Product and Brand Management

MODULE-I

1. THE CONCEPT OF NEW PRODUCT:-

A product may be new to the company, but not to the customers

and in reverse a product may be new to the customers but not
to the company.

And basing upon these simple concepts, Booz, Allen and

Hamilton identified six categories of new products in terms of
their newness to the company and to the marketplace, as below-

a. New to the world: New products that create an entirely

new market.
b. New product lines: New products that allow a company
to enter an established market for the first time.
c. Additions to the existing product lines: New products
that supplement a company’s established product line.
d. Improvements in Revision to existing products: New
products that provide improved performance or greater
value and replace existing products.
e. Repositioning: Existing products that are targeted to
new market segments.
f. Cost reductions: New products that provide similar
performance at lower cost.

2. WHY NEW PRODUCTS FAIL?

Because:-
a. Inadequate Market Analysis.
b. Product deficiencies.
c. Higher costs than anticipated.
d. Poor timing of introduction of new products.
e. Severe competition.
f. Insufficient marketing efforts.
g. Inadequate sales force.
h. Weakness in distribution system.

3. NEW PRODUCT DEVELOPMENT PROCESS:-

STEP 1: IDEA GENERATION

STEP 2: IDEA SCREENING

STEP 3: CONCEPT TESTING

MARKETING
STEP 4: STRATEGY
DEVELOPMENT

STEP 5: BUSINESS ANALYSIS

PRODUCT
STEP 6:
DEVELOPMENT

STEP 7: TEST MARKETING

STEP 8: COMMERCIALIZATION
 YES YES YES YES YES YES YES

1. 2. 3. 4. 5. 6. 7. 8.
IDEA IDEA CONCEPT MARKETING BUSINESS PRODUCT MARKET COMMERCIALIZATION
GENERATION SCREENING TESTING STRATEGY ANALYSIS DEVELOPMENT TESTING
DEVELOPMENT Are our product
- Is the - Have we -
-Can we - Will this - Have our
product idea Can we find developed a sales meeting our
- Is the idea find a good - product product
compatible a cost technically expectations?
worth concept for meet our sales met
considering? with company effective and
objectives, the product profit goal? our IF YES LAY
affordable commercially
strategies and that expectation FUTUTE PLANS
marketing sound
resources? consumers s? REGARDING…
strategy? product?
say they
would try?

N N
O O
YE
S
N N N N N N
O O O O O O Should we Would it help to
send the idea modify the
back for product or
product marketing
development program ?
?

N N
O O
DROP
STEP 1: IDEA GENERATION

It is a continuous process, which is a systematic search for new product opportunities.

Otherwise, this step is known as opportunity exploration.

Methods of generating ideas include brainstorming, focus group, analysis of existing

data on products and survey. Other sources include seminar & conferences,
advertising agencies and marketing research firms.

STEP 2: IDEA SCREENING

As ideas emerge, they are checked against the firm’s new product goals and long
range strategies.

Today many companies following checklists for preliminary evaluation. In it, firms list
the new product attributes considered most important and compare each idea with
those attributes.

- In screening ideas, the company must avoid two types of errors, such
as-
DROP ERROR: - It occurs, when the company dismisses a good
idea.
GO ERROR : - It occurs, when the company permits a poor idea
to move into development and commercialization.

- These errors may lead to three types of failures, such as-

1. An absolute product failure: - Losses money. Here sales don’t cover

variable cost.
2. A partial product failure : - Losses money. But, Here sales
cover variable costs and fixed costs.
3. A relative product failure :- Yield a profit that is less than the
company’s target rate of return.

STEP 3: CONCEPT DEVELOPMENT & TESTING

Attractive ideas must be refined into testable product concepts; in consumer terms.
Again concept testing determines customer attitudes before product development.
Concept testing is a quick and inexpensive way of measuring consumer enthusiasm.
Where, the following questions are arises-
a. Is the idea easy to understand?
b. Do you perceive distinct benefits for this product over those products
currently in the market?

c. Do you find the claims about the product believable?

d. Would you replace your current brand with this new product?

e. Would this product meet a real need?

 f. What improvements can you suggest in various attributes of the concept?

g. How frequently would you buy the product?

h. Who would use it?

