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?

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See you next week!