Basic Marketing Concepts - II

Product
New Product Development

04/22/10 Marketing Concepts - II 1

The Product and the Product Mix
– Product
• Physical goods Components
• Services of the Market Offering
• Experiences
• Events
• Persons
• Places
• Properties
• Organizations
• Information
• Ideas

04/22/10 Marketing Concepts - II 2

The Product and the Product Mix
♦ Product levels
– Customer value
hierarchy Five Product Levels

– Core benefit
– Basic product
– Expected product
– Augmented product

04/22/10 Marketing Concepts - II 3

 What is a Product?
♦ Kotler’s Potential Product
Five
levels to a Augmented Product
product:
Expected Product

Generic Product

CORE BENEFIT

04/22/10 Marketing Concepts - II 4

What is a Product?
♦ Kotler’s Potential Product
Five
levels to a Augmented Product
product:
The
Expected Product Fundamental
Need or Want
that consumers
Generic Product satisfy by
consuming the
product or
CORE BENEFIT service

04/22/10 Marketing Concepts - II 5

 What is a Product?
♦ Kotler’s Potential Product
Five
levels to a Augmented Product
Basic Version
product: of the product
containing only
Expected Product those elements
absolutely
necessary to
Generic Product function. No
distinguishing
features.
CORE BENEFIT

04/22/10 Marketing Concepts - II 6

 What is a Product?
♦ Kotler’s Potential Product Attributes and
Five Characteristics
that buyers
levels to a Augmented Product normally expect
product: and agree to
when they
Expected Product purchase a
product

Generic Product

CORE BENEFIT

04/22/10 Marketing Concepts - II 7

What is a Product?
♦ Kotler’s Potential Product Additional
Five product
attributes,
levels to a Augmented Product benefits, or
related services
product: that distinguish
the product
Expected Product
from
competitors

Generic Product

CORE BENEFIT

04/22/10 Marketing Concepts - II 8

 What is a Product?
♦ Kotler’s Potential Product All the
Five augmentations
and
levels to a Augmented Product transformations
that a product
product: might
ultimately
Expected Product
undergo in the
future

Generic Product

CORE BENEFIT

04/22/10 Marketing Concepts - II 9

 What is a Product?
♦ Kotler’s
All the augmentations and
transformations that a product
Potential Product might ultimately undergo in the

Five future

Additional product attributes,

levels to a Augmented Product benefits, or related services that
distinguish the product from

product: competitors

Attributes and Characteristics that

Expected Product buyers normally expect and agree
to when they purchase a product

Basic Version of the product

Generic Product containing only those elements

absolutely necessary to function.
No distinguishing features.

The Fundamental Need or Want

CORE BENEFIT that consumers satisfy by
consuming the product or service

04/22/10 Marketing Concepts - II 10

 The Messages
♦ New Product Development is risky business; often
avoided by well established firms
♦ A New Product Development Strategy can improve
the odds of success
♦ New Product Development can be the first step in a
series of profitable innovative efforts for a firm
♦ Tetra Pak took the risks, has taken the early steps in
a series of innovative efforts, and appears to have
improved the odds for success in new product
development thanks to the inventors of Tetra Recart.

04/22/10 Marketing Concepts - II 11

 Success
SuccessRate
RateEntirely
EntirelyNew
New Products
Products

3000 raw 125 beginning

300 submitted
ideas projects
ideas
.03% .8%
.3%

1.7 launches 4 major 9 large

60% developments developments
25% 11%

1 commercial
success
Stevens and Burley,
RTM May-June 1997
04/22/10 Marketing Concepts - II 12
 Familiarity Matrix: A Guide
Place Your Project in One of the Nine
Boxes
Decreasing knowledge of the market

Market Business New Business

Expansion Expansion Model

Market Business Business

Extension Extension Expansion

Market Product Product

Penetration Extension Expansion

Decreasing knowledge of the technology

04/22/10 Marketing Concepts - II 13
What is a Brand?
♦ Not simply a product -- anything offered to a
market for attention, acquisition, use, or
consumption that might satisfy a need or want.
♦ A product can be:
– Physical good
– Service
– Retail Store
– Person
– Organization
– Place
– Idea

04/22/10 Marketing Concepts - II 14

 What is a Brand?

Product = Commodity
A product is a produced item always
possessing these characteristics:
• Tangibility
•Attributes and Features

Brand = “Mind Set”

The sum of all communications and experiences received
by the consumer and customer resulting in a distinctive
image in their “mind set” based on perceived emotional
and functional benefits.

04/22/10 Marketing Concepts - II 15

 What is a Brand?

Product = Commodity
A product is a produced item always
possessing these characteristics:
• Tangibility
•Attributes and Features

Brand = “Mind Set”

The sum of all communications and experiences received
by the consumer and customer resulting in a distinctive
image in their “mind set” based on perceived emotional
and functional benefits.

04/22/10 Marketing Concepts - II 16

 What is a Brand?
Kotler’s Five Levels
Potential Product
of A Product

Augmented Product
BRAND DISTINCTION by Timothy D. Ennis

Products Brand Strong Brand

(Commodities) Name Brand
Expected Product Perceived by the
No Difference Well Known Distinctive Consumer as
Except Price But Similar Unique

Generic Product

CORE BENEFIT

04/22/10 Marketing Concepts - II 17

The Product and the Product Mix
– Product system
– Product mix
♦ Product classifications
– Durability and Tangibility
Classification:
• Nondurable goods
• Durable goods
• Services

04/22/10 Marketing Concepts - II 18

The Product and the Product Mix

– Consumer-Goods Classification:
• Convenience goods
– Staples
– Impulse goods
– Emergency goods
• Shopping goods
– Homogeneous
shopping goods
– Heterogeneous
shopping goods
• Specialty goods
• Unsought goods
04/22/10 Marketing Concepts - II 19
Classification
of Consumer
Products

04/22/10 Marketing Concepts - II 20