CREATE AND IMPROVE PRODUCTSHow do businesses develop new products? In many cases, products that are identified as new in a company's advertising are not new at all. Some type of change has been made in the product that may be a major improvement. The change may also be a minor one that provides little benefit to the customer. The business calls the product new to attract the attention of customers and encourage them to buy.
Totally new products that have never been seen before by customers are not often introduced. What new products can you recall having been introduced during your lifetime? The Internet, airbags in automobiles, scanning equipment used in retail stores, and artificial hearts did not have similar substitutes before they were introduced. They were the result of research by engineers and scientists seeking to find solutions to important problems. Most products you use today are minor or major improvements in existing products. New cell phone technologies that store and replay music, take pictures or video, or have computer applications are improved versions of older wireless telephones, MP3 players, and digital video cameras. These and many other product improvements occur through the development of new technology or redesign of current products.
Scientists and other researchers often develop product improvements. Many ideas for product improvements result from the ideas of consumers and from their experience in using current products. Finding solutions to problems through carefully designed studies involving consumers is known as marketing research .
Plan Marketing ResearchMany types of research procedures can be used to solve marketing problems. Each type of research follows the scientific problem solving process outlined in Figure 10-3.
All marketing research studies involve gathering and analyzing information. A great deal of information about consumers and competitors is available to businesses without doing new studies. Analyzing existing information gathered for another purpose but used to solve a current problem is known as secondary research . Studies carried out to gather new information specifically directed at a current problem is primary research .
Types of Research StudiesThe most common type of marketing research study involves consumer surveys. Surveys gather information from people using a carefully planned set of questions. The surveys are often sent to consumers through the mail or using the Internet. They can also be conducted over the telephone.
Another less structured way of gathering the ideas, experiences, and opinions of consumers is through focus groups . In this research method, a small number of consumers take part in a group discussion
A focus group leader acts to identify areas of agreement and disagreement and to develop new ideas. Focus group members might discuss their experiences with a product, react to new product ideas, or make suggestions for product improvements.
Observations of consumers provide useful information for marketing researchers. Observations collect information by recording the actions of consumers rather than asking them questions. A store may be interested in how customers study and choose products in a display case or the routes they take through a store when shopping. A product design team may observe any problems consumers have using a product to make design improvements.
A final method of marketing research is conducting experiments. An experiment presents two carefully controlled alternatives to subjects in order to determine which is preferred or has better results. A marketing experiment may compare two sizes of packages to see if one size results in more sales than the other. A study could determine the effect of offering a 50-cent coupon to grocery shoppers on their choice of cereal brands.
Totally new products that have never been seen before by customers are not often introduced. What new products can you recall having been introduced during your lifetime? The Internet, airbags in automobiles, scanning equipment used in retail stores, and artificial hearts did not have similar substitutes before they were introduced. They were the result of research by engineers and scientists seeking to find solutions to important problems. Most products you use today are minor or major improvements in existing products. New cell phone technologies that store and replay music, take pictures or video, or have computer applications are improved versions of older wireless telephones, MP3 players, and digital video cameras. These and many other product improvements occur through the development of new technology or redesign of current products.
Scientists and other researchers often develop product improvements. Many ideas for product improvements result from the ideas of consumers and from their experience in using current products. Finding solutions to problems through carefully designed studies involving consumers is known as marketing research .
Plan Marketing ResearchMany types of research procedures can be used to solve marketing problems. Each type of research follows the scientific problem solving process outlined in Figure 10-3.
All marketing research studies involve gathering and analyzing information. A great deal of information about consumers and competitors is available to businesses without doing new studies. Analyzing existing information gathered for another purpose but used to solve a current problem is known as secondary research . Studies carried out to gather new information specifically directed at a current problem is primary research .
Types of Research StudiesThe most common type of marketing research study involves consumer surveys. Surveys gather information from people using a carefully planned set of questions. The surveys are often sent to consumers through the mail or using the Internet. They can also be conducted over the telephone.
Another less structured way of gathering the ideas, experiences, and opinions of consumers is through focus groups . In this research method, a small number of consumers take part in a group discussion
A focus group leader acts to identify areas of agreement and disagreement and to develop new ideas. Focus group members might discuss their experiences with a product, react to new product ideas, or make suggestions for product improvements.
Observations of consumers provide useful information for marketing researchers. Observations collect information by recording the actions of consumers rather than asking them questions. A store may be interested in how customers study and choose products in a display case or the routes they take through a store when shopping. A product design team may observe any problems consumers have using a product to make design improvements.
