Chapter 7: Product Bentley Campus Week 6: 2/3 April: Ilecture Only

Chapter 7: Product
Bentley Campus Week 6: 2/3 April
iLecture only –
NO FACE-TO-FACE LECTURE IN 210.101 IN WEEK 6
Semester 1 2012
Lecture Presentation Slides
Prepared by
Lucy Miller & Cathy Martin
Macquarie University Curtin University
Lecture Slides available on Blackboard on the Friday BEFORE the lecture occurs
iLecture available on Blackboard on the Friday AFTER the lecture occurs
© 2009 John Wiley and Sons Australia

Announcements
• Curtin Business Club – https://curtinbusinessclub.curtin.edu.au
• UniEnglish www.unienglish.curtin.edu.au
• Bentley Communication Skills Centre Information (CSC)-
announcements about workshops and assistance. Up to date
information will be found in the folder of the same name in
Blackboard under the Learning Hub Tab
– Drop in times 407.222 Mondays 10:00 – 11:00 and
Thursdays 14:00 – 15:00
• Bentley Careers Centre Information will be found in the folder
of the same name in FLECS/Blackboard under the Learning Hub
Tab
• START – Student Transition and Retention Team
– Curtin Mentor Program
3
Due Date Reminders
• Situation Analysis/Target Market
Identification Report is DUE THIS WEEK
– Submit electronically via the Assessment Tab in
Blackboard by 5 pm on Thursday 5 April, 2012.
– Clicking on the Assessment tab in Blackboard will
automatically open the Turnitin window where
the student will submit the assessment.
– Under the Assessment Tab in Blackboard see the
SA/TM ID Report Submission Process if you have
questions.
4
What if my assessment will be late?
• See the last 2 pages of your Unit Outline on Blackboard
• Late penalties at 10 marks per day late (including weekends) if
submitted late. Not graded if > 7 days late.
– If applying for Assessment Extension, MUST submit to Cathy
Martin
• Completed Assessment Extension form – form is p. 31 of your Unit
Outline
• Appropriate Documentation
• BEFORE 5 PM THURSDAY 5 APRIL.
• NO EXTENSIONS GRANTED AFTER THE DUE DATE AND

TIME – NONE - ZERO
External/Fully Online Announcement
 Announcement for External/Fully Online Students
– See notice on pages 20 and 26 of your Unit
Outline
 NOTE: Properly registered External students will
receive notification from the Exams Office through the
OFFICIALCOMMUNICATION CHANNEL (OCC) during
week 6 of this semester informing them to make
appropriate arrangements for the location where they
will take the exam.
 IF an EXTERNAL/CURTIN ONLINE student does NOT
receive such a notice, they need to contact the Exam
Office (Telephone: +61 8 9266 7016; Fax: +61 8 9266
4108; Email examinations@curtin.edu.au )
IMMEDIATELY.
 Please make sure to check your OFFICIAL Curtin email
address and Announcements on Blackboard at least
twice a week © 2009 John Wiley and Sons Australia
What you should remember from Ch. 6
• Explain the broad concept of a ‘market’
• Understand the target marketing concept
• Identify market segmentation variables for
consumer and business markets, and develop
market segment profiles
• Select specific target markets based on
evaluation of potential market segments
• Understand how to effectively position an
offering to a target market in relation to
competitors, and develop a marketing mix.

Chapter 7: Product
Learning objectives:
•define ‘product’ and product attributes
•describe the product life cycle, new product
development and the product adoption process
•outline how an organisation can differentiate its
products to obtain a competitive advantage
•explain value of branding brand management
•describe the roles of packaging
•explain key aspects of product management and
positioning through the product life cycle.

Product innovation at Apple
Apple iPhone
Dial-up Broadband

Product
• Product: A good, service or idea offered to the
market for exchange.
• Good: A physical (tangible) offering capable

of being delivered to a customer.
• Service: Intangible offering that does not

involve ownership.
• Idea: Concept, issue or philosophy offered to the

market.

Product-Service Continuum
Pure Tangible Pure

Goods Services
Tangible Service
Hybrid
goods with
offer
with minor
minor goods
services
Click here to add title

Product
Total product concept
• Describes the core product, expected product,
augmented product and potential product in order
to analyse how the product creates value for the
customer.

Product differentiation
Product differentiation
• The creation of products and product attributes
that distinguish one product from another.
• Characteristics that customers may perceive to be
differentiators include design, brand, image, style,
quality, features and price.

Qantas: Total product concept
Outsourcing ? Space Travel?
Mergers? Hotels?

What is the core product?

What is the core product?