STEP 4: MARKETING STRATEGIES DEVELOPMENT

The planner must now develop a marketing strategy plan for introducing the product
into the market.
The marketing strategy formulation takes place in three parts, like-

a. The first part: describes the size, structure and behaviour of target market,
the planned product positioning and the sales, market share and profit goals
sought in the first few years.
b. The second part outlines the product’s planned price, distribution strategy
and marketing budget for the first year.
c. The third part describes the long run sales and profit goals and marketing
mix strategies.

STEP 5: BUSINESS ANALYSIS

It involves the detailed review and projection of relevant market factors, revenues,
costs and tends for a proposed new product.

Example: Demand projections, Cost projections, completion, Required

investments and profitability.

STEP 6: PRODUCT DEVELOPMENT

If product development passes through the business test, it moves to the

manufacturing department to convert it into the physical product shape.

Product development decisions include the types and qualities of materials, the
methods of production, cost and production time requirement per unit, alternative
sizes, colours, brand and trademarks, etc.

STEP 7: TEST MARKETING

If the product passes functional and consumer tests, the next step is the test
marketing.
According to Phillip Kotler, test marketing is the stage at which the product and
marketing program are introduced into more realistic market settings.
Test marketing involves placing a fully developed new product for sale in one or more
selected areas and observing its actual performance under a proposed marketing
pan.
The purpose is to evaluate the product and pretest marketing efforts in a real setting
prior to the commercialization.
Test marketing process requires the decision making on when, where, how long &
what information to acquire.
Test marketing allows the marketer to see the feasibility of product in the real test
conditions. So there is always a scope for correction. So many products fail after
commercialization, because of lack of test marketing by the marketer.

STEP 8: COMMERCIALISATION

After the successful test marketing of the product, the company is ready to introduce
the product in its target markets. It is called as commercialization.

In the commercialization stage, the following factors are to be considered-

a. Acceptance by customers and intermediaries.

b. The intensity of distribution (i.e. how many outlets?)
c. Production capabilities.
d. Promotional mix.
e. Competitions.
f. Price.
g. Break Even Point.
h. Time Period profitability occurs.
i. Cost of commercialization.
 RESEARCH TECHNIQUES
and STRATEGES USED IN
NEW PRODUCT DEVELOPMENT PROCESS
I. IDEA GENERATION…

 Research studies on the consumers, products, competition, etc. will reveal

market gaps by comparing the existing supply of products with the ideal
product conceptions of consumers.

 There are many techniques for concept or idea generation, such as –

-A- Need Assessment (What does the Customer/company want?)
-B- Scenario Analysis (Futuristic Forecasts)
-C- Group Creativity (Group Innovation)
-D- Attribute analysis (Mechanical approach for obtaining new
viewpoints)
-E- Relationship analysis (Force to see new relationships)
-F- Lateral Search (Move away from the product)

-A- Need Assessment…

 This category of techniques involves understanding current and future needs of

the marketplace.

 And they are-

-a- Customer visit.

-b- Focus groups.
-c- Using expert’s service.
-d- Publications.
-e- Role playing.
-f- Lead User methodology.

-a- Customer visit :-

The purpose of customer visit is not to sell customers on the company’s

products but rather to listen to what customers are saying about
what they need.

- Set objectives.
- Select a sample.
- Compose the visit team.
- Develop the discussion guide.
- Conduct the interviews.
- Debrief after each interview.
 - Analyze, report and store visit data.

-f- Lead user methodology:-

This technique attempts to analyze the needs and wants of lead users.

The steps in this method are as follows –

- Specify product market segment.
- Identify trends.
- Identify lead users.
- Develop new product specifications with lead users.
- Test lead user product concept with routine users.

-B- Scenario Analysis (Futuristic Forecasts):-

 Here the attempt is to describe the futuristic scenario and frame potential
problems emerging from this scenario. And, consequently, new product ideas
can be envisioned to solve these problems.

 Again it is of two types –

- Extend Approach:-
-means to analyze present then future facts and scenarios one by one
briefly to find out the actual problems.

- Leap Approach:-
-means to analyze those types of products on the basis of a limited gap
periods, i.e. after 5 years…

-C- Group Creativity (Group Innovation)

 Other wisely known as Brainstorming…

 This comprises those techniques that stimulate groups to think of new ideas.

