The anatomy of a product and the product concept document

1
The anatomy of a product and the product concept
document

• Hoorcollege marketing blok 2 week 4

2
Learning goals

• By the end of this weeks colleges and the
  reading you should
• Be able to explain what a product is
• Be aware of the different types of product there
  are
• Understand the three levels of a product and why
  this is an important idea
• Understand the key decisions that must be made
  when developing a product
• Know how to develop a product concept document

3
Agenda

• What is a product?
• Why is product important in interactive media
• Three levels of a product
• Key product decisions
• The product concept document
• Positioning and the product concept
• Summary

4
Where are we now?
5
What is a product?
6
Definition of a product

• A product a thing (or a service) that is offered
  for use to a target customer / user with the aim
  of allowing them to satisfy needs and/or wants
• It helps them achieve their goals
• It helps them solve their problems

7
The term product is used broadly
8
Products and interactive media

• By its very nature interactive media is often
  about creating products rather than simple
  communication
• The level of interaction required is usually (and
  should be) greater than a traditional piece of
  communication
• To be successful we need to understand how to
  develop products rather than just
  communications
• We can do this by using the tools used to develop
  physical products

9
Three levels of a product
10
A product is more than just its features

• When developing products marketers usually think
  of products as having three levels
• The core (kern) product
• The actual (tastbaar / werkelijk) product
• The augmented (uitgebreid) product

11
Three levels of product
12
Why is this important?

• Thinking about a product in three levels is
  important because
• Customers buy benefits or solutions to problems
• The Core product focuses on these
• A product is more than just its features
• The actual product tool helps us define a more
  complete product
• Actual products today are often quite easy to
  copy
• The brand and the augmented product can give us
  competitive advantage
• We can use this tool as the basis for a product
  concept document
• A product concept document is critical to the new
  product development process since it is the basis
  of the go/no-go decision

13
Key product decisions
14
Key product decisions
15
The product concept document
16
Introduction

• This is a suggested (so not the only possible)
  format for a product concept document
• It is based on the three levels of a product
• Part 1 The customer / user covers the core
  product
• Part 2 The product covers the key decisions to
  be made for the actual product
• Part 3 The extras covers the augmented product

17
The customer / user

• Who is the customer and who is the user?
• Firstly are the user and the customer the same
  person?
• You should try to help the reader create a mental
  picture of the customer / user you might use
  your market segmentation and personas to do this
• What is the need(s)/want(s) that the product
  satisfies
• Customers buy things that solve problems and help
  them achieve their goals, what are these goals?
• Why your product?
• There are possibly many ways to achieve goals,
  why would the customer choose your product?
• The context-based scenario you developed to show
  what is wrong with the current situation will be
  useful here
• When, where and how will the product be used?
• Think about the time and the place the user will
  use the product
• Develop some positive usage scenarios that show
  how your product would be used

18
The product

• Product positioning
• How is the product positioned for the target
  customer?
• Quality
• What is the requirement for product quality?
• Features
• Features provide benefits and benefits allow
  users to achieve their goals
• What features does the product need to meet the
  need(s) that the product will be developed to
  fulfil?
• Beware of feature bloat

• Brand
• What brand will be used - company or product?
• Design guidelines
• Are there any minimum needs in terms of design
  (think about size, style etc.). Always leave the
  designer room for creativity
• Packaging
• Does the product need any special packaging, or
  indeed does it need it at all?
• Labelling
• What labelling is required for legal
  requirements, usability, promotion etc?

19
The extras

• Installation
• Will you offer the customer installation help, do
  you need to?
• Service
• What level of service support does the product
  need? This will be affected by your positioning
  and the complexity of the service
• The level of service for a Chunky KitKat will be
  different from a piece of software that runs a
  factory
• Help
• What sort of help do you offer the customer?
  Again this is more important for complex
  products. Sometimes it might be just a manual or
  a quick start guide, for other products you may
  need online help or a telephone line.

• Manuals
• Does the product need a manual? What type of
  manual, user manual or a full technical manual?
• Training
• Could you offer the customer training? Does this
  make sense? If o, then how do you do this?
• Delivery
• Do you deliver the product?
• Credit
• Do you offer the customer credit?
• Warranty
• How long is the warranty on the product?

