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Chapter 08
Product Strategy and New-Product Development
8-1
LEARNING OBJECTIVES
LO 8-1 Understand the essential role of the product experience in marketing.
LO 8-3 Recognize how product strategies evolve from one product to many products.
LO 8-5 Recognize the importance of new-product development to long-term success.
LO 8-7 Identify how new products become diffused in a market.
CHAPTER OUTLINE
I. PRODUCT: THE HEART OF MARKETING
A. Product Characteristics
i. Define the Product
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ii. Essential Benefit
iii. Core Product
iv. Enhanced Product
B. Product Classifications
i. Tangibility – Physical Aspects of The Product
Experience
ii. Durability – Product Usage
a. Consumer Goods
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b. Business Goods
C. Product Discrimination: Create a Point of
Differentiation
i. Form
ii. Features
iii. Performance Quality
iv. Conformance Quality
v. Durability
vi. Reliability
vii. Repairability
viii. Style
D. Product Plan: Moving from One Product to Many
Products
i. Product Line
ii. Product Mix
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E. Product Decisions Affect other Marketing Mix
Elements
i. Pricing
ii. Marketing Communications
II. THE LIFE OF THE PRODUCT: BUILDING THE
PRODUCT EXPERIENCE
A. Product Life Cycle Sales Revenue and Profitability
B. Product Life Cycle Timeline
C. Product Life Cycle Caveats
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III. NEW PRODUCTS – CREATING LONG TERM
SUCCESS
A. “New” Defined
i. Company Perspective
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ii. Customer’s Perspective
B. Reasons For New Product Success or Failure
IV. NEW PRODUCT DEVELOPMENT PROCESS
A. Identify Product Opportunities
i. Generate New Ideas
a. Internal
b. External
c. Customers
d. Distributors
ii. Screen And Evaluate Ideas
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B. Define The Product Opportunity
i. Define And Test Product Concept
ii. Create Marketing Strategy
iii. Conduct Business Case Analysis
a. Total Demand
b. Profitability Analysis
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C. Develop The Product Opportunity
i. Develop The Product
a. Product Testing
ii. Test The Market
a. Consumer Product Market Tests
b. Business Product Market Test
iii. Product Launch
V. CONSUMER ADOPTION AND DIFFUSION PROCESS
A. Consumer Product Adoption Process
B. The Diffusion of Innovations
VI. SUMMARY
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..
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stock keeping unit (SKU) Unique identification numbers used in tracking products through a
distribution system, inventory management, and pricing.
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.
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durability The projected lifetime of the product under specific operating conditions.
reliability The percentage of time a product works without failure or stoppage.
market penetration Attractive price point to gain market share and discourage competitors.
market skimming High initial price point targeting less price-sensitive consumers to recoup
R&D costs before competitors enter market.
new-to-the-world product A new product that has not been available before.
upgrades or modifications to existing products A new product that represent incremental
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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).
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.
2. Choose two comparable phones from Samsung and Microsoft/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?
1
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Samsung Galaxy Note 8 Nokia 8
Dimensions 162.5 x 74.6 x 8.5mm 151.5 x 73.7 x 7.9mm
Display
6.3in Quad HD+ Super AMOLED,
2960x1440 Infinity Display (18.5:9 Aspect Ratio)
5.3in IPS LCD 1440 x 2560 (@554ppi)
Processor
Qualcomm Snapdragon 835 (10nm) octa-core CPU
OR Samsung Exynos 8995 (10nm) octa-core CPU -
region dependent
Qualcomm Snapdragon 835 (10nm) octa-core CPU
GPU
Adreno 540 (Qualcomm Snapdragon) OR ARM
Mali-G71 (Samsung Exynos) - region dependent
Adreno 540
RAM 6GB 4GB/6GB
Software Android Nougat Android Nougat
Connectivity
4G LTE, Wi-Fi, Bluetooth, Type-C USB, NFC,
GPS, Fingerprint scanner, Iris Scanner, Face
Scanner
4G LTE, Wi-Fi, Bluetooth, Type-C USB, NFC, GPS,
Fingerprint scanner
Storage 64GB, 128GB or 256GB - region dependent 64GB/128GB
MicroSD Yes Yes
Primary Camera@60fps
Dual-12MP, f/1.7 and f/2.4 apertures, 1/2.3" sensor
size, 1.55µm pixel size, Dual-Pixel Phase Detection
Autofocus, OIS, 2x optical zoom, touch focus,
face/smile detection, Auto HDR, panorama, 2160p
video @30fps, 1080p video @60fps
Dual-13MP Carl Zeiss, f/2.0 apertures, 1.12µm pixel
size, hybrid laser & phase detection autofocus, OIS,
dual-LED flash, geo-tagging, touch focus, face
detection, HDR, panoramic capture, 2160p video
@30fps, 1080p video @30fps
Secondary Camera
8MP with autofocus, f/1.7 aperture, Auto HDR,
1440p video @30fps
13MP, 2160p video
Battery 3,300mAh 3,090mAh
Other
IP68 Certified (Water & Dust Resistant), S-Pen
Stylus
IP54 Certified (Splash & Dust Resistant), Nokia OZO
Audio
3. One of the most difficult characteristics of a product to define is style. 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).
The Escalade is known for its over-the-top styling. The following is from the GM website:
2
SUV.
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4. You are the marketing manager for Coca-Cola 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.
Current product line for Coke branded products:
Name
Launched
Discontinued
Coca-Cola
1886
Caffeine-Free Coca-Cola
1984
Coca-Cola Cherry
1985
Coca-Cola with Lemon
2001
2005
Coca-Cola Vanilla
2002
2005
Coca-Cola Vanilla
2007
Coca-Cola C2
2004
2007
Coca-Cola with Lime
2005
Coca-Cola Raspberry
2005
2005
Coca-Cola Zero
2005
Coca-Cola M5
2005
Coca-Cola Black Cherry Vanilla
2006
2007
Coca-Cola Blāk
2006
2008
Coca-Cola Citra
2006
Coca-Cola Light Sango
2006
Coca-Cola Orange
2007
5. 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.
The company that takes the risk and introduces a new product, creating a new product
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MANAGEMENT DECISION CASE
Reaching Millennials through New Product Innovation at Campbell’s Soup
This case provides an opportunity to elaborate on two important Product Management
principles: New Product Development and the Product Life Cycle. It also is a good case for
Questions for Consideration
1. In what category of the Product Life Cycle is Campbell’s soup products? Can a company’s
product be in one stage of the PLC while the industry category is in another?
This is a good opportunity to discuss the imperfections of the PLC as a planning tool. The
lines between stages are often blurred and the stage for a particular product is often
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2. Beyond product innovation, what other parts of the Campbell’s marketing mix could be
adjusted to try to get millennials to grab their soup spoons?
Promotion can be used to move Millennials toward more favorable attitudes about soup.
3. Campbell’s expanded their offerings through both their own R&D and by acquiring other
companies and their products. What are the pros and cons of these two options? Which
should be their focus going forward?
Managers (both within Marketing and other departments) are frequently faced with “make
or buy” decisions. Some pros and cons of the two approaches to new product creation:
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4. Since consumer research shows a clear preference among millennials for foods other than
soup, should Campbell’s slowly abandon soup in favor of other alternatives or continue to try
to reinvigorate the soup product line?
Some students will conclude that soup is just a dieing product class and should therefore be
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Product Strategy and New-Product Development
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Product Strategy and New-Product Development
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