A final method of marketing research is conducting experiments. An experiment presents two carefully controlled alternatives to subjects in order to determine which is preferred or has better results. A marketing experiment may compare two sizes of packages to see if one size results in more sales than the other. A study could determine the effect of offering a 50-cent coupon to grocery shoppers on their choice of cereal brands.
PRODUCT PLANNINGEach part of the marketing mix is important when you decide to buy a product. The product must be available through effective distribution and must have an affordable and fair price. You must be aware of the product through effective promotion and know how it will meet your needs better than other choices. However, one mix element is more critical than the other three. If the product itself is not what you want, the effectiveness of the other mix elements does not matter. A business must carefully plan each of its products to make sure it meets the needs of the target market better than similar products offered by competitors.
Parts of a ProductA product is everything a business offers to satisfy a customer's needs. A product is made up of several components. It starts with the basic product , which is the simplest form of a product. The basic product is not unique and is usually available from several companies. Additions and improvements to the basic product are known as product features . One model of cellular telephone offers a built-in digital camera, voice dialing, and a web browser as features. When customers are offered choices of features, the choices are known as options . When buying an automobile, customers can choose options such as color, engine size, and manual or automatic transmission.
A brand name provides a unique identification for a company's products. Companies try to develop a memorable brand name with an appealing image.
Packaging is a part of many products. Packaging provides protection and security for the product before it is used. It also may make product storage and use easier. A new container for ground coffee is created with indentations that allow customers to pick it up easily with one hand. Some customers struggled with handling the original round container. The package is a convenient way to provide information to customers that help them make a purchase decision or explain how to use the product.
A way to build customer confidence in a company's products is by offering a guarantee or warranty. If the product breaks or does not meet customer expectations, the company will repair, replace, or provide a refund.
Product PlanningNew product planning is a costly and time-consuming process. It is not unusual for a company to invest several million dollars and spend years to develop a new product. Many people are involved in creating the product idea, determining how it will be produced and marketed, analyzing costs, and predicting sales. When that much money is at stake, companies need a procedure that results in products customers want and that can make a profit for the company for several years. The planning process involves multiple stages.
Idea Development Generating new product ideas is a creative process. Ideas come from the work of scientists, from the suggestions of salespeople and other employees, and from consumer surveys and focus groups. Most ideas are for improvements to existing products.
Idea Screening Companies encourage the development of a large number of new product ideas. Then they evaluate the ideas to determine which have the best chance to be successful. Ideas are screened to determine if a demand exists for the new product. Do other companies offer similar products? Can the product be produced at a reasonable cost? Is the product legal and safe?
Strategy Development If a product idea appears to be workable, the next step is to develop a full marketing strategy. The target market for the product is studied carefully. There must be a strong need for the new product. Alternative marketing mixes are developed and tested with potential customers. The costs of the alternatives are compared to determine which provide the greatest value.
Production and Financial Planning Next, the company develops a production procedure and identifies the facilities, equipment, and people that will be needed to produce the product. The costs of production and marketing are determined and a financial plan is developed to be sure the product will make a profit.
Limited Production and Test Marketing If a new product idea makes its way through the planning process, a company may produce a limited quantity of the product and test it in a small part of the market. This step allows the company to make sure the product can be produced and marketed as planned before a large investment is made for full production.
Full-Scale Production If each of the preceding steps is completed successfully, the new product will move into full-scale production and marketing. The company will continue to gather information on production and sales to be sure financial projections are being met. Competitors will also be watched because they will likely introduce competitive products if the new product is successful. Few unsuccessful products should make it through. Products that are fully screened have a much greater chance of being successful than new products that do not go through a planning procedure.
Parts of a ProductA product is everything a business offers to satisfy a customer's needs. A product is made up of several components. It starts with the basic product , which is the simplest form of a product. The basic product is not unique and is usually available from several companies. Additions and improvements to the basic product are known as product features . One model of cellular telephone offers a built-in digital camera, voice dialing, and a web browser as features. When customers are offered choices of features, the choices are known as options . When buying an automobile, customers can choose options such as color, engine size, and manual or automatic transmission.
A brand name provides a unique identification for a company's products. Companies try to develop a memorable brand name with an appealing image.
Packaging is a part of many products. Packaging provides protection and security for the product before it is used. It also may make product storage and use easier. A new container for ground coffee is created with indentations that allow customers to pick it up easily with one hand. Some customers struggled with handling the original round container. The package is a convenient way to provide information to customers that help them make a purchase decision or explain how to use the product.