20
Positioning and the product concept
21
Not everyone accepts new products at the same rate
Source Rogers, E. M., 1962. Diffusion of
Innovation, Free Press
22
Factors affecting rate of adoption

1. Relative advantage when compared with
   alternatives
2. Compatibility to consumers tastes, needs,
   attitudes and existing products
3. Complexity - the less complex the quicker
   adoption
4. Divisibility (deelbaarheid) - how easy it is to
   trial (to reduce purchase risk) e.g. software
5. Communicability - ease of communicating benefits
6. Perceived risk - the cost to the consumer (in
   money and pride) if they make the wrong purchase
   decision

Source Gatignon, H. and Robertson, T. S., 1985.
A Propositional Inventory for Diffusion
Research, Journal of Consumer Research, 11
(March), pp. 849-867
23
Good product positioning helps adoption

• Product positioning is an important decision in
  the life cycle of a product because it helps with
  the product adoption process
• Product positioning is about positioning the
  products benefits in the mind of the target
  customer
• Rather like positioning a company, but the focus
  is on the benefits of the product
• The aim is to overcome some or all of the factors
  that affect new product adoption

24
Positioning

• Once we have chosen our target segment(s) we need
  to position our organization and its offers
• Positioning is about owning a space in your
  target customers mind

25
Positioning is natural but it can be influenced

• We naturally position products
• We organize the thousands of offers into
  categories
• The aim of positioning as a conscious process is
  for us to actively try to get our target customer
  to position our offer in a certain way
• By planning a positioning that is attractive to
  the target customer
• And by designing a marketing mix that supports
  this positioning

26
Being number 1 is a good positioning strategy

• Generally consumers do not remember all the
  products they are exposed to
• They organize them into categories or product
  ladders
• E.g.
• Soft drinks Coke ? Pepsi ? Fanta
• Beers Heineken ? Amstel ? Grolsch
• The top company is the one they remember most
  easily

27
More than one way to be number 1

• The company or brand that is perceived as number
  1 is usually easy to remember
• However, there is more than one way to be number
  1
• Example
• Who crossed the Atlantic first by airplane?
• Charles Lindenbergh?
• Not true?
• Allcock Brown did it first - Lindenbergh was
  the first to do it alone
• Being perceived as number one has a lot of
  advantages
• But there are lots of ways of being number 1
• The trick is to know ensure it is relevant to
  your target customer

28
The number 1 approach to positioning

• This approach was proposed by Al Ries and Jack
  Trout in their book Positioning The battle for
  your mind
• They noted that only one company can be number 1
• But they argued that there are many number 1
  positions available, such as
• Biggest
• First
• Best quality
• Most innovative
• Etc., etc
• The trick is to understand what will work for
  your target customer

Ries, A. and Trout, J., 1981. Positioning The
battle for your mind, New York McGraw-Hill
29
Three approaches

• Ries and Trout suggested 3 possible approaches
• Strengthen your current position in the target
  customers mind
• Avis were number 2 to Hertz in the hire car
  market, so they positioned themselves as were
  number two, we try harder
• Look for an unoccupied position in the mind of
  the target customer
• Market holes are places where you can be first
  (e.g. the number one MP3 player)
• Deposition or reposition your competitor
• Stolichnaya vodka attacked Smirnoff by being
  noting that only their vodka was actually made in
  Russia

30
Levels of positioning
31
Positioning and product positioning

• The positioning of a particular product does not
  necessarily have to be the same as the brand or
  company positioning
• It will often be based on the products unique
  benefits
• However, a product positioning must not conflict
  with the brand or company positioning

32
How position a product

• Product positioning should be based on the goals
  of the target customer / user
• The positioning should show how the product
  benefits the target customer in ways that are
  appropriate to that customer
• Like brand and company positioning, being number
  1 in some way is one approach
• BUT there is another way
• The successor approach to product positioning
• Your product is the successor (opvolger) to an
  already familiar product
• This is like Ries Trouts 3rd option

33
The successor approach to product positioning
34
Why I Dark Side of the Moon wasnt my first
MiniDisc
35
Summary

• Interactive media by its nature means that we
  tend to develop products
• Developing products requires a different way of
  working compared to developing communications
• The product concept document is a tool that
  allows you to develop products more effectively
• Positioning your product is essential to success
• There are at least two approaches to product
  positioning
• Number 1 approach
• Successor approach