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Product Planning and Product Planning and DevelopmentDevelopment
Product Planning and Product Planning and DevelopmentDevelopment
Maxwell RanasingheMaxwell RanasingheB.Sc. ( Business Administration) Hons. MAAT, B.Sc. ( Business Administration) Hons. MAAT,
Attorney at Law, CPM ( New Haven- USA) Attorney at Law, CPM ( New Haven- USA)
Product Planning and Development
• Introduction to a product• Tangibility continuum of a product• Product Classification• Branding • Packaging• Product life Cycle• Introduction to new product planning•
Definition of a product
• Product could be defined as• Anyhting that can be offered to a
market for attention, acquisition, use or consumption that might satisfy a want or a need- Phillip Kotler.
Product could be of any of the following
• A physical product – Table, Car, Pen• Person- Bathiya and Santhus, Sanga,
ranil, Mahinda, Anarkali, Anjalina Jollie, Mervin S
• Place- Anuradhapura, Rathnapura, London, Jerusalem
• Organisation- SLIM, CIM, UN, UNP, JVP, UNI LEVER, DIALOG
• Idea- Freedom, democracy, Anti Corruption, Social Justice, Anti Drugs, MADD, Family Planning
• Services – education, lawyers service, bank service
Product Scope- Three Aspects
• 1. Physical Aspect- is the physical aspect of the product. What it is ? E.g. It is a herbal tooth paste
• 2. Functional Aspect – is what is does? • E.g. It cleans tooth/ prevents tooth decay• Symbolic Aspect- is what it means to the
users emotion?• E.g. The satisfaction of a person “free
from tooth decay”
The Product Attributes
The Product
Tangible AtrributesDesign, Features,
performances, BrandingPackaging
Intangibel AttributesImage, Value, Perception
• Product Sub category- Further categorization of a product category eg. Toilet Soap category may be sub categorized as beauty soap and herbal soap
• Product Brand- There could be one or many brands in sub categories of the product line such as Lux and Dove
• Product Mix Consistency- how closely related the various product lines are in terms of channel distribution, promotion or in other ways
Product category
Product Lines
Product sub category
Product Brands
Product width
Tangibility Continuum of a products
• Tangibility continuum discuss about to a what degree a product is tangible or intangible.
• It is practically difficult to find a totally tangible product or a totally intangible product in the modern world of marketing
• In many products there are physical goods as well as service components.
Tangibility Continuum
Pure tangible
Tangible goods with service
Hybrid- Equal
Major service with goods
Pure intangible
Pencil
Car restaurant Air line
Lecture
Product ClassificationProducts
Consumer Industrial
Convenience
shopping
Speciality
Unsought
Staple
Impulse
Emergency
Materials and parts
Capital Items
Supplies & services
Raw Materials
Manufactured Materials
Installations
accessories
Supplies
Business services
Side talk
Product Life Cycle Theory ( PLC)
• It is assumed that a product will have a life cycle from development to decline.
• It is measured in relation to time and sales.
• However every product may not go through the same life cycle or some products will stay for along without getting on to the declining stage.
Stage of Life cycle
• 1. Development stage• 2. Introductory stage• 3. Growth stage• 4. Maturity stage• 5. Declining stage
PLC• Dev Intro Growth Maturity Decline
Sales
Profit
losses
Time
Sales
Introductory Growth Maturity Declining
Relatively short
Relatively short
Longer period
Longer or short
Sales are usually slow and profits ar low
Sales increase and profits will be high
Sales growth become slow but volume big
Drop in the sales
Competitors will watch
New competitors enter
More competition and over capacity
Competitors do not enter due to low margings
Distribution has just begun
More distributors take up the product
Many distributors and undercutting
Distributors reduce or give up
Introductory
Growth Maturity decline
Positioning and brand awareness
Brand image is established
Many brands fight each other
Brand image is low
Promotion budget very high
Promo budget may be increased
Promo budget may be standard or low
Not much promotions done
Only one or two manufacturers
Few manufacturers
Many manufactuers
Abundoning manufacturing
High Product failure rate
Improve product quality and features
Many changes in the Marketing mix to be done
May have to take a decision to stay on or not
Importance of P L C to Marketers
• Important tool for forecasting and strategic planning
• It shows that product have a limited life span
• It graphically shows the trend in sales and profitability
• It shows the need to adopt different strategies in various stages
•
PRODUCTS THAT COME AND GO ( FAD)
Limitation of the PLC • Many products may not have a life
cycle as depicted by PLC• Stages of PLC are difficult to distinguish • Identifying where one stage ends and
the other begins is very difficult• Traditional shape may not occur. Eg.