 Guidelines for brainstorming –

- Defer judgment:- means all ideas need to be welcomed & initial criticism
of original ideas are inappropriate.
- Quantity breeds quality:- means the more ideas, the better objective is to
put forth all ideas.
 Rules of Brainstorming –

- Brainstorming works best in a small group of 4 to 10 people.

 - A target is required. That is, there must be a single defined question or
items on which to focus that everybody understands.

- All suggested ideas are publicly recorded; none are edited out.

- Equal opportunities for all group members to express themselves must be

ensured.

- All possible answers should be encouraged and actively sought out,

including the impractical, wild or out-in-left-field ideas.

- Keep going around the team until all ideas are collected and
recorded.

-D- Attribute analysis (Mechanical approach for obtaining new

viewpoints)
 This means to analyze the product’s characteristics/ attributes to generate new
ideas.

 Three approaches within this category are taken into consideration, such as –

- Determinant gap analysis /Attribute Rating (AR)–

Attributes are known.

Most important attributes/drivers of the market place are selected on the

basis of company or on the basis of customers’ angle.

A judgmental approach can be taken into account to map existing product

offerings with potential product offerings on the given attributes.

- Perceptual gap analysis /overall similarity analysis–

Attributes are not known/ not easily found.

The methodology here is to pair all existing products & then make an
evaluation of the similarity between the two paired product
offerings.
After all pairs have been evaluated, a map is constructed in an
attempt to illustrate the relationships among all existing products – all
existing products are plotted on the map to show their relationships to
every other product.

- Similarity/Dissimilarity analysis –

Here products are evaluated on their similarity/ dissimilarity to each

other, based on a given set of attributes/ characteristics.
This analysis is used to group and classify product offering to determine
the competitive nature of the marketplace for existing or potential product
offerings.

-E- Relationship analysis (Force to see new relationships)

  is a category of techniques that force relationships between seemingly
unrelated issues to discover new products ideas.

 There are 3 types of relationship analysis, such as-

-a- Two dimensional matrix

-b- Morphological analysis
-c- Trade – off analysis

-a- Two dimensional matrix

This approach consists of identifying two key elements in question

concerning a product.

Example:-

Lets take two different key elements (a –type of customers &

b- category of services ) to generate some ideas of a product, i.e.
TELECOM SERVICE PROVIDERS

BUSINESS MEN SERVICE STUDENTS

HOLDERS
LIFETIME 1 2 3
PREPAID 4 5 6
POSTPAID 7 8 9

-b- Morphological analysis

 A technique that is based on identifying different attributes for a product and
identifying multiple levels for each of the attributes.

 Each of the attribute and respective levels are listed, and then each level per
attribute is combined with a level from every other attribute to iterate a list of
product attribute combinations.

 Example:-

If 3 attributes are there and 4 levels( and each level consists of 3 categories )
are there then the total possible ideas are = 36

-c- Trade – off analysis

 As it is not possible to judge which type of attributes and which types of levels
are more preferred by the customers, this type of analysis is required for better
judgment.
 It’s a quantitative technique for calculating the desirability of a particular
product’s attributes. This, then, can lead to the aggregation of particular types
of attributes that provide the greatest desirability.
  The basic approach here is that all possible product attributes are being taken
into consideration and customers are asked to rank the combinations
accordingly to their preferences/ desirability. And finally, the best ones with
more samples are taken into considered.

-F- Lateral Search (Move away from the product)

 The overall theme underlying here is to force thinking away from the current
product offering or attributes to conceive new ideas.

 Four techniques are generally overviewed here, such as:-

-a- Competitor’s review.
-b- Avoidance technique.
-c- Big winner technique.
-d- Creative stimuli technique.

-a- Competitor’s review:-

Review of what competitors are doing relative to the product

offerings. In this manner product attributes, product offerings, core
competency and other initiatives that make competitor’s product popular can
be identified and possibly incorporated into a new product concept.

-b- Avoidance technique:-

A technique that constantly challenges team members about why
they think a certain way.In this way the team can understand why certain
preferences exist and how such preferences can best served.

To perform this technique, discussion begins on a particular topic,

and then the question why or why not is posed. And this continues
until the team is satisfied with the preferences and corresponding ideas
generated.

