Chapter 4 ~ Marketing and Product Development

Market research reveals

What consumers want and points towards opportunities

2 questions before developing a

new product:

1. can we produce it

Production team answers:

1. can we produce it

2. can we sell it

2. costs

For many businesses product

development is infrequent

Once the business is underway

In the case of most successful

An ongoing marketing activity
businesses product development is

Cooperation between marketing

and production is

complex and constant

Feasibility study

To determine if a business opportunity is possible, practical

and viable

Who performs feasibility studies

All businesses

Invention or Innovation
Product development begins with An idea that is based on solving a problem for consumers

Necessity is the mother of invention

Inventions are

New devices, methods or processes developed from study or

experimentation

Businesses use invention to

Create original solutions to consumer needs

Innovation is

A product or service that uses new technology, items, or

process to change:
1. existing products
2. methods used to produce products
3. ways to distribute them

There are many more

Innovators than there are inventors

Most innovations develop as a

result of the

Competitive market

Example

Tracking packages for shipping

Stages of Product Development

Inventors tend to

Sell or license their ideas to others who know how to develop

products for the marketplace

Innovators on the other hand are marketers

more likely to be

Stages of product development

1. idea generation
2. idea screening
3. concept development
4. market strategy
5. feasibility study
6. product design
7. test marketing
8. Market Entry

Prototype

Sample of what the product might look like and operate

Market strategy discovers:

Primary and secondary market

Feasibility is closely tied to what

other stages?

1. market strategy
2. product design

Product design takes into account Primary market

the preferences of

Test marketing often includes

A survey

Product Development and Utility

Utility

What is added to the product to make it valuable on the market

Utility affects

The value equation by providing consumers with something

they did not have before

Types

1. form
2. information
3. place
4. time
5. possession

Function

What the product is intended to do

Form follows function means:

The products looks will be dictated by what its intended to do

Components of the Form Utility

1. material
2. scent
3. flavour
4. colour

5. design
6. packaging

Information utility

Provides consumers with instructions, directions, manuals

Place utility

Makes it possible for consumers to purchase the product

Time utility refers to

Making the product available when consumer needs it

Possession Utility

When they are easy to purchase

How can we increase possession

utility

.1 - Positioning and Branding

Positioning allows us to

1. payment plans
2. lower price

Perception is Reality
Create an image, the outward representation of the person we
want to be

Positioning by others can lead Misunderstandings and limited choices

to

Marketers too make choices

about

How to position their product or service

These choices mean

That the brand will appeal to some people and not to others

6.2 - Types of Positioning

5 Types of positioning:

1. Benefit
2. target
3. price
4. distribution
5. service

Benefit positioning

Customers want the product they buy: to do something for

them

Often a company will position One that offers consumers more benefits than competitors
its products or service as being

Problem with benefit

positioning

Competition can do the same

Price Positioning

Marketer is faced with 2 options when using price for

positioning:
1. cheapest
2. most expensive

If a marketer chooses a price in the middle range, they must use a different positioning
strategy!

A luxury good offers

Status more than quality

Consumers of luxury products The product to be expensive

want

Examples of luxury items

1. caviar
2. diamond watches
3. expensive ties

Many consumers are willing to Quality

pay high prices for

Manufacturers who use price Be sure to provide it

positioning with the promise of
quality must

It is possible that if a product

boasts the same features but
less expensive consumers will
think

The product is of inferior quality.

Distribution Positioning

Examples:
1. Avon
2. Amazon

Service Positioning

Examples:
1. convenience stores
2. free installation

Ikea uses price and service in

Low price, less service because products not assembled

combination.

6.3 How to Position a Product

The initial positioning premise Marketers have to be prepared to alienate some consumers

Businesses may decide that

there are some consumers

It doesnt want!

Some companies try to be all

things to all consumers

Examples:
1.

nike

2.

apple

3. Car manufacturers

Clear and coherent positioning If consumers dont know: they wont go!

A company that does not

position its product in a
distinctive manner will
discover

Consumers have no reason to choose it over a competitors

6.4 Branding
Business creates a brand for a A distinct identity
product to give it

Why?

Product Differentiation
includes

To keep consumers from confusing it with competitors

1. branding
2. advertising
3. positioning

A brand consists of

Includes:

All the features that make up the products image

1. name
2. logo
3. slogan

Commodities

Unbranded products

Why dont farmers need to

They sell stuff like potatoes, lettuceall the same
engage in marketing activities?

Commodity marketing is
usually conducted by:

Marketing boards

Marketing boards try to

Increase the overall consumption of the commodities

Brand Names

1. corporate dominant
2. product dominant

Corporate dominant

Examples:

1. Roots
2. Mastercraft
3. Presidents Choice
4. Kelloggs
5. Nike

Product Dominant

Examples:
1. Zest
2. Kodiak
3. Luvs

Logo

Includes:

Symbolic ways to create a brand

1. trademarks
2. trade names
3. brand marks
4. logotypes
5. symbols

3 types of logos:

1. monogrammatic
Example:
2. Visual Symbols
Example:
3. Abstract Symbols
Example:

Slogans

Short catchy phrase that is always attached to the

companys name and logo

How many words should a

slogan have?

Brand Strategies

Brand Strategies

1. Support
2. Develop Extension
3. license
4. co-brand
5. acquire

Once a brand has been

reposition
positioned it is very hard to

When is it feasible to
change?

Introducing into foreign market

Brand Extension

Capitalize on other brands success

Examples:

1. coke/diet coke
2. Humpty Dumpty chips/Cheezys
3.

Nike apparel/golf clubs

Licensing: similar to

Brand extension but for a fee license to other companies

Famous people even license Themselves

Co-Branding: when two

Or more brands combine

Acquisition of a successful
brand

If you cant beat em, buy em!

Branding for International Markets

The Internet connects

3 choices when going

international:

Consumers and businesses around the globe

1. leveraging positive reputation and use the same

brand identification
2. rename to reflect local culture and market
preferences
3. acquire local brand

Factors when choosing:

1. Centralized or not?
Glocal means:

2. Expansion Strategy

If centralized, stay the same

Thinking global but acting local

If wants to go global, build on original, but if wants limited

trade, acquire or rename

3. Corporate Identity

Strong international identity would lead to keeping it,

otherwise change or merge

4. Similarity of Products If the product mix is narrow it is easier to push it into

foreign markets

5. Similarity of markets

The more similar the market is to your own the easier it is to

push the same product

6. Competition in foreign Joint ventures or buyouts best if heavy competition exists

markets

7. Cultural Associations

If bad blood exists, use different brand or acquire/merge

8. Changing Dynamics

Brand can be local one day and international the next