Fad items• Ignores the application of marketing
mix activities• Strategic decisions can change the PLC
eg. repositioning
Side talk
Services• Service is is any act or performance
that one party can offer another that is essentially intangible. It does not result in ownership of anything- Kotler.
• Services have unique features that differentaite from physical goods
• Intangibility• Variability• Inseparability• Perishability• Ownership
• V I²PO
Planning for New Products
• Long term survival of many firms in the competitive world depends on launching new products successfully.
• Planning for new products is an essential and demanding strategic activity.
• There could be many types of new products
Types of new products
Innovative Products
Replacementproducts
ImitativeProducts
• Innovative Products– These products are new to the world and new to the
company.– They are truly new to the customers and they
provide completely different alternatives to existing products
– Eg. . Vaccine for AIDS
• Products based on Nano Technology• Heat seeking missile• Computers
• Replacement products– Although these products are new to
customers or even to the company, they are essentially improvements or redesigns of existing products
– Digital phones replaced the analogues– Disposable racers replaced the old blade
base racers– Shaving foam and gels have replaced the
shaving soaps
• Imitative Products– These products are new to the company and not
new to the market– Many products come in this form to the market– One or few companies may come out with an
innovative or replacemnet products but many will copy the technology and come out with simillar products. They are called mee- too products
– Eg. After celltel> mobitel> dialog> Hutch– After Signal > clogard> supirivicki> sudnatha– After Bata slipper > DSI> Ceypa> ranpa– After Mercedes Benze> Ford> GM> Toyota>
Nissan–
Reasons for introducing new products
• To suit the changes in customers needs
• To adopt new technological advances and avoid obsolence
• To match competition• Product Life Cycle Concept• To bring down the cost
Customer need analysis
• . Information is required as to the expectation of the customer and to what extent the existing products meet that expectation. Then the gap between the two could be observed Expectation
• GAP
Level met by the product
Side talk
If the gap is understood well, one could find
opportunities to • Introduce new products• Make improvements in existing
products• Make improvements in production
process• Make improvements in supporting
services.
Stages of new product development
• 1. Idea Generation• 2. Idea Screening• 3. Concept Development & testing• 4. Marketing Strategy• 5. Business Analysis• 6. Product Development• 7. Test Marketing• 8. Commercialisation ( Launch)
Idea Generation• Finding promising new ideas is the
starting point in the new-product development process.
• Idea generation ranges from incremental improvements to existing products to new to the world products.
• ( produce a drug to reduce cholesterol with less side effects = improvement
• produce a drug that cures AIDS = new to the world product)
Sources of new ideas
• Internal• Customers• Competitors• Outside inventors• Channel members• Consultants
Side talk
Methods of generating new ideas
• Search• Searching new product idea publications,
research publications, the internet, exhibitions, conventions
• Marketing Research• Meet product end users and find out what kind
of products that can be used to satisfy their needs. Meet focus groups of consumers- retailers to discuss new products.
• Technical research• Firm’s internal research laboratories and other
external laboratories could generate new idea for you.
Screening Evaluating and business analysis.
• Screening• There should be a very clear cut
screening policy that would reject the unpromising product ideas and further the promising ideas.
