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Chapter 11: Developing and Managing Products
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. Does the AMA Statement of Ethics address this issue? Go to
http://www.marketingpower.com, and review the statement. Then write a brief
paragraph on what the AMA Statement of Ethics contains that relates to knock-off
products.
The AMA Statement of Ethics does not explicitly discuss piracy and knock-offs. It does,
Video Assignment: GaGa’s Inc.
1. Which of the following types of new product best describes the Sherbetter Bars developed
by GaGa’s?
a. Repositioned product
b. Improvement on an existing product
c. Addition to an existing product line
d. New product line
2. Which of the following steps in the new-product development process would have helped
Jim King realize that the novelty bars and the pints of Sherbetter would not be shelved
together?
a. Business analysis
b. Development
c. Test marketing
d. Commercialization
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3. Which category of new product does the new Coconut Sherbetter pint fall under?
a. Repositioned product
b. Improvement on an existing product
c. Addition to an existing product line
d. New product line
4. Sherbetter takes some explaining because it isn’t ice cream and it isn’t sherbet. Which of
the following product characteristics might affect how quickly people adopt Sherbetter?
a. Complexity
b. Compatibility
c. Observability
d. Trialability
5. At which stage should GaGa’s have conducted its extensive focus groups and any research
it needed before putting GaGa’s Sherbetter on the shelves?
a. Idea generation
b. Development
c. Idea screening
d. Business analysis
6. Because GaGa’s Inc. is such a small business, it could be said that their sampling system is
a way of using Rhode Island as a business analysis opportunity.
a. True
Chapter 11: Developing and Managing Products
15
b. False
7. Based on what you saw in this video, GaGa’s is aiding the diffusion process by
communicating directly with potential adopters, particularly the early adopters.
a. True
b. False
8. Which of the following stages of the PLC best describes the position of Sherbetter?
a. Introductory
b. Growth
c. Maturity
d. Decline
Case Assignment: Tesla Motors
Tesla Motors was founded with innovation in mind. Launched in 2003 by a group of engineers in
Silicon Valley who wanted to prove that electric cars could replace gasoline-powered
automobiles, Tesla’s mission is to accelerate the world’s transition to sustainable energy.
The Tesla Roadster was launched in 2008 and can travel 245 miles per charge of its
lithium ion battery. There are now more than 2,400 Roadsters being driven in more than 30
countries. The Roadster was followed by the Tesla Model S in 2012. The Model S can travel 265
miles per charge and has room for seven passengers with 64 cubic feet of storage. The Model S
was named Motor Trend’s 2013 Car of the Year and achieved a 5-star safety rating from the U.S.
National Highway Traffic Safety Administration.
Next came the Model X, which Tesla began delivering in 2015, and the new Model 3 will
begin production in mid-2017 with estimated delivery for new reservations at mid-2018 or later.
Chapter 11: Developing and Managing Products
16
The Model 3 is Tesla’s most affordable model to date, starting at $35,000. It has seating for five
adults and can travel 215 miles per charge.
Improvements to battery life and safety features weren’t the only upgrades Tesla had
quietly been putting together. They created a roar in the automobile industry when they
announced in October 2016 that, moving forward, all vehicles produced in Tesla factories would
have the hardware needed for full self-driving capabilities at a safety level higher than that of a
human driver. Model S and Model X vehicles with the new hardware are already in production,
and the hardware will be included on the new Model 3 when it goes into production.
This hardware includes eight surround cameras providing 360-degree visibility around
the car up to 250 meters of range; two updated ultrasonic sensors; forward-facing radar that can
see through heavy rain, fog, dust, and even the car ahead; and a new onboard computer with
more than 40 times the computing power of previous generations.
Tesla’s move was unprecedented compared to other car companies, but not as much for
them. While Tesla will be creating cars with the hardware needed for self-driving capabilities,
they do not have the software finished yet. They will update the software in the cars produced
now using over-the-air software updates. This is a method that Tesla already employs to enhance
performance and fix security bugs; it allows them to continually improve cars even after they are
on the road and to stay ahead of automakers who do not operate under this model.
Tesla still has to complete millions of miles of real-world testing before the software can
be implemented. They will run the software in the background while a professional drives the car
and then compare what the computer would have done with what the person did do. The goal is
for self-driving cars to be even better than humans at avoiding crashes.
Tesla must also achieve regulatory approvals of full self-driving cars before they can
legally drive on public roadways. So it is still unclear when customers (even those currently
purchasing models featuring the new hardware) will be able to experience fully autonomous
driving.
Sources: “About Tesla,” Tesla, accessed October 23, 2016, https://www.tesla.com/about; K.
Korosec, “4 Reasons Why Tesla’s Autonomous Driving Announcement Matters,” Fortune,
October 20, 2016, accessed October 23, 2016, http://fortune.com/2016/10/20/tesla-self-driving-
hardware-matters/; P. Valdes-Dapena, “Elon Musk: You’ll be able to summer your driverless
Chapter 11: Developing and Managing Products
17
Tesla from cross-country,” CNN Money, October 20, 2016, accessed October 23, 2016,
http://money.cnn.com/2016/10/19/technology/tesla-announcement/; The Tesla Team, “All Tesla
Cars Being Produced Now Have Full Self-Driving Hardware,” Tesla, October 10, 2016, accessed
October 23, 2016, https://www.tesla.com/blog/all-tesla-cars-being-produced-now-have-full-self-
driving-hardware.
