Goals:
Key Terms:
Develop Effective Products and Services
Create and Improve Products – How do businesses develop new products? In many
cases, products are identified as new in a company’s advertising that 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 little one that provides little benefit to the customer. The
business calls the product new to attract attention of customers and encourage them to
buy.
Totally new products that have never been seen before by customers are not often introduced.
Most products you use today are minor or major improvements in existing products. A CD or
MP3 player uses new technology to store and replay music. Even cellular phones are improved
versions of older wireless phones. These and many other product improvements occur through
the development of new technology or redesign of current products.
Finding solutions to problems through carefully designed studies involving consumers is known
as marketing research.
Plan Marketing Research – Many types of plans can be used to solve marketing problems. Each
type of research follows the scientific problem solving process.
1. Define the marketing problem.
2. Study the situation.
3. Develop a data collection procedure.
4. Gather and analyze information.
5. Propose a solution.
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 Studies – The 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 structuredway of gathering 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 a suggestion for product improvements.
Observations collect information by recording the actions of consumers rather than asking them
questions. A product design team may observe any problems consumers have using a product to
design improvements.
Marketing research may also be gathered by conducting experiments. An experiment presents
two carefully controlled alternatives to subjects in order to determine which is preferred of has
better results.
Product Planning – Each 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 it will meet your needs better than other choices. However, if the product itself is not
what you want, the effectiveness of the other mix elements does not matter.
Parts of a Product – A product is everything a business offers to satisfy a customer’s needs. 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. When customers are offered choices of features,
the choices are known as options.
A brand name provides a unique identity 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 may also make product storage and use easier. A new container for
coffee is created with indentations that allow customers to pick it up easily with one hand after
customers are observed struggling to handle the original round container.
A way to build up customer confidence in a company’s products is by offering a guarantee or a
warrant. If the product breaks or does not measure up to customer expectations, the company
will repair, replace, or provide a refund.
Product Planning Procedures -New product planning is costly and time-consuming. It is not
unusual for a company to invest millions of dollars and to spend years developing a new
product. When that much money is at stake, companies need a procedure that results in
products customers want that can make a profit for the company for several years.
The steps in new product planning are:
Idea Development – Generating new product ideas is a creative process. Ideas come
from the work of scientists, from the suggestions of sales people 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.
Strategy Development – If a product appears to be workable, the next step is to
develop a full marketing strategy. The target market is studied carefully. There must be
a strong need for the new product.
Production and Financial Planning – The company develops a production procedure
and identifies the facilities, equipment, and people that will be needed to produce the
products 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 allows the company to make sure that the product
can be produced and marketed as planned before a major 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 monitor information on production and sales to make certain financial projections
are being met.Competitors will also be watched because they will likely introduce
competitive products if the new product is successful. Products that are thoroughly
screened have a much better chance of being successful than products that do not go
through the process.
Services – Products are tangible items you can see and examine such as books, cars, and food.
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 they have no physical form. Because services are intangible, it
is more difficult to examine a service and determine if it will satisfy your needs. Marketers must
find ways to describe the service in understandable ways to prospective customers.
Using a two-step marketing strategy, service marketers first identify target markets for services.
They then develop a marketing mix that appeals to the market. The marketing mix includes
distribution, pricing, and promotion of the service.
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 be able to determine where and when customers want a
service and must be able to provide it at that time and location.
Services are perishable, meaning that the availability of a service must match the demand for
that service at a particular time. A service cannot be stored for use at a later time. Fill all seats
for a concert are filled, no one else will be able to attend that performance. If a hair-stylist does
not have a client, the service goes unused.
Services are heterogeneous, meaning that there will be differences in the type and quality of
service provided. Because people typically 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 affects service quality.
Assignments:
Go to Online Resources (see link below). Select Chapter 10.
1 - A manufacturer of athletic shoes is ranked in the top three by people over 25 years old, but is not in the top five for the ages of 15-24. Using the five steps in marketing research, plan a way to improve the brand ranking with younger consumers.
2 - Identify four well-known services. For each service, describe each of the four characteristics of services as it applies to that service. Would it be easier or more difficult to maintain the quality of a service? Why do you think so?
3 - Click on Online Quiz Prep. Take the Web Quiz. When your quiz score is displayed, call the teacher over to see and record your score.
4 - Click on Study Tools
Complete Lessons 1 -4
Lesson 1 - Labeler - Marketing Functions
Lesson 2 - First Things First - Steps in Marketing Research
Lesson 3 - Test Your Knowledge - Price and Distribute Products
Lesson 4 - Beat the Clock - Plan Promotion
When your quiz scores are displayed, call the teacher over to see and record your scores.
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