Product Planning and Development

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- Sachin tendulkar, Amitabh Bachhan, Anjalina Jollie, Place- Agra, Goa, Mataysia, London, Jerusalem Organisation- UNO, UNI LEVER, CRY 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

Product Sub category- Further categorization of a product category eg 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

UnilevernProductlever Mix soaps Laundry Soap Toilet Soap Herbal Soap Beauty Soap Lux brand Dove brand Food Personal Care Product width Product Lines Product DEpth Product category Product sub category Product Brands

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 Major service with goods Pure intangible Pure tangible Tangible goods with service Hybrid- Equal Pencil Car restaurant Air line Lecture

Product Classification

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 Sales Profit losses Time

Growth Maturity Declining Relatively short Longer period Introductory Growth Maturity Declining 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

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

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

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

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

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. 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.

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.

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

Categories of Adopters -2σ -σ +σ The Chasm! 34% 34% 16% 2.5% 13.5% The Chasm Mohr, Sengupta, Slater © 2005