What are the three product layers for Lexus GS?
Lexus
Dial-up

Kia Assurance and the Total Product Concept
Kia Assurance commercial
Dial-up Broadband

Product
Product item
• A particular version of a product.
Product line
• A set of product items related by characteristics such
as end use, target market, technology or raw
materials.
Product mix
• The set of all products that an organisation makes
available to customers.

Product classifications
A product used to manufacture

Business other goods or services, to facilitate
Products an organisation’s operations or to
(goods or services)
resell to other consumers.
Consumer Product bought to satisfy an

Products individual’s personal wants.
(goods or services)

Types of consumer products
• Classify based on how consumers buy
– Unsought product
• Newly
• Regularly
– Sought product
• Convenience product
– Staples
– Impulse
– Emergency
• Shopping product
– Homogeneous
– Heterogeneous
• Speciality product

Convenience Products
• Consumer – Frequent purchases

– Low involvement
purchasing – Limited DM
characteristics
• Toothpaste, cereals, detergents,
• Types of products coffee, FMCG’s, impulse, emergency
products
– Low price
• Strategic – Wide distribution
characteristics – High ad expenditure
– Use of sales promotion

Shopping Products
• Consumer – Less frequent purchases
purchasing – Higher involvement
characteristics – Extensive DM
• Appliances, clothing, cars, medical

• Types of products services
• Strategic – High price

characteristics – Selective distribution
– Personal selling important

Speciality Products
• Consumer – Infrequent purchases

– Highest involvement
purchasing – Brand loyalty purchases
characteristics
• Rolex watch, Gucci handbag, Nikon
• Types of products camera
– Highest price
• Strategic – Exclusive distribution
characteristics – Unique brand
– Personal selling important

Product life cycle (PLC)
Product life cycle

The typical stages a product progresses through:
• new product development
• introduction
• growth
• maturity
• decline.


Fashion, style or fad?
Snuggie
Ironing Hair
Bermuda
Business Shorts
Platform Shoes
The product life cycle (PLC)
• Product Development • Maturity

– Begins when the company – A period of slowdown in
finds and develops new sales growth as the product
product ideas gained acceptance by most
• Introduction buyers
– A period of slow sales • Decline
growth as the product is – Period of drop in sales and
being introduced to the profits as customers switch
market to new products
• Growth
– Period of rapid market
acceptance and sales
growth

PLC concepts
• PLC can refer to:
– Product class (lipstick,
drinks)
– Product form (stay-on
lipstick, energy drinks)
– Product brand (Maybelline
stay-on lipstick, Red Bull)

What stage in the PLC?
White Water World commercial
Dial-up Broadband

http://www.theage.com.au/small-business/
smallbiz-marketing/give-marketing-a-healthy-
boost-20120318-1vdmm.html
Dial-up Broadband
http://www.theage.com.au/small-business/smallbi
z-marketing/give-marketing-a-healthy-boost-2012
0318-1vdmm.html

1st stage of PLC: New product development (NPD)
The new product development process:
1. Idea generation
2. Screening
3. Concept evaluation
4. Marketing strategy
5. Business analysis
6. Product development
7. Test marketing
8. Commercialisation

New Products
• New to the world (ground shaking innovation that
creates other support innovations and new
behaviours – mobile phones, DVD’s, computers)
• New category for the firm (Tim Tam Ice Cream, V)
• New addition of product line (Tim Tam biscuits with
Tia Maria, Hallmark Greeting Cards for Pets)
• Product improvement (Colgate 2 in 1)
• Repositioning (Levi’s, McDonald’s).

New product development process
Marketing Business
strategy analysis
Concept Product
evaluation development
Test
Screening
marketing
Idea
generation Commercialisation

Nokia 888 – Next Generation Gadget – Idea generation & Concept evaluation
• Companies are now getting the public to

create new products and model designs
• Nokia invited designers from around the
world to come up with concepts for their
phone
of the future
• Turkish Designer, Tamer Nakisci had the
winning design
• Still in concept stage and not yet being
produced
http://www.youtube.com/watch?v=D3dF44XtHek

Hydrogen Cell Car concept evaluation
Concept 4—an
Concept 1—an inexpensive small
inexpensive
sized vehicle designed as a
second family car to be used sub-compact appealing
around town (ideal for loading to conscientious people
groceries and hauling children, who want basic
and easy to enter). transportation, low fuel
cost and low pollution.
Concept 2—a medium-cost,
medium-sized car designed as
an all-purpose family car.
Concept 3—a medium-cost sporty

compact appealing to young
people. © 2009 John Wiley and Sons Australia
Product Development – Testing the prototype
– Louis Vuitton
- pick up and drop bag thru use of mechanical
arm over 4 day period
- lab with ultra violet rays for fading resistance
- mechanical hand that tests zip 5,000 times

