978-1305405769 Chapter 11 Part 2

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Chapter 11: Developing and Managing Goods and Services

DISCUSSION STARTERS

Discussion Starter 1: Product Line Extensions

Dr. Pepper created a product line extension called Dr. Pepper Cherry. Below is a YouTube clip

incorporating Gene Simmons (from Kiss) to promote this new product. Ask students to identify other

product line extensions that have proven to be successful since the turn of the millennium.

http://www.youtube.com/watch?v=W_6bPjB5lD8

Discussion Starter 2: New Product Ideas

ASK: What two groups of people know the most about your products?

ASK: If you are an online content provider, who knows the most about your service and what

consumers want from the site?

(Special Note: This clip is rather lengthy at 17 minutes, but does a good job promoting new product

ideas.)

http://www.youtube.com/watch?v=p70jVmR24eE

Discussion Starter 3: Making the Most of Intangibility

ASK: How many of you have ever heard of a town called Winslow, Arizona?

ASK: How could Winslow Arizona capitalize on this brush with fame?

Chapter 11: Developing and Managing Goods and Services

In 1999 Standin’ on the Corner Park was officially opened. Billboards were installed, inviting

travelers to have their picture taken in Standin’ on the Corner Park with a girl in a flatbed Ford, just

as the song lyrics suggested. Winslow was also lucky to be located on the now legendary Route 66,

which recently has experienced a resurgence of interest.

Discussion Starter 4: Concept Testing

ASK: How do organizations know whether or not consumers will respond to a new concept?

As the textbook states, for new products there is a tool called concept testing. Concepts are put

http://www.youtube.com/watch?v=aQZ2BaK4K-c

Chapter 11: Developing and Managing Goods and Services

CLASS EXERCISES

Class Exercise 1: Product Positioning and Product Categories

The goal of this exercise is to help students understand product positioning—that is, customers’

perceptions of a product’s attributes—by considering the position of several products.

Prompt for students: Describe the following brands’ relative positioning in their product categories:

Question

Answers

Volvo automobiles

Safe

Keds athletic shoes

inexpensive, simple comfort

Mont Blanc writing instruments

more expensive

Diet Coke

superior taste

Hampton Inn

for business travel

Dom Perignon champagne

premium taste

Sony television sets

better quality

Avis Rent-A-Car

more responsive

Just For Men hair color

for men only

10.

Subway sandwiches

alternative fast food

Class Exercise 2: Keeping Products Relevant

In this chapter, students learned about developing and managing products. In this exercise, they will

examine how products remain relevant to consumers.

Prompt for students: For each of the following product categories, you are to: (1) list a brand, (2) list the

product’s stage within the product life cycle, (3) list any product or brand extensions familiar to you, and

(4) brainstorm possible next-generation products for this brand.

1. MP3 players

2. Bicycles

3. Frozen pizza

Answers:

Students’ answers will vary based on the brands that they choose. They may want to answer the questions

Class Exercise 3: New Product Concept

In this exercise, students will examine the process of devising a new product concept for an established

product.

Step 1: Backpacks have been used without innovation for decades. List features common to all

Chapter 11: Developing and Managing Goods and Services

backpacks.

Step 2: List known innovations in backpack technology. How did these innovations improve the

backpack’s functionality or user enjoyment?

Step 3: Brainstorm a list of the common complaints associated with backpacks. Brainstorm a list of the

desirable features.

Step 4: Design a new backpack. What features did you include? How do these features add value to the

backpack user?

Chapter 11: Developing and Managing Goods and Services

CHAPTER QUIZ

1. Product ideas are analyzed to determine whether they match the company’s objectives and resources

during the __________ phase of new-product development.

a. concept testing

b. idea generation

c. business analysis

d. product development

e. screening

2. The expectation that a bean burrito at one Taco Bell will be the same as a bean burrito at another

Taco Bell several weeks later demonstrates

a. level of quality.

b. customer service.

c. consistency of quality.

d. product differentiation.

e. standardization.

3. An important aspect of many products such as clothing, furniture, shoes, and cars is their physical

appearance or

a. features.

b. product design.

c. positioning.

d. aesthetics.

e. styling.

4. A phase out approach can be best described as

a. allowing the product to decline without a change in the marketing strategy.

b. exploiting any strengths left in the product.

c. immediately dropping the product from the product mix.

d. intensifying marketing efforts in core markets.

e. stopping production to get rid of material surplus.

