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B.Sc. ( Business Administration) Hons. MAAT, Attorney at Law, CPM ( New Haven- USA)
Maxwell Ranasinghe
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.
Tangible Atrributes
Design, Features, performances, Branding Packaging
Intangibel Attributes
Image, 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 width
soaps
UnilevernProductlever Mix
Food
Personal Care
r
o d u
Laundry Soap Toilet Soap
c
t D
Herbal Soap
Beauty Soap
E
p t h
Dove brand Lux brand
Product Brands
Tangibility Continuum
Pure tangible Tangible goods with service Hybrid - Equal
Pure intangible
Pencil
Car
restaurant
Air line
Lecture
Product Classification
Products Consumer Industrial Convenience Materials and parts
Staple
Raw Materials
Impulse
Manufactured Materials
Emergency
Capital Items
shopping
Installations
Speciality
accessories
Unsought
Supplies
Business services
Side talk
PLC
Dev Intro Growth Maturity Decline
Sales
S a l e s
Profit
losses Time
Introductory
Growth
Maturity
Sales are Sales increase Sales growth Drop in the usually slow and profits become slow sales and profits ar will be high but volume big low Competitors will watch New competitors enter More distributors take up the product More competition and over capacity Many distributors and undercutting Competitors do not enter due to low margings Distributors reduce or give up
Maturity
decline
Brand image is low Not much promotions done Abundoning manufacturing May have to take a decision to stay on or not
Brand image is Many brands established fight each other Promo budget may be increased Promo budget may be standard or low
Only one or Few Many two manufacturers manufactuers manufacturers High Product failure rate Improve product quality and features Many changes in the Marketing mix to be done
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
Side talk
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
Services
V IPO
Innovative Products
Replacement products
Imitative 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
. 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
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)
Side talk
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 Firms internal research laboratories and other external laboratories could generate new idea for you.
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.
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
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.
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.
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
Launch product
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