Chapter 12

Developing and
Managing Products

Objectives
Understand how companies manage existing
products through line extension and product
modifications
Describe the development of product ideas into
commercial products
Understand importance of product differentiation
and elements that differentiate products
Examine use of product deletion to improve
product mix
Describe organizational structures used for
managing products
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Managing Existing Products

Line Extensions
Product Modifications
Quality Modifications
Functional Modifications
Aesthetic Modifications

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Line Extension
Development of a product that is closely
related to existing products in the line but
is designed specifically to meet different
customer needs.

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Purpose of Line Extensions

Focus on different segment
More precisely satisfy needs of current
segment
Capture market share from competitors
Might result in negative view of core
product

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Product Modification
Changes in one or more characteristics
of a product.

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Conditions Of
Product Modification
Must be modifiable
Perceive modification has occurred
Makes product more consistent with
customers desires
Risk = previous purchaser may view
as riskier purchase

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Methods Of
Product Modification
Quality
Functional
Aesthetic

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Quality Modifications
Changes relating to a products
dependability and durability.
Reducing quality = lower price
Increasing quality = competitive edge

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Functional Modifications
Changes affecting a products versatility,
effectiveness, convenience, or safety.

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Benefits Of
Functional Modifications
Stronger competitive position
Achieve/maintain progressive image
Reduce possibility of product liability
lawsuits

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Aesthetic Modifications
Changes relating to the sensory appeal
of a product. Such as taste, texture,
sound, smell, and appearance.

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Aesthetic Modifications
Benefit
Differentiate product

Drawback
- Value is subjective

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Developing New Products

New product development process
A seven-phase process for introducing
products: idea generation, screening,
concept testing, business analysis,
product development, test marketing,
and commercialization

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Phases Of
New-Product
Development

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Idea Generation
Seeking product ideas to achieve
organizational objectives.
Magazine of Innovation

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Screening
Selecting the ideas with the greatest
potential for further review.

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Concept Testing
Seeking a sample of potential buyers
responses to a product idea.

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Concept Test
For A New
Product

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Business Analysis
Evaluating the potential impact of a product
idea on the firms sales, costs, and profits

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Product Development
Determining if producing a product is feasible
and cost effective.

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Test Marketing
A limited introduction of a product in
geographic areas chosen to represent
the intended market.

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Benefits Of Test Marketing

Expose product to marketing environment
and assess sales performance
Identify weaknesses in product or
marketing mix
Experiment with variations in marketing mix
Reduce risk of failure

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Popular
Test Markets

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Commercialization
Refining and finalizing plans and budgets
for full-scale manufacturing and marketing
of a product

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National Market
Commercialization

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Product Differentiation through Quality,

Design, and Support Services
Product Differentiation
Creating and designing products so that
customers perceive them as different from
competing products.

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Product Differentiation
Quality- characteristics to perform
as expected
- Level
- Consistency

Design and features

- Styling
- Features

Support services- add value

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Product Quality
Quality characteristics of a product allowing it
to perform as expected in satisfying customer needs

Level of quality the amount of quality a

product possesses

Consistency of quality the degree to which

a product has the same level of quality over time

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Product Design and Features

Product design conception, plan, and production
of a product

Styling physical appearance of a product

Product features specific design characteristics
that allow a product to perform certain tasks

Customer services human or mechanical efforts

or activities that add value to a product

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Product Deletion
Eliminating a product from the product mix
when it no longer satisfies a sufficient
number of customers.

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Product Deletion Process

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Organizing To Develop
And Manage Products
Product Manager
Brand Manager
Market Manager
Venture Team
18 Steps

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Royalty-Free, The Studio Dog/Getty Images

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