-c- Big winner technique:-

Here, the attempt is to iterate the reasons underlying the success of
products, people, things and so on. The technique begins by listing things
that are successful to focus discussion. And the discussed reasons are
then tried to incorporated into fruitful ideas/ concepts.

-d- Creative stimuli technique:-

is a technique that brainstorms ideas based on a given adjective or

noun. This technique attempts to content different ways of marking a
product by reflecting certain elements of a listed word. The key difference
 in the case of the creative stimuli technique is that a word, not a success
characteristic, is listed and that disconnected words bring about the
greatest creativity.
This type of technique is more successful in generating ideas for
new product offerings.

II. CONCEPT TESTING…

 After getting feedback about its new product ideas and concept development;
concept testing is being done.

 Concept testing determines customers’ attitudes before product development.

 It’s a quick and inexpensive ways of measuring customer enthusiasms.

 Concept testing incorporates customer opinion into the evaluation process.

 Other question during a concept test can include reasons why the concept is? or
is not Appling? Main strength of the products key weakness of the product
concept and suggestion for improving the proposed product concept Or
research method.

 There are 4 approach for conducting a concept test:-

-A- The narrative concept test

-B- The picture / sketch concept test
-C- The prototype concept test
-D- The virtual relating concept test

A- The narrative concept test:-

Here a test description of the concept being presented to
consumers for their opinions.

B- The picture / sketch concept test:-

Here a b/w or drawing is presented to consumers for their for
opinions is presented to consumers for their opinion.

C- The prototype concept test:-

Here the consumer is shown and may be able to handle a facsimile
(just copy/ similar product) of the product, sometimes a working
prototype of the product is shown. The consumer, there for witness the
product firsthand

D- The virtual relating concept test:-

Here the consumer views a computer image of the product and may
interact with the virtual prototype.
 III. CONCEPT EVALUATION…

 Once a set of product concept has been generated an evaluation of each

concept is conducted.

 The purpose of concept evaluation is to refine the set of concept to determine

these that should continue in the product development process.

 Five generally accepted approach can be used evaluate concept .In most cases,
these approaches are used together to achieve a border perspective of which
concept should be continued.

 These five approaches are

a). product development character review

b). concept testing
c). scoring models
d). snakes plot
e). financial Analysis

a). Product development character review

- Here the of executives (responsible for) evaluates the respective

product concept against the criteria established in the PDC

- A product concept that appears to meet the expectations

established in the PDC is allowed to proceed in the next product
development stage.

- Ultimately the decision for adopting/not adopting using the PDC

review approach is based on managerial intuition and judgment.
b). concept testing
- Discussed Above

c). Scoring models

- These comprise lists of criteria and associated rating scales

that are generated by the team or established by the company
.Each individual product concept is then evaluated on the
given criteria by using the given scale.
 - Score across the of criteria are summed to provide a total score per
concept.

- Concept with higher scores are given priorities over concepts

having lower scores.

The 5 points scale are:-

very good
good
average
bad
very bad

Criterion Concept A Concept B Concept C

Cost to do 4 3 5
Profitability 3 2 5
Size of potential market 5 4 4
Market share expected 1 3 3
Capital investment required 2 1 5
---- ---- ---
15 13 22

d) Snakes plot

- Here for each product concept the score per criterion is plotted.

- Therefore, by plotting the scoring profiles of multiple product

concepts a comparison of product concept can be made
regarding which profile is most reasonable or appealing.

- Typically a favorable profile would be one with a more stable

profile so long as an acceptable minimum score is achieve a profile
could also be considered favorable of a product concept
has a higher score on certain desirable criteria.

e). Financial Analysis

There are 2 ways to calculate the financial impact of the product concept.

-I). ATAR model:-

ATAR stands for - Awareness, Trial, Availability and Repeat

Purchases.
This approach is typically refers to as a breakdown approach because—an
aggregate market size is broken down by:-

- The percentage of awareness in the market due to promotion. (a)

 - The percentage of trial by consumers. (t)
- The percentage of availability in existing distribution channels. (a)
- The percentage of consumers who will buy again. (r)

Multiplied by how much will be bought in a given time period. (qb)

So, a × t × a × r × qb = ???

-II). ECV Approach:-

- This means - Expected Commercial Values (ECV) Approach.

