Chat with us, powered by LiveChat Important Definitions: Product ? a good, a service, or an idea received in an exchange. Good ? a tangible physica | WriteDen

Important Definitions: Product ? a good, a service, or an idea received in an exchange. Good ? a tangible physica

Important Definitions:

Product – a good, a service, or an idea received in an exchange.

Good – a tangible physical entity

Service – An intangible result of the application of human and mechanical efforts to people or objects

Idea – a concept, philosophy, image, or issue

Product Mix – the total group of products that an organization makes available to customers

New Product Development Process – a seven-phase process for introducing products (you can review the 7 phases in the Pride and Ferrell textbook on pages 393-401)

Brand Loyalty – a customer’s favorable attitude toward a specific brand

Product Management, New Product Development, Branding, and Packaging Summary:

This particular mini-lecture introduces a topic (product) that contains a significant amount of material and information. There are three chapters in the Pride and Ferrell textbook devoted to the development and management of product offerings (actually four chapters if you include Chapter 13 – Services, which we will cover later). Although this mini-lecture will not be able to cover all pertinent sub-topics of the product-related chapters, I expect each student to review the material presented in the three chapters if he or she is not familiar with the concepts associated with marketing products to business customers or ultimate consumers.

Two important topics will be covered in this mini-lecture, new product development and branding.

A. New Product Development

A critical issue facing a significant number of organizations globally today is the development of new products that will allow an organization to maintain or increase profitability. The race to uncover the newest “it” product drives organizations to spend millions of dollars in research and development costs each year. It is important to note that organizations often have two options in developing new product options. The first, a line extension, is defined as the “development of a product that is closely related to existing products in the line but is designed specifically to meet different customer needs” (Pride and Ferrell p. 390). Line extensions are very popular today, especially for consumer product manufacturers. As a very basic example, Coca-Cola has been very successful adding line extensions in the past (starting with Coca-Cola, then adding Sprite, Diet Coke, Mellow Yellow,…) and continues to add line extensions today to its beverage options (Coca-Cola Zero, Dasani water, Frutopia, ….). The key to utilizing line extensions is building on the success of the previous product offerings without eliminating the previous offerings. In other words, the company continues to manufacturer Coca-Cola and Diet Coke even as it adds new product lines.

The second option for introducing new products is labeled a product modification, defined as a change “in one or more characteristics of a product” (PF p. 391). However, the key difference between a line extension and a product modification is that an organization choosing to utilize product modification will remove the original product from production once the modified product is introduced. The best example of product modification occurs in the automobile industry, where the automobile manufacturer will make changes to a particular vehicle every few years, and eliminate production of the “older” version once the “newer” version hits the production line. For example, the Toyota Camry and the Chevrolet Tahoe have seen body style modifications in recent years.

The choice between utilizing a line extension or a product modification is often based on the product being produced. Some products tend to be more amenable to line extensions, others to product modification. Whatever option the organization selects, the key is finding successful new products to introduce to the consuming public.

Two articles, found in the links below, highlight the challenges facing organizations developing new products today. Both articles emphasize how product development strategies have changed in recent years, specifically the challenges facing international product development and introduction.

Kandybin, Alex and Michaels, Adam (2013), “Successful Product Development: Unique, Coherent…And Rare,” Forbes, July 29, 2013.

https://www.forbes.com/sites/boozandcompany/2013/07/29/successful-product-development-unique-coherent-and-rare/#1d9233da684c

Berner, Gabriela, Chang, Jade, Dunaeva, Marina, and Scamazzo, Leonardo (2014), “Sharp Focus,” Business Today, April 13, 2014. http://www.businesstoday.in/magazine/lbs-case-study/gillette-innovated-improved-its-market-share-in-india/story/204517.html

Discussion Question #1 – As seen in the previous articles, the speed of new product development is often a critical factor in determining success or failure. The relationship between the time it takes to get the product to the market versus the risk associated with the product introduction is often an inverse relationship (the shorter the time to develop and introduce the product = the greater the risk). What companies have recently and successfully introduced new products in an expedited manner? Additionally, what organizations have recently been unsuccessful in trying to rush products to the market? Why did these failures occur? What components of the development process were compromised that led to these failures?

B.        Branding

A developing trend in the utilization of brand names is one organization licensing its brand name(s) to another organization for use on the latter organization’s product. Although the utilization of this strategy has a variety of names, the most common label attributed to this process is entitled co-branding. Examples of this are becoming common. Six recent examples are provided in the article linked below:

Williams, Morgan (2016), “^ Examples of Great Co-Branding,” Altitude Branding, July 7, 2016. http://altitudebranding.com/6-examples-great-co-branding/

Discussion Question #2 – What other brands can you identify that would work together well as co-brands? Be sure to attempt to identify potential co-branding relationships that do not currently exist and thoroughly explain the justification for your recommendations.  (Professor’s Hint: Have fun with this discussion. This is an opportunity for the students to step away from the academic rigor of “analyzing” companies and their marketing activities and, instead, to step into a creative discussion. This is your chance to develop your own new products or co-brands.)

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