A way to build customer confidence in a company's products is by offering a guarantee or warranty. If the product breaks or does not meet customer expectations, the company will repair, replace, or provide a refund.
Product PlanningNew product planning is a costly and time-consuming process. It is not unusual for a company to invest several million dollars and spend years to develop a new product. Many people are involved in creating the product idea, determining how it will be produced and marketed, analyzing costs, and predicting sales. When that much money is at stake, companies need a procedure that results in products customers want and that can make a profit for the company for several years. The planning process involves multiple stages.
Idea Development Generating new product ideas is a creative process. Ideas come from the work of scientists, from the suggestions of salespeople and other employees, and from consumer surveys and focus groups. Most ideas are for improvements to existing products.
Idea Screening Companies encourage the development of a large number of new product ideas. Then they evaluate the ideas to determine which have the best chance to be successful. Ideas are screened to determine if a demand exists for the new product. Do other companies offer similar products? Can the product be produced at a reasonable cost? Is the product legal and safe?
Strategy Development If a product idea appears to be workable, the next step is to develop a full marketing strategy. The target market for the product is studied carefully. There must be a strong need for the new product. Alternative marketing mixes are developed and tested with potential customers. The costs of the alternatives are compared to determine which provide the greatest value.
Production and Financial Planning Next, the company develops a production procedure and identifies the facilities, equipment, and people that will be needed to produce the product. The costs of production and marketing are determined and a financial plan is developed to be sure the product will make a profit.
Limited Production and Test Marketing If a new product idea makes its way through the planning process, a company may produce a limited quantity of the product and test it in a small part of the market. This step allows the company to make sure the product can be produced and marketed as planned before a large investment is made for full production.
Full-Scale Production If each of the preceding steps is completed successfully, the new product will move into full-scale production and marketing. The company will continue to gather information on production and sales to be sure financial projections are being met. Competitors will also be watched because they will likely introduce competitive products if the new product is successful. Few unsuccessful products should make it through. Products that are fully screened have a much greater chance of being successful than new products that do not go through a planning procedure.
SERVICESProducts are tangible items you can see and examine such as books, boats, and hamburgers. Marketing is used for both products and services, but services are more difficult to market. Services are activities that are consumed at the same time they are produced.
Services are intangible , meaning that they have no physical form. Because services are intangible, it is more difficult to examine a service and determine if it will meet your needs. Marketers must find ways to describe the service in understandable ways to prospective customers.
Effective service marketing is done in much the same way as product marketing. Using the two-step marketing strategy, service marketers first identify target markets for services. They then develop a marketing mix that appeals to the market. In addition to the service itself, the market mix includes distribution, pricing, and promotion of the service. The nature of services compared to the nature of products requires a change in the way they are marketed.
Services are inseparable , meaning that they are consumed at the same time they are produced. The person or technology producing the service must be available when and where the customer needs it. Marketers must determine where and when consumers want a service and must be able to provide it at that location and time.
Services are perishble, meaning that the availability of a service must match the demand for that service at a specific time.
A service cannot be stored for later consumption like many products. If all seats at a concert are filled, no more people will be able to hear that performance. If a hair-stylist does not have a client, the service goes unused.
Services are heterogeneus , meaning that there will be differences in the type and quality of service provided. Because people usually provide services at the time they are consumed, there is less control over quality than is possible with products. The skill, training, and motivation of the service provider affect service quality.
Services are intangible , meaning that they have no physical form. Because services are intangible, it is more difficult to examine a service and determine if it will meet your needs. Marketers must find ways to describe the service in understandable ways to prospective customers.
Effective service marketing is done in much the same way as product marketing. Using the two-step marketing strategy, service marketers first identify target markets for services. They then develop a marketing mix that appeals to the market. In addition to the service itself, the market mix includes distribution, pricing, and promotion of the service. The nature of services compared to the nature of products requires a change in the way they are marketed.
Services are inseparable , meaning that they are consumed at the same time they are produced. The person or technology producing the service must be available when and where the customer needs it. Marketers must determine where and when consumers want a service and must be able to provide it at that location and time.
Services are perishble, meaning that the availability of a service must match the demand for that service at a specific time.
A service cannot be stored for later consumption like many products. If all seats at a concert are filled, no more people will be able to hear that performance. If a hair-stylist does not have a client, the service goes unused.
Services are heterogeneus , meaning that there will be differences in the type and quality of service provided. Because people usually provide services at the time they are consumed, there is less control over quality than is possible with products. The skill, training, and motivation of the service provider affect service quality.