Product development from basic as described

PRODUCT

1. MARKETING MANAGEMENTMARKETING MANAGEMENT
UNIT – IIIUNIT – III
The product – Classification of products - The product – Classification of products -
Product Life Cycle (PLC) – New product Product Life Cycle (PLC) – New product
planning - Product Modification - Elimination planning - Product Modification - Elimination
– Product failure – Branding – Features – – Product failure – Branding – Features –
Types of brands – Packaging – Functions - Types of brands – Packaging – Functions -
Kinds.Kinds.

2. What is a product?What is a product?

A product is any offering by a company to a A product is any offering by a company to a
market that serves to satisfy customer needs market that serves to satisfy customer needs
and wants.and wants.

It can be an object, service, idea, etc.It can be an object, service, idea, etc.

3. Product Classification Schemes
Durability
Use
Tangibility

4. Durability and Tangibility
Nondurable
goods
Services
Durable
goods

5. Consumer Goods Classification
Convenience
Unsought
Shopping
Specialty
Consumer Product Classifications
 Convenience Products
 Shopping Products
 Specialty Products
 Unsought Products
(1) Products of which consumers are unaware
(2) Products that consumers do not consider
purchasing until a need or emergency arises

6. Product classifications

Consumer productsConsumer products

Industrial productIndustrial product

Organizations, persons, places, and ideasOrganizations, persons, places, and ideas

7. Specialty Products
Unsought Products Products
Shopping ProductsProducts
Buy less frequently
> Gather product information
> Fewer purchase locations
> Compare for:
• Suitability & Quality
• Price & Style
Convenience Products
Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations
New innovations
> Products consumers don’t
want to think about.
>Require much advertising &
personal selling
Buy frequently & immediately
> Low priced
> Many purchase locations
> Includes:
• Staple goods
• Impulse goods
• Emergency goods
Consumer-Goods Classification

8. Industrial Goods Classification
Materials and parts
Supplies/
business services
Installations

9. Product Life-Cycle StrategiesProduct Life-Cycle Strategies

The course of a productThe course of a product’’s sale and profit s sale and profit
over it lifetime. over it lifetime.

It involves four distinct stages: It involves four distinct stages:

Introduction, Introduction,

Growth, Growth,

Maturity, Maturity,

And decline.And decline.

Not all products follow this cycleNot all products follow this cycle

10. Sales & Profit Life Cycles
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
TimeTime
S
a
l
e
s
S
a
l
e
s
&&
p
r
o
f
i
t
s
p
r
o
f
i
t
s
(
$
)
(
$
)

11. Introduction stage

The product life-cycle stage in which the The product life-cycle stage in which the
new product is first distributed and made new product is first distributed and made
available for purchase.available for purchase.

12. Growth stage

The product life-cycle stage in which a The product life-cycle stage in which a
productproduct’’s sales start climbing quickly.s sales start climbing quickly.

13. Maturity stage

The stage in the product life cycle in which The stage in the product life cycle in which
sales growth slows or levels off.sales growth slows or levels off.

Modify the market,the product,and the Modify the market,the product,and the
marketing mix.marketing mix.

14. Decline Stage

The product life cycle stage in which a The product life cycle stage in which a
productproduct’’s sales declines sales decline

15. Definition

New Product DevelopmentNew Product Development

Development of original products, Development of original products,
product improvements, product product improvements, product
modifications, and new brands modifications, and new brands
through the firm’s own R & D through the firm’s own R & D
efforts.efforts.

16. New Product Development Strategy

New products can be obtained via New products can be obtained via
acquisition or development.acquisition or development.

New products suffer from high failure New products suffer from high failure
rates.rates.

Several reasons account for failure.Several reasons account for failure.

17. Causes of New Product Failures
Only 10% of new consumer products are still on the Only 10% of new consumer products are still on the
market and profitable after 3 years.market and profitable after 3 years.
Industrial products failure rate as high as 30%.Industrial products failure rate as high as 30%.

Overestimation of Market SizeOverestimation of Market Size

Product Design ProblemsProduct Design Problems

Product Incorrectly Positioned, Priced or AdvertisedProduct Incorrectly Positioned, Priced or Advertised

Costs of Product DevelopmentCosts of Product Development

Competitive ActionsCompetitive Actions
To create successful new products, the company To create successful new products, the company
must:must:

understand it’s customers, markets and competitors understand it’s customers, markets and competitors
 develop products that deliver superior value to customers.develop products that deliver superior value to customers.

18. New Product Development Process

Idea Generation and ScreeningIdea Generation and Screening

Concept Development and TestingConcept Development and Testing

Marketing StrategyMarketing Strategy

Business AnalysisBusiness Analysis

Product DevelopmentProduct Development

Test MarketingTest Marketing

CommercializationCommercialization

19. New Product Development Process
Step 1. Idea Generation
Systematic Search for New Product
Ideas
Internal sources: Company employees at all levels,
R & D
External idea sources:
Customers
Competitors
Distributors
Suppliers

20. 
Process to spot good ideas and drop poor onesProcess to spot good ideas and drop poor ones

CriteriaCriteria

Market Size, Product Price, Development Time & Market Size, Product Price, Development Time &
Costs, Manufacturing Costs, Rate of ReturnCosts, Manufacturing Costs, Rate of Return

Executives provide a description of the product Executives provide a description of the product
along with estimates of market size, product price, along with estimates of market size, product price,
development time and costs, manufacturing costs, development time and costs, manufacturing costs,
and rate of return.and rate of return.