Chapter 11: Developing and Managing Goods and Services

SEMESTER PROJECT

In the last Semester Project exercise, you were asked to describe your product, you, and to define what

value you offer the marketplace. In this exercise, further examine your product, including any product

innovations you intend to undertake.

Step 1: In thinking about you as a product, were there any aspects of your product you wish to modify?

Aesthetics, for example, might transition your look from student to professional employee. How would

these modifications impact you, the product?

Step 2: New products often include plans for brand extensions or next generation products. Think about

what a next generation you, the product, would be like. Would you return to graduate school? Would you

change positions within your organization to diversify your experience? How would you position you to

introduce the next generation of you, the product?

Step 3: Organizations often test market new products before they go to market. This allows developers to

identify flaws prior to a full launch. What opportunities are available to test market your product? How

would you use these opportunities to better your product?

Chapter 11: Developing and Managing Goods and Services

ANSWERS TO ISSUES FOR DISCUSSION AND REVIEW

1. What is a line extension, and how does it differ from a product modification?

2. Compare and contrast the three major approaches to modifying a product.

Any product modification changes one or more of a product’s characteristics. The three major ways

3. Identify and briefly explain the seven major phases of the new-product development process.

The seven major phases of new-product development are idea generation, screening, concept testing,

business analysis, product development, test marketing, and commercialization. Idea generation is

4. Do small companies that manufacture just a few products need to be concerned about

developing and managing products? Why or why not?

Any manufacturing firm, regardless of size or number of products, must be concerned about

5. Why is product development a cross-functional activity within an organization? That is, why

must finance, engineering, manufacturing, and other functional areas be involved?

6. What is the major purpose of concept testing, and how is it accomplished?

7. What are the benefits and disadvantages of test marketing?

8. Why can the process of commercialization take a considerable amount of time?

9. What is product differentiation, and how can it be achieved?

10. Explain how the term quality has been used to differentiate products in the automobile

industry in recent years. What are some makes and models of automobiles that come to mind

when you hear the terms high quality and poor quality?

11. What is product positioning? Under what conditions would head–to–head product

positioning be appropriate? When should head–to–head positioning be avoided?

12. What types of problems does a weak product cause in a product mix? Describe the most

effective approach for avoiding such problems.

Weak products reduce an organization’s profitability in several ways:

13. How important are services in the U.S. economy?

14. Identify and discuss the major characteristics of services.

15. For each marketing mix element, which service characteristics are most likely to have an

impact?

For the marketing mix elements of creation, pricing, distribution, and promotion, the service

characteristics of intangibility, inseparability of production and consumption, perishability,

heterogeneity, client-based relationships, and customer contact would relate in these ways. For

service development, heterogeneity results in variability in service quality and makes it difficult to

16. What type of organization might use a venture team to develop new products? What are

the advantages and disadvantages of such a team?

Chapter 11: Developing and Managing Goods and Services

ANSWERS TO DEVELOPING YOUR MARKETING PLAN

The information obtained from these questions should assist you in developing various aspects of your

marketing plan found in the Interactive Marketing Plan exercise at www.cengagebrain.com.

1. Identify whether your product will be a modification of an existing one in your product mix or

the development of a new product.

Students’ answers will vary, but they should remember that product modification means changing

2. If the product is an extension of one in your current product mix, determine the type(s) of

modifications that will be performed.

3. Using Figure 11.1 as a guide, discuss how your product idea would move through the stages of

new-product development. Examine the idea, using the tests and analyses included in the new-

product development process.

4. Discuss how the management of this product will fit into your current organizational structure.

Students’ answers will vary.

Chapter 11: Developing and Managing Goods and Services

COMMENTS ON VIDEO CASE 11: DO AXE PRODUCTS MAKE MEN

MORE DESIRABLE?

Summary

AXE is the number one male grooming brand in both the United States and Canada. The company’s

advertisements feature women who are very attracted to men who wear AXE body spray. AXE believes

the provocative ads are important because they get the attention of men 18–24 years old, the company’s

target demographic. AXE has extended its product line to include other grooming products such as

shower gel to continue to meet the needs of young men. However, the ads and the products also appeal to

pre-teens who want to feel more confident, which could damage AXE’s “sexy” perception.

Questions for Discussion

1. How has AXE managed its product mix?

2. How has AXE used line extensions to increase its reach among consumers?

3. Why are younger generations attracted to AXE products?