MT 219 Marketing Unit Five
New Product Development
And Services
New Product Development Process
• Idea Generation – ideas come from many sources• Idea Screening – need to avoid “go” or “no go” error• Concept testing – process of consumer feedback• Business Analysis – what is the potential for sales, costs, and
profits?• Product Development – lengthy and expensive• Test Marketing – realistic settings• Commercialization – when, where, and how
Capitalizing on Existing Products
• Line Extensions- can be simple or complex• Product Modifications
- Quality
- Function
- Aesthetics
Differentiating Products
• Quality – level and consistency• Design and Style• Features• Customer support• Hopefully develop a USP- Unique Selling Proposition
Positioning
• Where a product lives in a consumers mind relative to competition
- Important- This is a perception or feeling of consumer- not important what a marketer thinks it is.
Bases for Positioning
• Benefits• Features• Toward competition- amount of distance in consumer’s mind• Away from competition- Same as above• Into another category-Oatmeal as cholesterol reducer and not
hearty cereal• User- Remember those variables?• Lifestyle- Again, those variables.
Repositioning
• Can be based on features, product modification, market change, function, etc.
• Must be done very carefully or customers will be lost- New Coke
• Examples of successes-
Target
Services
Intangible products involving a deed, performance, or effort that cannot be physically possessed
-Haircuts
-Concerts
-Tax preparation
-Annual doctors’ physicals
Characteristics of Services
1.Intangibility – A service that is not physical and cannot be touched.
- Lawyer consulting fee2.Inseparability – Being produced and consumed at the same
time.- Plastic surgery
3.Perishability – The inability of unused service capacity to be stored for future use.
- Unused concert tickets for yesterday’s Hannah Montana concert.
4.Heterogeneity – Variation in quality.- Customer service at McDonald’s. (May get great service
today with a certain employee at lunch and horrible service tomorrow with a different employee at breakfast.)
Can you think of services that fit each category?
Issues related to service intangibility
• Difficult for customers to evaluate• No physical possession• Difficult to advertise and display• Pricing is problematic and subjective• Service process not always protected by patents
Issues related to service perishability
• Services cannot be stored or inventoried• Unused capacity is lost forever• Demand may be time sensitive• Balancing supply and demand is difficult
Issues related to heterogeneity
• Quality difficult to control• Standardization is a problem• Services vary from provider to provider• Services can vary from the same provider• Reputation is crucial• Reason for grading rubrics …take subjectivity out.
Issues related to service inseparability
• Does not allow for mass production• Customer participation required• Other customers can affect process• Difficult to distribute
Any Questions?
Thank you for attending!
See you next week!