Product development time
• Gillette Mach 3 – 6 years
• Xerox photocopier – 15
years
• Minute Rice – 18 years
• Television – 55 years

2nd Stage of PLC: Introduction
Product mode new

Price policy use skimming or penetration
strategies
Place rapidly building distribution
network
Promotion build general demand
Profits expected losses
Introduction Growth Maturity Decline

3rd Stage of PLC: Growth
Product mode Differentiated products

Price policy Maintain stable pricing policy
Place Solidify distribution channels
and network
Promotion Generate secondary demand
Profits Start of profits

4th Stage of PLC: Maturity
Product mode Modify product or product usage

Price policy Price reduction
Place Increase distribution efforts
Promotion Concentrate on product
positioning
Profits Highest profits (peak)

Maturity Stage (cont.)
• Product revitalisation achieved by:

– Market Modification: finding new users (e.g.
Playstation for teenage girls), uses (e.g. cornflakes
& Anzac cookies) or increase usage.
– Product Modification: change features, quality,
design, to attract new users and increase usage
(e.g. Gillette razors)
– Marketing Mix Modification: sales promotion,
price cuts, new ads, etc.
5th Stage of PLC: Decline
Product mode Maintain a basic product

Price policy Maintain pricing or rise prices
Place Limit distribution efforts
Promotion Cut-back on advertising and sales
promotions
Profits Reduced profits

Decline Stage (cont.)
Product strategies include:

• Product Deletion: eliminate unprofitable
products i.e. Kit Kat Chunky, Kit Kat Chunky
Caramel, Kit Kat Mint
• Product Harvesting: slowly phasing product out
by reducing expenditure: Kodak 35mm films
• Product Revitalisation: bringing products back to
life through new ads, brands – Levis, Bailey’s,
Lego’s.

Branding
A name, term, symbol, design or combination
thereof that identifies a seller’s products and
differentiates them from competitors’ products.
Brand image
• The set of beliefs that a consumer has regarding
a particular brand.

• For consumers:
The value of branding
– Helps speed consumer purchases by identifying specific preferred products
– Provides a form of self-expression and status
– Denotes product quality, reduces purchase risk
• For marketers:
– Identifies and differentiates a firm’s products from competing products
– Helps in the introduction of new products
– Facilitates the promotion of all same-brand products
– Fosters the development of brand loyalty

Brand awareness
Dial-up Broadband

Selecting a Brand Name
A brand name should:
– be easy to say, spell and recall.
– indicate the product’s major benefits.
– suggest the product’s major uses.
– be distinctive, setting it apart from competing brands.
– be compatible with all the products in the product line.
– be designed for use and recognition in all types of
media.
– Not be offensive or have negative references.

Unusual Brand Names
DIRTY LAUNDRY –
CANADA
GLAMOUR PUSS – NZ
CAT’S PEE ON A
GOOSEBERRY BUSH –
NZ
FAT BASTARD & WILD
PIG - FRANCE
MAD DOGS &
ENGLISHMEN - UK
Branding
Brand mark
• The part of a brand not made up of words —
it often consists of symbols or designs.
Trade mark
• A brand name or brand mark that has
been legally registered so as to secure
exclusive use of the brand.

Branding
• Brand equity
Added value that a brand gives a product.
• Brand loyalty
Customer’s highly favourable attitude and
purchasing behaviour towards a brand.
• Brand metrics
Measure the value of brands and include: brand
assets, stock price analysis, replacement cost,
brand attributes, and brand loyalty.

Branding strategies
Brand No brand
Manufacturer Brand Private label brand

Sony, Kodak, Sara Lee, Innovare (Myer)
Cadbury, Holden, Honda Australia’s Choice, Jackaroo (Kmart)
Individual Family Combo

Kellogg’s Individual Family
brand brand Combo
RiceBubbles brand brand
Fanta Coke Harvey
Coco Pops Starbucks Innovare
Sprite Diet Coke Norman
Special K Beans Regatta
Red Bull Vanilla Coke
Cornflakes
Branding
• Licensing
The brand owner permits another party to use the
brand on its products.
• Franchising
Agreement to use an established business model.
Benefits: coordinated promotional activity, reduced
risks and effort.
• Co-branding
Use of two or more brand names on the same
product.