TRUE/FALSE
1. Telsa’s new products have been successful, in part, because they have a well-defined new
product strategy at their core and are driven by the corporate objectives and strategies of using
electricity over gasoline when designing automobiles.
2. A new-product strategy is a plan that links the new-product development process with the
objectives of the marketing department, the business unit, and the corporation.
3. The business analysis to determine if Tesla should equip their cars with the self-driving
hardware before the software was complete would have been a simple process.
4. Tesla employed simultaneous product development by having their hardware design team and
their software design team work together on the autonomous automobile initiative.
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5. Tesla will use test marketing to teach the self-driving software how to appropriately respond in
different driving situations.
1. New products are important because they do all of the following EXCEPT:
a. sustain growth
b. increase revenues and profits
c. extend resources
d. replace obsolete items
2. The Tesla Model 3 is what category of new product?
a. improvement/revision to existing product
b. new-to-the-world product
c. new product line
d. repositioned product
e. lower-priced product
3. New product ideas can come from all of the following sources EXCEPT:
a. employees
b. customers
c. distributors
d. competitors
e. New product ideas can come from all of these.
Chapter 11: Developing and Managing Products
19
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ANS: E
PTS: 1 OBJ: LO: 11-2 TOP: AACSB: Reflective Thinking
KEY: CB&E Model: Strategy MSC: BLOOMS: Level I Knowledge
4. The addition of the self-driving hardware to Tesla cars in considered a(n) __________.
a. diffusion
b. experiment
c. commercialization
d. innovation
5. Which of the following characteristics will NOT have an impact on decisions for early
adopters of the Tesla Model 3?
a. compatibility
b. observability
c. complexity
d. relative advantage
Great Ideas for Teaching Chapter 11
James S. Cleveland, Sage College of Albany
Discussion Board Topics to Encourage Participation
Discussion board questions provided to students to encourage them to engage in thinking and
writing about the content of the Principles of Marketing course usually take the form of a
provocative statement to which students are asked to respond. An example of this would be “All
PR is good PR.”
Discussion topics such as this one are abstract and often require that the instructor provide an
initial reply to show students what is expected of them in their own replies. For students with
limited work experience, this approach may be quite appropriate. For adult students with
extensive experience as employees and consumers, however, the abstract nature of such topics
can be frustrating.
Chapter 11: Developing and Managing Products
20
I have developed, therefore, a series of discussion board questions to use with experienced, adult
students. These questions are designed to encourage them to use their experiences as employees
and consumers as doorways to better understand the course material and to make their own
responses more interesting to themselves and to the other students in the class who will read and
comment on them.
Each question has three parts.
1. First, there is a sentence or two from the students’ textbooks introducing the topic. By
using the text author’s words, students are enabled to locate relevant material in the text
more easily, the text content is reinforced, and confusion resulting from the use of variant
terms or expressions is minimized.
2. Second, there is a reference to text pages the students should review before proceeding.
Since the goal of the exercise is for students to apply the course content to their own
experiences, reviewing the content beforehand is important.
3. Third, there is a request for the students to think about or remember some specific situation
in their experiences to which they can apply the text material, and a question or questions
for them to address in their replies.
Here are additional similar discussion board questions developed for Chapter 11 of MKTG11.
Each is written to fit the same text cited above but could easily be rewritten and revised to fit
another text.
Series A
1. An innovation is a product perceived as new by a potential adopter. Diffusion is the
process by which the adoption of an innovation spreads. There are five categories of
adopters: innovators, early adopters, early majority, late majority, and laggards. The
category under which you would fall depends on the type of product involved.
2. Review how new products spread in section 11-4a of your text.
3. Then choose a product that you have recently adopted. Which category of adopter are you
for that product? Do you fall into a different category for a different type of product? Give
an example.
Series B
1. The PLC is a biological metaphor that traces the stages of a product’s acceptance, from its
introduction (birth) to its decline (death).
2. Review the stages of the product life cycle in section 11-5 of your text.
3. Suggest an example of a product in each stage of the product life cycle. Explain your
examples. Which of these products do you own? What does this suggest about the type of
Chapter 11: Developing and Managing Products
21
adopter you are?
Deborah Reed Scarfino, William Jewell College
A Project to Fail
I have used the project, “Create a Product, Good, or Service That Will Fail,” to instill or recharge
creativity in my students.
We spend the first half of the semester understanding the concepts, working on case studies, and
analyzing material to make recommendations to improve the existing situation or resolve
problems that pose challenges. There are no real textbook answers to some of these cases, and
that alone creates personal frustration for some students. Thinking beyond the textbook is a
foreign challenge to many of my students who have successfully completed courses where
memorization made all the difference. The world of marketing is multifaceted and offers
unending challenges that require creative thinking to make a difference.