- The specific approach calculates the expected commercial value of
a particular product concept using decision—tree methodology.
- This incorporates
- the probability of technical success.
- the probability of commercial success.

- to estimate the overall expected commercial worth of a

particular concept.

And the formula for this type of approach is :-

ECV = { (NPV × Pcs-C) × Pts-D }

Where –
- ECV = Expected Commercial Value of the product
concept.
- NPV = Net Present Value of the project’s future
earnings.
- Pcs = Probability of commercial success.
- Pts = Probability of technical success.
- Pts = Probability of technical success.
- D = Development Costs.
- C = Commercialization costs.
 S
YE
NPV
YE
S C
COMMERCIAL
D NO FAILURE
NO
TECHNICAL FAILURE

- The probability of technical success and commercial success can

affect the consideration of product concepts. And this lead to an
erroneous ECV calculation. So 4 recommended approaches (as
discussed) for calculating these probabilities are –

- DELPHI Consensus Approach:-

Here, each manager submits his/her probability estimates; which

are then compiled & reported to each of the managers.
Discussion about the numbers usually will take place if there
are significant differences across the estimates, and then,
subsequent rounds of probability estimate will ensue. The
process ends when consensus on numbers is reached.

- The MATRIX Approach:-

consists of documentation in two-dimensional matrices that

specify probability of technical success across different
scenarios and probability of commercial success across
different scenarios.

- The SCORING Model Approach:-

is a more detailed version of the matrix approach. A scoring model

comprising key criteria are summed and compared to a given
 standard score to indicate the probabilities for technical
success and commercial success.

- New PROD Model:-

is an empirically based computer model that is customized to a

company situation.
Responses from a team of company representatives answering a
series of 30 questions are loaded into the New Prod computer
model, these data are compared to profiles within the model, and
then, prediction of success or failure is given.
But still there may arise some doubt in this case as because of the
application of probabilities.

IV. PRODUCT TESTING…

- Before going to these tests, there should be a product protocol-

which includes the primary questions of whether the product
actually works and which factors are to be taken into account for
its success.

OBJECTIVES BEHIND:-

- To assess how far the product fares on the product concept.

- To assess the chance of improving the product.
- To know what is liked and disliked in a product.
- To know preferences after extended usage.

- By definition, a protocol is a signed document containing a record of

the points on which agreement has been reached by negotiating
parties. A product protocol, therefore, represents the points of
agreement for product specifications and deliverables – where all
the departments & management have agreed (on these
specifications & deliveries).

- Here the protocol of the product is tested.

- The customers are allowed to test the product. Then testing is done.
For example – How the tea tastes is tested after a consumer takes a
cup of tea.

- Product testing and concept testing are sometimes done

simultaneously to know whether a product meets the expectations
generated by its concept.

- In general, a product protocol is to address 12 distinct areas, such

as
 1. Target Market:- who is the intended purchaser of the product.

2. Product positioning:- how is the product to be positioned in the

market relative to existing company offerings & competitor
offerings?

3. Product attributes:- describe the technology and form of the

product in specific product functions & attributes/features.

This description is basically technical in nature comprising a metric

and a target value.

The metric represents the specific function/feature to be built into

the product and the target value represents the boundary conditions for
building that functions/ features into the product.

There are five ways in which to set target values for metrics –
- At least X: - These specifications establish targets for the
lower bound on a metric, but higher is still better.
EX: - The range for the new bike (metric) must be at
least 90 km/hr.
- At most X: -These specifications establish targets for the
upper bound on a metric, with smaller values being better.
EX:- The capacity of the tank of a bike can be no more than
14 litres.

- Between X & Y:-

These specifications establish both upper & lower bounds for
the values of the metric.
EX: - The no. of pages in a book can range from 400 to 450 pages.

- Exactly X:- These specifications establish a range of a particular

value of a metric.
EX: - The duration of a new movie must be 2 hrs.

- A set of discrete values:-

Some metrics will have values corresponding to several
discrete choices.
EX: - CASE sizes for cold-drinks can come in counts of 6 or 12 or
16 or 27.
4. Competitive comparison:- What are competitors’ currently doing?

5. Augmentation dimensions:- How is the product to be differentiated?

What is the product’s competitive advantage?