Packaging & Labelling
Secondary
Immediate Shipping
Packaging
Labelling
Identifies Promotes
Describes

Packaging
• Packaging involves the development of a container
and a graphic design for a product.
• Primary/Secondary/Shipping packaging
• Packaging Functions:
– Protect the product from damage
– Maintain its functional form
– Offer convenience to consumers
– Prevent waste and make storage easier
– Promote the product by communicating
its features, uses, benefits and image

Clever Packaging

Packaging
Capilano
Dial-up Broadband

Packaging
Labelling
• part of the package and provides identifying,
promotional, legal and other information.
• Compulsory label information can include:
 Brand name and logo
 Product name
 Ingredients list
 Use-by-date or date of packaging
 Bar code

Innovations in Labelling
• Tesco – a grocery chain in UK is attaching ‘life story’

labels to its products
• The label shows the carbon footprint that the
product has on the environment

Labelling
UK based Chippindale Foods was the first company to offer customers full egg traceability.
wheresyoursfrom, UK-based
Dole Organic lets consumers “travel to the origin of each organic product”. By typing in a
fruit sticker's three-digit Farm Code on Dole Organic's website, customers can read
background info, view photos of the farm and workers and learn more about the origin of
Dole products.
Scan codes are used by those that have code reading software in their camera-phones.
Which means that infinite amounts of information (including images and videos) can be
'attached' to products,

Existing product expansion
• Line extensions - New products that are closely
related to existing products in a product line.
• Product modifications: Changes to the characteristics
of a product that result in a product that supersedes
the original. The main types of product modification
relate to:
 functionality
 quality
 aesthetics.

“We race, we learn, you win.”
Toyota
Dial-up Broadband

Positioning
• Product positioning
The way in the market perceives a product in relation to
competing offerings.
• Product deletion
The process of removing a product from the product
mix.

Chapter 7: Product
Summary:
• define ‘product’ and product attributes
• describe the product life cycle, new product
development and the product adoption process
• outline how an organisation can differentiate its
products to obtain a competitive advantage
• explain value of branding brand management
• describe the roles of packaging
• explain key aspects of product management and
positioning through the product life cycle.

What you should do…
TO DO week 6:
– Collate, edit, proof read, check references and make sure they
use Chicago Author Date 16th edition for your SA/TM ID Report.
AND, most importantly
– SUBMIT on time – electronically to the Assessment Tab on
Blackboard by 5 pm on Thursday 5 April.
– Please note late penalties/assessment extension policy on p.
30/31 of your unit outline.
– In Tutorials: Your 3rd case based on Ch.6: Markets: segmentation,
targeting and positioning. Everyone must view the Mercedes-
Benz case (3 video commercials) on Blackboard. If submitting
the case, type up answers to Questions 1,2 & 3. Do both of these
things before you show up for your tutorial
70
What you should plan to do…
TO DO week 7: Have a great tuition free week have fun, but be safe.
• Please remember to read Chapter 8: Price early in the week so you

won’t forget and you’ll be ready for the lecture in week 8!
71

Chapter 7: Product Bentley Campus Week 6: 2/3 April: Ilecture Only

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Chapter 7: Product

Bentley Campus Week 6: 2/3 April

iLecture available on Blackboard on the Friday AFTER the lecture occurs

© 2009 John Wiley and Sons Australia

• NO EXTENSIONS GRANTED AFTER THE DUE DATE AND

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

• Good: A physical (tangible) offering capable

• Service: Intangible offering that does not

• Idea: Concept, issue or philosophy offered to the

© 2009 John Wiley and Sons Australia

Pure Tangible Pure

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

Kia Assurance commercial

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

A product used to manufacture

Consumer Product bought to satisfy an

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

• Consumer – Frequent purchases

© 2009 John Wiley and Sons Australia

• Appliances, clothing, cars, medical

• Strategic – High price

© 2009 John Wiley and Sons Australia

• Consumer – Infrequent purchases

© 2009 John Wiley and Sons Australia

Product life cycle

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

• Product Development • Maturity

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

White Water World commercial

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

© 2009 John Wiley and Sons Australia

• Companies are now getting the public to

© 2009 John Wiley and Sons Australia

Concept 3—a medium-cost sporty

© 2009 John Wiley and Sons Australia

• Minute Rice – 18 years

© 2009 John Wiley and Sons Australia

Product mode new

Introduction Growth Maturity Decline

Product mode Differentiated products

Introduction Growth Maturity Decline

Product mode Modify product or product usage

Introduction Growth Maturity Decline

• Product revitalisation achieved by:

Product mode Maintain a basic product

Introduction Growth Maturity Decline

Product strategies include:

© 2009 John Wiley and Sons Australia