In the second half of the course, I offer the challenge to design a product, good, or service idea
that will fail in the marketplace. The class evaluates the ideas after oral presentations. Those that
truly fail get the best grades. The results of this assignment are often humorous and ridiculous
but very creative. The students initially complain about how hard it is—but in the end, some
exceptional ideas are evaluated. Building a better mousetrap won’t guarantee success, and such a
project drives this message home.
Students who learn that failure is a valuable learning tool and that many great ideas are born
from the experience of failure are well on the road to success. We suffer from stagnant
practicality and from the pressure to succeed. This approach makes it okay to fail and rewards
the student who identifies a marketing mix that supports a useless idea and knows exactly what
he or she is doing. You must truly understand your subject to succeed at this project to fail!
Barbara Ross Wooldridge, The University of Texas at Tyler
Packing the Powerful P! The Impact Packaging Has on How We “See” Products: A Taste
Test Experiment
While most students in an introductory marketing course can easily visualize the role packaging
plays in protecting and facilitating the storage of products, it is not as clear to them the powerful
role packing can play in determining how a consumer views and classifies a product (the
promotion aspect). This taste test experiment is designed to graphically demonstrate how
packaging makes us see three very similar products as completely different items.
Chapter 11: Developing and Managing Products
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Exercise Overview
Three products are used in this taste test: KitKat candy bars, Sweet Escapes, and Keebler Fudge
Sticks. The items should be cut into bite-size pieces. Each product is placed in separate bags
labeled “A,” “B,” and “C.” Students are divided into groups of three to five, depending on the
class size. The groups are given taste test sheets to fill out as a team. These sheets include the
following questions. Which product did you prefer, and why did you prefer it? Who is the target
market for the product? What is the name of each product? What price does each product sell
for? (This question can be replaced with a question asking students to list the products from the
most expensive to the least.) Once these are completed, they are collected and reviewed with the
class, and the identities of the products are revealed. Next, the groups are given the ingredient
lists for the three products labeled “A,” “B,” and “C” and are asked to match the product with its
ingredients. These sheets are collected and reviewed. Finally, students are given the nutritional
breakdown for each product—standardized—so that each product’s nutritional breakdown is for
the identical serving portion, and they are asked to identify which product goes to which
nutritional breakdown. These are collected and reviewed, and how each team fared on the three
tasks is reviewed. After the taste test is completed, the results are discussed as a class.
The Results
What the students discover is that although the three products are all basically chocolate-covered
wafers, they are viewed very differently and sell for very different prices based on packaging.
KitKat is packaged individually as a candy bar, while Fudge Sticks are packaged in a group as
cookies, and Sweet Escapes—a cross between a cookie and a candy bar—are packaged as a
group of individually wrapped snacks. Students tend to be surprised at the fact that they cannot
identify the candy bar, which they perceive as a chocolate bar, by its ingredients.
Benefits to the Student
The taste test allows students to immediately begin to understand the relevance of packaging in
determining how one perceives a product. It also demonstrates how packaging interacts with the
price, promotion, and positioning of a product. Additionally, it allows them to apply their own
experience to the material presented in class lectures. This exercise has a side benefit as it
exposes students to taste tests as a form of marketing research. Most importantly, it forces
students to move from a passive state of learning to participatory learning. A good follow-up is
to ask them to try to find their own examples.
Conclusion
Chapter 11: Developing and Managing Products
23
This exercise, depending on class size, takes some time to create the tasting samples but does not
require a lot of preparation time. Students tend to really enjoy it because the results surprise
them. It’s also a painless way to get students to participate actively in class.
Michelle Demoss, Stetson University
Did You Mean to Throw That Away?
Proponents of marketing state that a market-driven economy allows for more choices, better
products, and lower prices. Critics claim that marketing promotes materialism and a throw-away
culture. Is it possible to live in a society that embraces the benefits of marketing yet reduces the
costs? From a sustainable marketing perspective, practices that encourage reusing, recycling, and
reducing materials may provide the answer. Yet the question remains as to whether consumers
and marketers are using or are willing to adopt these practices.
This exercise encourages students to examine the impact of their consumption decisions on the
environment around them. Students are asked to become aware of decisions concerning how they
dispose of marketing-related items and how they make these decisions. Specifically, students are
asked to take the steps listed below.
1. Write down everything they throw away in one week. (Note: The typical American
generates 4.39 pounds of garbage a day.)
2. Specify whether it was a durable product; nondurable product; or promotional
message/mailer, package, or some other marketing-related item.
3. Assess whether they could alter the item in order to reuse, recycle, or reduce waste.
4. Write down what, if any, impact this experience has had on their perceptions and attitudes
during this week.
Discussion should center on any shift in students’ perspectives concerning the impact of their
consumption processes in their community. Specifically, students should be encouraged to
explore how sustainable their consumption behavior is in the long term. Are these choices
encouraging marketers to implement sustainable marketing practices?
