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1 Chapter 07
2 Product Strategy and New Product Development
1.1 ETHICAL DIMENSION 7
Ethical Perspective
1American companies importing Chinese produce: Should they stop importing fresh
produce from China until product quality and safety standards match those in the United
States? If consumers want fresh product year-round, shouldn’t companies seek out the
lowest-cost provider?
2U.S. federal government: Should it ban fresh produce from China until product quality and
safety is assured? What responsibility does the government have in ensuring the quality and
safety of Chinese produce?
3Consumers: What role do consumers have in making sure the food products they consume
are safe?
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1.2 KEY TERMS
product Anything that delivers value to satisfy a need or want and includes physical
merchandise, services, events, people, places, organizations, information, even ideas..
SKU (stock keeping unit) Unique identification numbers used in tracking products through a
distribution system, inventory management, and pricing.
essential benefit The fundamental need met by a product.
core product The physical, tangible elements that make up a product’s essential benefit.
enhanced product Additional features, designs, or innovations that extend beyond the core
product to exceed customer expectations.
tangibility The physical aspects of a product.
durability The length of product usage.
nondurable product Products that are usually consumed in a few uses and, in general, are of
low cost to the consumer.
durable product Products with a comparatively long product life that are often expensive.
convenience goods Frequently purchased, relatively low-cost products for which customers have
little interest in seeking new information about or considering other product options.
shopping goods Products that require consumers to do research and compare across product
dimensions like color, size, features, and price.
specialty goods Unique products in which consumers’ purchase decision is based on a defining
characteristic.
unsought goods Products that consumers do not seek out and often would rather not purchase at
all.
materials Natural or farm products that become part of the final product.
parts Equipment that is either fully assembled or in smaller pieces that will be assembled in
larger components and then used in the production process.
MRO supplies (maintenance, repair, operating) The everyday items that a company needs to
keep running.
capital goods Major purchases in support of significant business functions.
form The physical elements of a product, such as size, shape, and color.
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features Any product attribute or performance characteristic.
conformance A product’s ability to deliver on features and performance characteristics promised
in marketing communications.
reliability The percentage of time a product works without failure or stoppage.
repairability The ease of fixing a problem with a product.
style The look and feel of a product.
product line A group of products linked through usage, customer profile, price points, and
distribution channels or needs satisfaction.
product mix The combination of all the products offered by a firm.
product life cycle (PLC) The life of a product in four basic stages: introduction, growth,
maturity, and decline
market penetration strategies Attractive price point to gain market share and discourage
competitors.
market skimming strategies High initial price point targeting less price-sensitive consumers to
recoup R&D costs before competitors enter market.
growth phase A stage of the product life cycle marked by rapid expansion as competitors come
into the market and customers learn, understand, and begin to adopt the product.
new-to-the-world product A new product that has not been available before.
reposition existing products A new product to target new markets.
upgrades or modifications to existing products A new product that represent incremental
enhancements to current products.
Cost reduction A specific method for introducing lower- cost products that frequently focus on
value-oriented product price points in the product mix.
additions to existing product lines A new product that can extend the product
go-to-market mistake When a company fails to stop a bad product idea from moving into
product development.
stop-to-market mistake When a good idea is prematurely eliminated during the screening
process.
business case analysis An overall evaluation of a product and usually assesses the product’s
probability of success.
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innovation diffusion process How long it takes a product to move from first purchase to last
purchase (the last set of users to adopt the product).
1.3 APPLICATION QUESTIONS
1 You are a marketing manager for Starbucks. Describe the following as it relates to the
product experience at Starbucks: essential benefit, core product, and enhanced product.
Now imagine you are the marketing manager for Aquafresh Extreme toothpaste. Describe
the product experience in terms of essential benefit, core product, and enhanced product.
1. Choose two comparable phones from Motorola and Nokia and examine each product. How
does the product form differ between the two products, how are they the same? Now
consider the features of the two products, what features are unique to each phone? Which
phone, overall, appeals to you most and why?
The following is an example:
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2. One of the most difficult characteristics of a product to define is “style”. Consider that you
are the marketing manager for Cadillac; define the product style for an Escalade. Compare
and contrast that with product style for Chevrolet Tahoe (another large SUV built on the
same platform as the Escalade).
3. You are the marketing manager for Coke products in the United States. Describe the product
line for Coke branded products and briefly describe how each product differs from the other
products in the Coke brand product line.
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4. Motorola is introducing a new phone that incorporates Internet surfing capability using new
LTE technology, a GPS program, and other new features that will greatly expand the features
available on a cell phone. Develop a marketing strategy for the launch of the new product.
MANAGEMENT DECISION CASE: Product Development and Renewal in the Toy Market
Questions for Consideration
1. How would you classify Barbie as a product–as a convenience, shopping, or specialty
product? Discuss why you chose that particular classification given the amount of shopping
effort required by consumers to purchase a Barbie and the strategy utilized by Mattel to
market Barbie.
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2. American Girl, another line of popular dolls, also is manufactured and distributed by Mattel.
Contrast the American Girl marketing strategy with that used by Mattel to market Barbie.
Where do the strategies differ and where are they similar?
3. Discuss the various marketing strategies Mattel executives may use for Monster High as it
progresses through the stages of the product life cycle. What aspects of the marketing mix
should be emphasized at each stage and discuss why you believe those aspects are most
important.
try to stimulate
primary demand.
brand
advertising and
comparative ads.
brand
advertising and
comparative ads.
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up with
expanding
market demand.
distribution.
1.4 SUGGESTED VIDEO
BMW: "Newness" and the Product Life Cycle (11:02 minutes)
Description: BMW's key to success is the manner in the way they manage their product's life
cycle. They are able to keep all of their lines new and competitive in each individual sector.
Explanation of BMW's PLC is discussed.
1. What are the risks BMW faces as it continues to add new cars to its product line?
3M's Post-it Flag Highlighter: Extending the Concept! (7:40 minutes)
Description: The NPD process is discussed using a new product that 3M has come out with the
Flag Highlighter.
1. What are some of the top issues 3M should consider in developing the Flag Highlighter?
Marketing Management 2nd Edition 7-8
1 Chevrolet Tahoe Exterior Review (2007), Retrieved August 30, 2008, from
http://usnews.rankingsandreviews.com/cars-trucks/2007-Chevrolet-Tahoe/Exterior/
