Chapter 7 ("Developing and Managing Offerings") Flashcards Preview

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Developing New Offerings

Step 1: Idea Generation
Sources of new product ideas

Customers are important generators of new product ideas, especially if the product comes with a service component.

Employees are often used to the product category and can devise new products and uses. PRODUCT DESIGNERS and PRODUCT ENGINEERS are employees who specialize in developing new product ideas and uses.

Suppliers often suggest new uses for products that they supply.

Firms often get new product ideas by modifying the products of their competitors.


Developing New Offerings

Step 2: Idea Screening
The company tires to determine how promising the new product idea may be.

The goal at this stage is to answer the following questions:

Does the product add value for the customer?

Will it satisfy a market need?

Can it be made within a stated time period?

How many units can we sell, and at what price?

Can firm manufacture and sell within their budget?

Will there be enough profit margin?

Will there be need for after-sales services, and can we provide it?

Does it fit firm's image and corporate strategy?


Developing New Offerings

Step 2: Idea Screening

-Concept Testing
-Focus groups
-Depth Interviews

Concept Testing : Get early consumer feedback about a new offering before investing too much money into an offering that will not be successful.

Focus Group: Groups of 8-12 consumers gather together and react to the product concept in a group setting.

Depth Interviews: Individuals are presented with a new product concept and can react to it individually, and in great depth.


Developing New Offerings

Step 2: Idea Screening
-Strategic fit

Company must determine the STRATEGIC FIT of the new offering. Does the new offering match the image of the company?

Good Strategic Fit 例)Tideの会社が掃除用の商品を開発。
Poor Strategic Fit 例)Colgateが食製品を開発。


Developing New Offerings

Step 2: Idea Screening

Risk assessment
-investment risk
-opportunity risk

Investment risk: The possibility that the firm will not earn a sufficient return on their investment in the proposed new offering.

Opportunity risk: The risk that by choosing one product to develop, the firm might miss out an even better idea.


Developing New Offerings

Step 3: Feature Specification

Must narrow down the possible features to include in the proposed new offering, and decide on the best mix of features.


Developing New Offerings

Step 4: Development

-the actual offering is DESIGNED.
-detailed SPECIFICATIONS for the offering are created.
-PROTOTYPES are developed.


Developing New Offerings

Step 5: Testing
-Alpha testing
-Beta testing

-Alpha testing: Test it in a lab

-Beta testing: Actual customers makes sure that the offering will work under real-world conditions.


Developing New Offerings

Step 6: Launch or Commercialization
-rolling launch

Most common way to launch or commercialize a product is ROLLING LAUNCH.

-In a rolling launch, the firm introduces the new product gradually, expanding into new markets one-by-one or a few at a time.

-Rolling launch make sense if the company's sales or service staff needs training before having to handle the new product.


Developing New Offerings

Step 7: Evaluation


The milestone used will typically vary depending on the industry, the organization, and the type of offering being introduced. 例)映画がリリースされた時の最初の週末の売り上げ

Firms use the results of these milestones to evaluate their offerings, and may modify their product or marketing strategy based on these results.


4 different product lifecycle


-Introduction stage

-Growth stage

-Maturity stage

-Decline stage


Product Lifecycle:

Stage 1: The Introduction Stage

Durint this stage, the firm must:

-generate awareness of the product

-persuade consumers to try the product

-develop a sufficient supply chain to deliver the product to consumers.

Due to these requirements, the introduction stage is the most expensive stage in the product lifecycle.


Product Lifecycle:

Stage 1: The Introduction Stage

Describe two promotional strategies

-Promotional strategies
Pull strategy:
Push strategy

-Pricing strategies
Penetration pricing: Low initial price
Skimming pricing: High initial price


Product Lifecycle:

Stage 2: the Growth Stage

Characteristics of this stage

Also, the following competitive changes occur:

-increasing sales
-more competitors
-higher profits

-increased consumer demand for the new offering
-increased number of distribution and retailing channels
-new competitors will enter the market in response to the higher demand.

This is the most DANGEROUS stage. Company must have their distribution and production ready to go when the growth begins. じゃないと同業他社に奪われる。


Product Lifecycle

Stage 4: The Decline Stage

Strategies used in the decline stage:

-Harvesting: Stop spending money on promotion of the product, and just let the inventory run out without spending much.

-Divesting: Drop or delete the product, or sell off the brand, or reduce the price drastically to get rid of remaining inventory.


Lifecycle extension strategy

Extention strategy 1: Modify the target market.

-A new target market can result in increased numbers of users. 例)Disney targeting empty-nesters (people whose children have moved out)

-Find new uses

-Expand the target market internationally

Extention strategy2: Modify the product itself

-Increase the frequency of use

-Modify the packaging

-Improve the quality of the product of offering

-Increase the quantity of the product of offering


4 Product Development strategies

1. Market Penetration
Existing P, Existing M

2. Product Development
New P, Existing M

3. Market Development
Existing P, New M

4. Diversification
New P, New M


Brand Equity

3 stages that are required in order to build a strong brand:

1. Introduction

2. Elaboration

3. Fortification(要塞化)


Brand Equity

Different companies have opted for different brand strategies for multiple products. These strategies are:


Single brand identity: a separate brand for each product. 例)P&GがTide, Cheer, Bold,

Umbrella: All products under the same brand. 例)Sony offers many different product categories under its brand.

Mutli-brand categories: Different brands for different product categories. 例)Campbell Soup Company uses Campbell's for soups, Pepperidge Famr for baked goods, and V8 for juices.

Family of names: Different brands having a common name stem. 例)Nestle uses Nescafe, Nesquik, and Nestea for beverages.