Ch 9 - Developing New Products and Services Flashcards
Recognize the terms that pertain to products and services.
A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or something else of value.
A good has tangible attributes that a consumer’s five senses can perceive and intangible ones such as warranties; a laptop computer is an example. Goods also can be divided into nondurable goods, which are consumed in one or a few uses, and durable goods, which usually last over many uses. Services are intangible activities or benefits that an organization provides to satisfy consumer needs in exchange for money or something else of value, such as an airline trip. An idea is a thought that leads to a product or action, such as eating healthier foods.
Identify the ways to classify consumer and business products and services.
By type of user, the major distinctions are consumer products, which are products purchased by the ultimate consumer, and business products, which are products that assist an organization in providing other products for resale.
Consumer products can be broken down based on the effort involved in the purchase decision process, marketing mix attributes used in the purchase, and the frequency of purchase: (a) convenience products are items that consumers purchase frequently and with a minimum of shopping effort; (b) shopping products are items for which consumers compare several alternatives on selected criteria; (c) specialty products are items that consumers make special efforts to seek out and buy; and (d) unsought products are items that consumers either do not know about or do not initially want.
Business products can be broken down into (a) components, which are items that become part of the final product, such as raw materials or parts, and (b) support products, which are items used to assist in producing other goods and services and include installations, accessory equipment, supplies, and industrial services.
Services can be classified in terms of whether they are delivered by (a) people or equipment, (b) business firms or nonprofit organizations, or (c) government agencies.
Firms can offer a range of products, which involve decisions regarding the product item, product line, and product mix.
Describe four unique elements of services.
The four unique elements of services—the four I’s—are intangibility, inconsistency, inseparability, and inventory. Intangibility refers to the tendency of services to be a performance that cannot be held or touched, rather than an object. Inconsistency is a characteristic of services because they depend on people to deliver them, and people vary in their capabilities and in their day-to-day performance. Inseparability refers to the difficulty of separating the deliverer of the services (hair stylist) from the service itself (hair salon). Inventory refers to the need to have service production capability when there is service demand.
Explain the significance of “newness” and “consumer learning” in terms of new products and services.
From the important perspective of the consumer, “newness” is often seen as the degree of learning that a consumer must engage in to use the product. With a continuous innovation, no new behaviors must be learned. With a dynamically continuous innovation, only minor behavioral changes are needed. With a discontinuous innovation, consumers must learn entirely new consumption patterns.
Describe the factors affecting the success or failure of a new product or service.
A new product or service often fails for these marketing reasons: (a) insignificant points of difference, (b) incomplete market and product protocol before product development starts, (c) not satisfying customer needs on critical factors, (d) bad timing, (e) too little market attractiveness, (f) poor product quality, (g) poor execution of the marketing mix, and (h) no economical access to buyers.
Explain the purposes of each step of the new-product process.
The new-product process consists of seven stages a firm uses to develop salable products or services: (1) New-product strategy development involves defining the role for the new product within the firm’s overall objectives. (2) Idea generation involves developing a pool of concepts from consumers, employees, basic R&D, and competitors to serve as candidates for new products. (3) Screening and evaluation involves evaluating new product ideas to eliminate those that are not feasible from a technical or consumer perspective. (4) Business analysis involves defining the features of the new product, developing the marketing strategy and marketing program to introduce it, and making a financial forecast. (5) Development involves not only producing a prototype product but also testing it in the lab and with consumers to see that it meets the standards set for it. (6) Market testing involves exposing actual products to prospective consumers under realistic purchasing conditions to see if they will buy the product. (7) Commercialization involves positioning and launching a product in full-scale production and sales with a specific marketing program.
business products
Products organizations buy that assist in providing other products for resale. Also called ‘B2B products’ or ‘industrial products’.
consumer products
Products purchased by the ultimate consumer.
customer experience management (CEM)
The process of managing the entire customer experience within the company.
four I’s of services
The four unique elements to services: intangibility, inconsistency, inseparability, and inventory.
idle production capacity
Occurs when the service provider is available but there is no demand for the service.
new-product process
The seven stages an organization goes through to identify business opportunities and convert them into salable products or services.
product
A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value.
product item
A specific product that has a unique brand, size, or price.
product line
A group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.
