Chapter 1
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A product is a good or a service
Product Planning comprised of two elements
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Product development
 Conceive, develop, produce, and test
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Product management
 Commercialized, sustained, eventually withdrawn
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These two elements combine for a “cradle to
grave” cycle of products
Same basic cycle for consumer products and
services and commercial products and services
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Resource Allocation
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Product Mix coordination
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Optimal mix of products to fill market targets
Marketing Program support
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All companies are resource-constrained
People, time, money
Information about product performance
Product Portfolio evaluation
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Cash, profitability, market position, strategic value
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Inventions versus innovations
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Inventions are not products; they are technical
devices
Innovations are inventions with a marketing
program
 Continuous innovation – “new and improved”
 Discontinuous innovation – “new category”
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Core benefit surrounded by attribute layers
Potential Product
Augmented Product
Expected Product
Generic
Product
Core
Expected
Product
Benefit
Potential – All future features
And capabilities of the product
Augmented – Differentiated
features and capabilities
Expected – Base set of buyer’s
expectations about product
Generic – very basic form
of product
Core – fundamental service
being acquired
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Core Benefit – shelter
Generic product – YMCA or youth hostel
Expected product – Motel 6
Augmented product – Hilton with concierge,
mini-bar, flat screen HD TV
Potential product – Disney arranges air
transport, airport shuttle, baggage transfer,
pleasant bungalow with kitchen, meals,
laundry service – all the comforts of home
while on vacation
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Companies can provide product for each layer
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Marriott portfolio
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Product line – a group of closely related
product items
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Generic – Fairfield Inn
Expected – Courtyard, Residence
Augmented – Marriott Hotels, Marriott Suites
Potential – Marriott Resorts
Internal resource maximization
Positioning signals to consumers
Product mix – combination of product lines
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Pillsbury example page 13
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Cost Improvements
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Product Improvements
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Arm and Hammer toothpaste, laundry detergent
New Category Entries
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Tartar control toothpaste, whitening toothpaste
Market Extensions
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New and improved features
Line Extensions
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possibly same item with cost reductions (different than
price reduction)
Kodak selling batteries
New-to-the-World Products
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Cell phone, DVD player, etc.
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One-third of a companies sales come from
products introduced in the past 5 years
Over 90% of product concepts fail during
product development process
Of the ones that make it to market, about a
third fail
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31% of commercial products, 46% of consumer
products
27% of product line extensions fail
31% of new brands in existing categories fail
46% of new products in new categories fail
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Not listening in Product Management class!
Lack of marketing orientation – listening to
customers
Driven by engineering – the better mousetrap
Rushed or incomplete product development
process
Lack of a defined product development process
Not doing proper market/competitor
surveillance
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Chapters 2-4 – envisioning process
Chapters 5-6 - conceptualizing steps
Chapter 7 – developing and producing steps
Chapters 8-9 – developing and testing steps
Chapter 10 – sustaining and disposing
Chapter 11 – special topics area
Chapter 12 – best practices and key learnings
We’ll go through a competition simulation as
well