Evaluated against a set of company criteria for new Evaluated against a set of company criteria for new
products.products.
New Product Development Process
Step 2. Idea Screening

21. New Product Development Process
Step 3. Concept Development & Testing
1. Develop Product Ideas into
Alternative
Product Concepts
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One
idea for a possible product that the
company can see itself offering.
detailed version of the idea stated in
meaningful consumer terms.

22. New Product Development Process
Step 4. Marketing Strategy Development
Part Two - Short-Term:
Outlines the product’s planned price,
distribution, and marketing budget.
Part Three - Long-Term:
Describes the long-run sales and profit
goals, marketing mix strategy.
Marketing Strategy Statement Formulation
Part One - Overall:
Describes the target market, planned
product positions, sales, market share,
and profit goals.

23. New Product Development Process
Step 7. Test Marketing
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.

24. BrandBrand
A name, term, sign, symbol
or design, or a combination of them,
intended to identify the goods
or services of one seller or group
of sellers and to differentiate
them from those of competitors.

25. The Role of BrandsThe Role of Brands
Identify the maker
Simplify product handling
Organize accounting
Offer legal protection

26. The Role of BrandsThe Role of Brands
Signify quality
Create barriers to entry
Serve as a competitive
advantage
Secure price premium

27. Advantages of brandingAdvantages of branding

Easy for the seller to track down problems and Easy for the seller to track down problems and
process ordersprocess orders

Provide legal protection of unique product featuresProvide legal protection of unique product features

Branding gives an opportunity to attract loyal and Branding gives an opportunity to attract loyal and
profitable set of customersprofitable set of customers
It helps to give a product category at different It helps to give a product category at different
segments, having separate bundle of benefitssegments, having separate bundle of benefits
It helps build corporate imageIt helps build corporate image

It minimises harm to company reputation if the It minimises harm to company reputation if the
brand failsbrand fails

28. Brand StrategyBrand Strategy

Brand PositioningBrand Positioning

Brand Name Selection Brand Name Selection

Brand SponsorshipBrand Sponsorship

Brand DevelopmentBrand Development

Three levels of Three levels of
positioning:positioning:

Product attributesProduct attributes

Least effectiveLeast effective

BenefitsBenefits

Beliefs and valuesBeliefs and values

Taps into Taps into
emotionsemotions
Key Decisions Key Decisions

29. Brand StrategyBrand Strategy

Brand PositioningBrand Positioning

Brand Name SelectionBrand Name Selection

Brand SponsorshipBrand Sponsorship

Brand DevelopmentBrand Development

Good Brand Names:Good Brand Names:

Suggest something about Suggest something about
the product or its benefitsthe product or its benefits

Are easy to say, recognize Are easy to say, recognize
and rememberand remember

Are distinctiveAre distinctive

Are extendableAre extendable

Translate well into other Translate well into other
languageslanguages

Can be registered and Can be registered and
legally protectedlegally protected
Key Decisions Key Decisions

30. Brand StrategyBrand Strategy

Brand PositioningBrand Positioning

Brand Name Selection Brand Name Selection

Brand SponsorshipBrand Sponsorship

Brand DevelopmentBrand Development

Manufacturer brandsManufacturer brands

Private (store) brandsPrivate (store) brands

Costly to establish and Costly to establish and
promotepromote

Higher profit marginsHigher profit margins

Licensed brandsLicensed brands

Name and character Name and character
licensing has grownlicensing has grown

Co-brandingCo-branding

Advantages / Advantages /
disadvantagesdisadvantages
Key Decisions Key Decisions

31. New Product Development Process
Step 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives

If Yes, Move to
Product Development
If No, Eliminate
Product Concept

32. CommercializationCommercialization

Must decide on Must decide on timingtiming (i.e., when to introduce (i.e., when to introduce
the product).the product).

Must decide on Must decide on wherewhere to introduce the product to introduce the product
(e.g., single location, state, region, nationally, (e.g., single location, state, region, nationally,
internationally).internationally).

Must develop a Must develop a market rolloutmarket rollout plan. plan.

33. Packaging: The 5Packaging: The 5
thth
P P
All the activities of designing and producing
the container for a product.

34. What is the Fifth P?What is the Fifth P?
PackagingPackaging, sometimes called the , sometimes called the
fifth P, is all the activities of fifth P, is all the activities of
designing and producing the designing and producing the
container for a product.container for a product.

35. PackagingPackaging

Includes the activities of designing and Includes the activities of designing and
producing the container for a productproducing the container for a product

Packaging is done at three levelsPackaging is done at three levels
- primary- primary
- secondary- secondary
- shipping- shipping

36. Designing packagingDesigning packaging

Packaging conceptsPackaging concepts

Technical specificationsTechnical specifications

Engineering testsEngineering tests

Visual testsVisual tests

Dealer testsDealer tests

Consumer testsConsumer tests

Packaging innovationsPackaging innovations

Environmental considerationsEnvironmental considerations

37. Packaging has been influenced Packaging has been influenced
by…by…
Self-service
Consumer affluence
Company/brand image
Innovation opportunity