Foundations of Marketing Chapter 11

Line Extensions
Development of a product closely related to existing products but designed specifically to meet different customer needs
Product Modifications
Changing one or more characteristics of a product
-the original product drops from the line
1. Idea Generation
(Phases of New-Product Development)
-Internal sources
-External sources
2. Screening
(Phases of New-Product Development)
Selecting ideas with greatest potential for further review
-most new products are rejected here
3. Concept Testing
(Phases of New-Product Development)
Presenting potential buyers with a product idea
-low-cost procedure
4. Business Analysis
(Phases of New-Product Development)
Evaluating a product idea to determine its potential contribution to the firm’s sales, costs, and profits
5. Product Development
(Phases of New-Product Development)
Determining if producing a product is technically feasible and cost effective
-prototype is produced
6. Test Marketing
(Phases of New-Product Development)
Limited introduction of a product in geographic areas chosen to represent the intended market
-competitors may try to interfere
7. Commercialization
(Phases of New-Product Development)
Plans for full-scale manufacturing and marketing are refined and settled, and budgets are prepared
Product is introduced in stages
Product Differentiation
Process of creating and designing products that are perceived as different from other products
Product Quality
Overall characteristics of a product that allow it to perform as expected in satisfying customer needs
Product design: Styling
Physical appearance of a product
Customer Services
Human or mechanical efforts or activities a company provides
Product Positioning
Decisions and activities intended to create and maintain a certain concept of the firm’s product in customers’ minds
(Product Positioning)
Product’s performance characteristics are equal to those of competitive brands
Avoid competition
(Product Positioning)
Brand has unique characteristics that are important to some buyers
Specialty based
(Product Positioning)
-product attributes
Evaluating the positions of existing products and changing the product through image or promotion
Product Deletion
Eliminating a product from the product mix
Allows a product to decline without a change in marketing strategy
Exploits any strengths left in the product
Immediate drop
Used when losses are too great
(Characteristics of Services)
Service is not physical and cannot be touched
Inseparability or production and consumption
(Characteristics of Services)
Shared responsibility between the customer and service provider in giving and receiving the service
(Characteristics of Services)
Unused service capacity of one time period cannot be stored for future use
(Characteristics of Services)
Variation in quality
Client-based relationships
(Characteristics of Services)
Interactions that result in satisfied customers who use a service repeatedly over time
Customer contact
(Characteristics of Services)
Level of interaction between provider and customer needed to deliver the service
Core service
Basic service experience or commodity that a customer expects to receive
Supplementary services
Related to the core service to differentiate the service bundle from competitors’
Pricing of Services
Pricing should consider consumer price sensitivity, nature of the transaction, and costs
Distribution of Services
Channels for services are usually short and direct
Promotion of Services
Tangible cues that are a typical way to promote services. Advertisements, Personal selling, Word-of-mouth
Product manager
Responsible for a product, a product line, or several distinct products that make up an interrelated group
Brand manager
Responsible for a single brand
Venture team
Responsible for all aspects of developing a product
-research and development
-finance and accounting

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