6. Timing:- What is the product development schedule?

7. Marketing Requirements:- Describe any special marketing issues.

 8. Financial Requirements:- Describe any special financial issues.

9. Production Requirements:- Describe any special production issues.

10. Regulatory Requirements:- Describe any special regulatory/ legal

issues.

11. Corporate Strategy Requirements:- What core competencies are to

be emphasized in developing the product?

12. Potholes:- Do there appear to be any foreseeable problems in

developing the product?

 Product Testing:- is therefore, employed to evaluate a product’s functional

performance and to examine the product protocol characteristics.
- Three specific types of product use testing are possible, such as-

a.- Alpha Testing:- In house testing, where employees serve as the basis for
testing. Its advantage is - it is often less expensive and competitors are not
tipped to the new product. But, the disadvantage is that employees may not
necessarily reflect customer views.

b.- Beta Testing:- Here, the basis is customers. The advantage of this testing
is - the customer provides insight into the product and its functioning. The
disadvantage is that competitors can learn about the new product and the
sample customers choosen for test may not necessarily reflect the total market.

c.- Gamma Testing:- Longer-term test where the product is put through
extensive use by the customer. It is predominantly used by pharmaceutical
companies due to regulatory issues surrounding medical drugs.

 Structuring a product use:-

This structure contains five testing dimensions as discussed below –

a). Test Objectives:- Objectives specifies what the company wants/needs

to learn by performing the product use test.
The focus is to test the elements of the product protocol.
b). Test Group Characteristics:- which includes test group composition,
mode of contact, company disclosure & degree of product explanation.
- Test group composition:- involves the issue of whether customers/non
customers should serve as the test group non customers include – experts, industry
opinion leaders and employees.
- Mode of contact:- includes the choice of mail or personal interaction,
individual/group setting, central testing location.
- Company Disclosure:- would pertain to whether users should be
given the company name & the brand.
- Degree of product explanation:- to be given, i.e. full information/
half of the information is given to the customers or not.
Degree of product explanation will depend on the objectives of the test.
 c). Product usage consideration:- means the no. of usage exposures to be
allowed & duration of each product use experience.
Related to this is whether the users’ experience with the product should be
surprised or not.

d). Product form considerations:- means the nature of the product to be

given to users during the test.
Like should the product be the best single product possible? Or Should multiple
variations of the product be provided?

e) Measurement & analysis considerations:- concerns the recording and

assessment of test results.
One issue is the mode for recording user reactions in paper documentation,
audiotape & videotape.
Another issue is a designation of norms for the product use test.
Final issue is – whether measurement & analysis should be performed in-house
or by consulting agency.

V. PRE-TEST MARKETING & TEST MARKETING

Pre-test Marketing:-

Pre-test market analysis is sometimes used in place of a full test market, or to

determine whether test marketing is necessary.

Pretest marketing models are increasingly being used by consumer products

firms for evaluating new products prior to test market.

The reasons for this are many, but include considerations of cost, risk, and
fear of premature competitive disclosure.

Allan Shocker and William Hall discuss the concept of a pretest market
and assess its value. They contrast and critically evaluate most frequently used
models for projecting pretest market results. The strengths and limits of these
models complement each other and provide useful additions to available methods
for predicting new product performance and for refining marketing plans
prior to test marketing.

Pre-test Marketing Modeling (PTM) are there for practicing , where the objective
is to convert the readily obtainable information into forecasts of market share or
sales volume and recommend improvements in the product, its pricing and
promotion while introducing new products.

The data collected usually through simulated test markets, the proposed
marketing plan, past experience with the product category and the judgment of
the executives.
 Basic Structure of Pre-Test Market Models:-

- Use the hierarchy-of-effects model as a good descriptor of customer

purchase behavior.
- Purchase phenomenon broken up into three behavioral stages:

 Stage 1: Awareness of the product given product concept

and marketing mix.
 Stage 2: Given awareness the trial percentage.
 Stage 3: Given trial, repeat purchase propensity.
 Stage 4: Proportion of future category purchases to the
new brand.

The different models of pre test marketing are discussed as under-

SIMULATED TEST MARKET (STM):-

- These are also called Laboratory Test Market.

- Here the Objective is to measure the trial and repurchase

intentions of target market toward a new product as a result of the
proposed marketing plans.

