Page 574 - Business Principles and Management

Chapter 21 • Product Development and Distribution

pocket- or desk-sized and be capable of special
mathematical functions. Also, it might come in a
variety of colors and include a protective case and
an instruction manual. Given the combination of
features, the price of the calculator could range
from a few dollars to as much as $50 or more. If
you were the person responsible for designing a
calculator to sell, what combination of design fea-
tures would you include? This example shows that
product planning can be very complex. Businesses
have many choices in designing products. In devel-
oping their product strategy, marketers pay close
attention to their customers’ needs and wishes. PHOTO: © GETTY IMAGES/PHOTODISC.

PRODUCT DESIGN LEVELS
There are three levels of product design—a basic
product, an enhanced product, and an extended
product. The basic product is the physical product
in its simplest form. It should be easy for consumers
to understand and see how it can meet a need. The
basic product of one company is usually similar to that of its competitors. Why should a company make
product development decisions
The basic product will meet an important consumer need. However, most
consumers are attempting to satisfy several needs at one time with a purchase, very carefully?
or they have very specific needs different from those of other consumers. In that
case, the basic product will not be satisfactory. Therefore, a business develops
an enhanced product. An enhanced product offers different features and options
for the consumer. For example, a basic computer can be produced in desktop or
notebook form. It can have different screen and hard-drive sizes and offer DVD,
an advanced speaker system, and many other features. If you visit the Web site
of an online computer manufacturer, you can see the many options available to
prospective purchasers. Choices are grouped by categories of customers, such
as business, home office, education, and family, making it easier for customers
to design the computer system they need.
The third level of product development is to plan extended products. An
extended product includes additional features that are not part of the physical
product but increase its usability. Examples are customer service, information
on effective use of the products, and even additional products that improve the
use of the original purchase. If you purchase a new digital video camera, you
will need tapes to begin filming. In addition, a tripod may be helpful to make
sure the video images are not shaky. Editing software, instructional videotapes,
and even lens filters to create special effects may be useful to some but not all
customers. The right combination of choices allows customers to get just the
right product to meet very specialized needs.
Companies may offer a warranty (a statement from the seller about the
product’s qualities or performance) or a guarantee (an assurance from the seller
that a product will perform to your satisfaction for a certain period of time).
This can help reassure the customer about the product.

CHECKPOINT
List and define the three levels of product design.

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