• Two basic questions need to be answered at the screening stage.
• Is the idea could be practically developed into a product with development, production,marketing and financial capabilities of the company?
• Is the venture commercially feasible? ( market attractiveness,profitability, social and environmental concerns)
• Evaluation• After the initial screening more
comprehensive evaluation is required. It is better to have a buyers reaction also into the evaluation process.
• A response from a sample of buyers potential buyers could be a very good criteria to find out the ultimate demand for the product.( This is also called proposed product concept testing) However, the actual product is not in existence and it could not be able to get results as in a test marketing process.
Concept development & testing
• Idea has to be developed into a concept• A concept is a detailed version of the idea
stated in a meaningful consumer terms. • The developed concept will be tested
among a sample of consumers. • This will be presented to the target market
in words or pictures.• Few questions will be asked to check
whether the target market will buy the product.
Concept Cars year 2008
Marketing Strategy Development
Product• Brand name selection and registration• Government regulations as to pricing,
packaging and labeling etc• Determine packaging, sizes, shapes,
colours, other properties• Guarantee period
Pricing• Finalise pricing strategy- Premium/
skimming, penetrative, mark up etc
• Dealer/distributor margings• Bulk selling discounts• Credit periods
Distribution• Select channels of distribution• Transportation • Point of Sales Materials ( POSM)• Display racks, stand etc.
Promotion• Selection and briefing an
advertising agency• Finalise segmentation and target
markets• Finalise the positioning strategy• Have a theme• Communication budgets• Finalise advertising
plan/promotion plan
Business Analysis
• Business analysis estimates the commercial performance of the proposed product.
• Revenue forecast • Cost Estimation • Profit Projections-• Acceptable level of profit for a given
product development- • Assess the amount of risk involve
Product Development and testing
• Prototype• User Tests• Manufacturing development• Component developments and
collaborative product developments various specialised manufacturers
get involved.
Test Market the product
• During the test marketing, the marketers offer the product for sale in a limited area where they can measure the response.
• Ideally the test market should reflect the target market for the product. The marketers evaluate not only the customers reaction but all the elements of the marketing mix.
• Based on the results of test marketing, marketers determines how the marketing mix should be adjusted before a full scale launch.
Malli Ehenum Cup Eka Issuwa Ah!
Ah Mokada putha wenda Yanne?
Katada Adambara…
• Depending on the nature of the product and the sample size, cost and time of test marketing may vary. E.g. test marketing a car could be more expensive than test marketing a new cell phone.
• If test marketing welcomes competition and gives ideas for competitors and the product could be copied easily one can avoid the test marketing.
Launch product• First let the company wide employees
know about the product and its features and marketing objectives of the firm
• Determine method of launch• Selection of venue for launch• Selection of media for launch• Brief distributors about the product• Press conference• Distribute promotional material • Execution of advertising strategy• • …
STAGES IN ADOPTION PROCESS
• AWARENESS – the consumer become aware of the innovation but lack information about the product
• INTEREST – the consumer is induced to seek information about the innovation
• EVALUATION – the consumer consider whether to try the innovation
• TRIAL– the consumer tries the innovation to improve his or her estimate of its value
• ADOPTION – the consumer decide to make full and regular use of the innovation
Diffusion of innovation
• Innovators 2.5% -- willing to try new idea at a risk
• Early adopters 13.5%-- opinion leaders , adopt new ideas early but carefully
• Early majority 34% -- deliberate they adopt new ideas before the average person
• Late majority 34% they adopt only after a majority of people have tried it.
• Laggards 16% -- suspicious of changes and only adopt when all options are exhausted
Questions and Answers and Exam Technique
Vibagayak Nethiwa Pass karanne nedda ?
Vibage fail vunath marketing karanna puluwni !!!!!!
Wedeh lehesi nehe!
Meka godak denek anaganna wedak…… Ha.. Ha
…. Parissamin…..
Maxwell
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