- STM’s venue is either a permanent or a traveling lab. These labs are

located at the shopping centers.

- Respondents are intercepted at the shopping centers.

- There attitudes and usage behaviour toward the product category are
surveyed.

They are exposed to the concept board or commercials for the new
product.
They can buy a new product. Non-buyers who are not interested may be
given a sample of the new product as a gift. After they try at home,
say for few weeks/days, they are contracted and their attitudes, use,
intention to repeat purchase are surveyed.

STM PROVIDE:-

a. Estimate of percentage of aware consumers who will buy

the product.
 b. percentage of triers who will re-purchase.

- There is a relationship between STM results and product performance in

subsequent test market and commercialization.

- STM enables us to decide whether further development of the new

product is warranted by giving us a fairly accurate prediction of the
market share.

- PTM models are further refinements of STM models which convert the
STM data into accurate market share prediction and to simulate effects on
share and profits of the different elements of the marketing mix.
BASES:-
- It is model used to make sales predictions at several stages of the new
product development process, e.g. business analysis, test marketing and
commercialization.
- At earlier stages, past data are used for extension based on
managerial judgment.
- At later stages, instead of previous averages, specific product or brand-
centric data are used.

- BASE – I :- Consumers are intercepted shopping mall to do concept

test.
BASE – II :- In-home test of a product. A good forecasting accuracy
is claimed.

BASE – III :- It measures the effect of retailing ambience.

For ex- self placement, presence of competitive brands,
packaging and merchandising materials.
The test is not used frequently.
ASSESSOR:-

- It consists of two components.

- One is – a preference model and other is – a trial and repeat model.
STM supports data for these two. It is a dual approach.
- Preference model is judgmental and Trial repeat model is based on
choice (behaviour) in the STM.

- Preference Model:-
Prior to being exposed to commercials in the STM, respondents are
asked to list their consideration set or evoked set of brands from
among those being tested. They are then asked to allocate a fixed
number of points among the evoked set. It gives relative
preference rating for each product. A follow up telephone call is
made. The respondents are again asked to allocate points among
the brands, But a new product is included in this time. A market share
can be estimated from the relative preference for the new
product and its draw from competitors product can be determined
from the change in relative preferences.
 - In the TRIAL REPEAT MODEL - long run steady state market share (S)
achieved by a new brand is given by product of long run levels of
trial and repeat purchasing.

S = TRB

where, T = Long run cumulative trial run (the proportion of all

buyers in the target group who ever try the product).
R = Long run repeat purchase rate (new brand’s share of
subsequent purchases in the product category made by
previous triers).
B = The index to adjust the users of buyers of the new
brand relative to other buyers in the category.

LITMUS and NEWS:-

- Both these models are a decision process or hierarchy of effects
model.
- Awareness is built by promotion.
- There are periodic forecasts of awareness, trial, share and sales and
even profitability.
- While NEWS uses consumer survey data, LITMUS uses STM data to
estimate trial and repeat probability to make consumers travel from
awareness to trial and from trial to repeat, whereas NEWS allows
just two.
- LITMUS also calculates profitability estimate.

Test Marketing:-

- It is the limited introduction of a product and its marketing

programme under controlled conditions basically to determine how
well the product will generate sales volume, market share and
profits.

- Thus, it is an opportunity to see how well the product will

perform in the actual marketplace.

- Broadly speaking test marketing is the rehearsal of the actual

marketing to be done later on.

- TEST MARKETING PLAN: - It is necessary to design a proper test

marketing plan. Which will help in developing the proper test design
and exercise necessary control.

- In general, marketing testing can be done through three types of

categories of techniques, such as – Pseudo scale, Controlled
scale and Full-scale test. These tests are defined under –

Pseudo Scale:-
 Here artificial selling situation/hypothetical selling situation is
created. Thus the actual product is not available for sale.

- These are of two types; such as – Speculative sale and pre-market

testing.
- Speculative sales rely on the sales force and are typically
associated with business-to-business products. During a speculative sale
situation, a sales person approaches a customer, makes a full
pitch about the product and then sees if the customer would likely buy
the product.
- Pre-market testing is typical of shopping mall intercepts, where a
market research firm surveys shoppers at a shopping center
or mall.

Controlled sale:-

- This is the second category of test marketing.

