Product Life Cycle

1. Product Life cycle (PLC) a series of stages in a products profit-producing life

ii. Stages in the Product Life Cycle

1. Introduction

2. Growth

3. Maturity

4. Decline

e. Extending Product Life: An Alternative to New Products

1. Product Extension: existing, unmodified product that is marketed globally

2. Product Adaptation: product modified to have greater appeal in foreign markets

3. Reintroduction: process of reviving, for new markets, products that are obsolete in older ones

III. Identifying Products

a. Branding Products

1. Branding is a process of suing symbols to communicate the qualities of a particular product made by a particular producer.

ii. Adding Value through Brand Equity

1. Brand equity: degree of consumers' loyalty to and awareness of a brand and its resultant market share

2. Brand awareness: extent to which a brand name comes to mind when the consumer considers a particular product category

iii. E-Business Branding

1. It takes a long time to establish national or global brand recognition

2. Cisco Systems Inc, B2B, E-commerce

iv. Types of Brand Names

1. National