- The distinction is that the product is available for purchase in an
exclusive market setting.
- There are basically three types of controlled sale market testing
techniques, such as - informal selling, direct marketing and mini-
market.

- Informal selling is typically performed at trade shows, where sales

people can show the product, informally approach customers, make
the pitch and see if the customer will actually buy the product.
- Direct marketing focuses selling efforts on a particular market
segment or target market; this segment or target market receives
information about the product and has the opportunity to
purchase the product.
- In case of Mini-market, only certain stores in a specific geographic
location sell the product and supported with promotion materials.

Full scale test:-

- This is the third kind of marketing testing technique.

- This means actually selling the product in a selective or intensive
distribution environment.
- Two types of techniques are mostly adopted here, such as test
marketing and rollout.

- Test Marketing:- Already discussed.

- Rollout:-
A rollout is when a subset of the intended target market receives
the product, the company then slowly introduces the new product to
other parts of the target market until the entire market is receiving
it.
 In many cases it is geographic in nature, with the smallest region
receiving the product first, followed by other region in a
predetermined order; often smallest to largest.

V. COMMERCIALIZATION…
 The lunch/commercialization of a product proceeds in four phases, such as –

a). Pre-launch preparation

b). Announcement
c). Beachhead
d). Early growth.
a). Pre-launch preparation
 It comprises the activities that precede the point at which the product is
officially offered for sale in the market.

 These activities typically include making preannouncements (public company

statements about the pending lunch of the product), building marketing
capability, establishing service capability, promoting the new product via public
relations, and filling the distribution pipeline.

 Together these activities have the purpose of building excitement and ensuring
that the company is ready to meet market demand.
b). Announcement
The second phase is announcement. And it is the point at which the product is
officially offered to the complete market. With the announcement all the decisions are
finalized.
c). Beachhead
 It’s the third step of lunching process.

 Here efforts focus on achieving market awareness and generating an initial

stream of sales.
d). Early growth
 The fourth phase is early growth.

 Usually, sales grow as interest in new product grows.

 If sales are not growing, a decision needs to be made quickly.

 And in general there are five decision options:-

- increase spending
- revise the lunch/marketing strategy
- revise the product
- pull the product temporarily from the
marketplace.
- abandon the product.
LUNCH CONTROL PROTOCOL
 One tool that is useful during pre-launch preparation is the lunch control
protocol.
  Like the product protocol on the technical development stage, lunch protocol is
used to monitor and control activities during the lunch cycle.

 The lunch control protocol Construction can be done through four different
stages as below-
 STEP-I:-
The potential problems that might occur during a particular product’s lunch are
identified. And there are three ways to identify such problems, such as –
- reviewing the situation analysis from the marketing plan to outline
potential threats,
- looking at the company’s product lunch history to indicate problems
from previous product lunches.
- and finally role-playing.

 STEP-II:-
- To select the problems that should be monitored.
- And selection will be done through potential impact of the problems
& commercial success of the product.
 STEP-III:-
- Design a system for monitoring and controlling each of the selected
problems.
- And to do this identify a measurable variable that corresponding to the
problem.
 STEP-IV:-
- The fourth step in lunch control protocol is to develop remedies or
contingency plans for each of the selected problems.
For Example

POTENTIAL TRACKING CONTINGENCY

PROBLEMS PLAN

Customers are notLook at point-of-Install point-of-

making trialpurchase reports. Atpurchase display.
purchases of theminimum, 100
new product. purchases per retail
outlet are expected
Overall salesTrack monthly unitImplement a
volume is lowershipments, instantaneous
than expected shipments less thanredeemable coupon
1000 per monthcampaign.
signify a problem.
Competitor hasDifficult to track, butOffer two for one
similar new product conduct surveysprogram; consider
with retailers andbunding new
final consumers. product with other
products.
 QUESTIONS TO BE FOLLOWED

 1. You have been provided with a concept that to evaluate for a new
product that your company will go to lunch very shortly. How will you
evaluate that concept that whether it will be fruitful for your company or not.
 2. What is a product prototype/ protocol? Define the objectives behind it
and explain the terms there to consider under it briefly.
 3. Define the terms below:-
a. Scoring models & snake plots
b. Financial Analysis.
c. Morphological Analysis.
d. Trade-off Analysis.