WHAT IS A PRODUCT?

Is something that can be offered to market for acquisition and consumption. That might satisfy a need or want. It may be physical good, retail store, person, organization, place or an idea.


WHAT IS PRODUCT INNOVATION?



A result of bringing to life a new way to solve the customers problem through a new product or service development. That benefits both the customers and the sponsoring company. It may refer to incremental and revolutionary changes in thinking, products, processes or organization.

Goal is to bring some positive changes (to make something better).

Those who are directly responsible for application of the innovation are often called Pioneers in their field, whether they are individuals or organizations.

PROCESS OF PRODUCT INNOVATION:

1.Idea 1.Idea Generation  Idea for new products can be obtained from basic research using a SWOT analysis, Market and consumer trends, companys R&D department.  Idea techniques can begin when you have done your opportunity analysis to support your ideas in screening phase.

2. IDEA SCREENING
 

The object is to eliminate unsound concepts prior to devoting resources to them. The screeners must ask at least three questions: Will the consumer in the target market benefit from the product? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customers at target price?

3. CONCEPT DEVELOPMENT:
Concept development includes:  Who is the target market and who is the decision maker in the purchasing process?  What benefits will the product provide?  How will consumers react to the product?  How will the product be produced most cost effectively?  What will it cost to produce it?

4. BUSINESS ANALYSIS:


Estimate likely selling price based upon competition and customers feedback. Estimate profitability and breakeven point.

5. MARKET TESTING:


 

Conduct focus group customer interviews or introduce at trade show. Make adjustments where necessary. Produce an initial run of the product and sell it in the test market area to determine customers acceptance.

6. COMMERCIALISATION:
 

Launch the product. Produce and place advertisements and other promotions. Fill the distribution pipeline with product.

7. NEW PRODUCT PRICING:



 

Impact of new product on the entire product portfolio. Value analysis. Competition and alternative competitive technologies. Forecast of unit volumes, revenue and profits.

Precision Ring Makers (PRM) made components to high specifications, largely for the aircraft industry. Its main development work was focused upon process improvements. It had developed low cost tooling techniques which resulted in great savings: for example, tooling changes for thin guage shims using conventional techniques cost about 4000, while with PRMs technique the cost was about 30. It had purchased CNC machines for milling and engraving, and was planning to network the CNC machines to its computer system so that programmes could be transmitted directly to production. Fabrication and Assembly Company (FAC) was primarily interested in welding technology. A recent example of process improvement was the application of plasma cutting instead of drilling, in the manufacture of heat exchangers and plates. A flushing system to prevent the build-up of sludge in buildthe air chambers of the water tables which were being manufactured, was also developed to assist the introduction of plasma cutting.

Examples of Process Of Innovation

PROCESS OF PRODUCT DIFFUSION

PRODUCT ADAPTION and DIFFUSION



Adoption is the process of accepting new product idea by individual customers. Adoption is similar to diffusion except that it deals with the psychological processes an individual goes through, rather than an aggregate market process. Diffusion is the process by which a new idea or new product is accepted by the market. market.

The DIFFUSION PROCESS is the spread of an innovation from its source to the ultimate consumer that focuses on external forces The rate of diffusion is the speed that the new idea spreads from one consumer to the next.

4 ELEMENTS OF DIFFUSION


Degree of innovation Communicated through certain channels (mass media, sales people or information conversation) Time for innovation Among the members of a social system (types of audiences, community).

STAGES


Awareness about the new product or service Knowledge to develop interest about how the innovation can benefit them. Evaluation mental trial of the product innovation. Trial is use of product on limited basis. Adoption

The Product Diffusion Curve

The Product Diffusion Curve is a useful model that helps you think about who you should be targeting at different stages of the life of your product or service.

With an understanding of the Product Diffusion Curve, you can target your marketing efforts intelligently, getting the best returns from your effort.

Five different groups of people will purchase your product at different stages of the product's life:

Innovators: Members of this group include in-the-know Innovators: in-theconsumers who are willing to take a risk on a new product. Innovators represent the first 2.5% of people to adopt a new product. Early Adopters: Members of this group gauge the response of Adopters: the Innovators before rushing in purchasing a new product. Early Adopters represent about 13.5% of the total consumer population.

Early Majority: Members of this group are more cautious and Majority: prefer to avoid the risk associated with purchasing an unproven product. The Early Majority represents 34% of consumers. Late Majority: Members of this group are more skeptical. The Majority: Late Majority represents about 34% of consumers Laggards: Members of this group are more than simply Laggards: skeptical. Laggards represent about 16% of consumers.

Examples of process Of Adoption

A. For example: CRM/sales-force automation systems promise all CRM/salessorts of benefits to the sales person and organization, but it has taken two decades and billions of dollars in failed implementations to get to a state where most sales people are comfortable with them and willing to enter their sales information into the system. Management systems in the collision shop market are another example. Despite the proven benefits of using a management system, reducing cycle time, increasing productivity, profits, etc., its taken nearly two decades to achieve a 50% penetration rate. mass adoption has required dramatic economic and cultural/generational changes in the industry. The best practices encapsulated in the management systems had to move from the extreme into the mainstream. And for the most part, that meant people literally changing jobs and bringing the new tools and ideas with them.

B.For example, youve created a great new window-washing tool that can clean windowwindows 50% faster and 200% better than your standard squeegee! Every house in America has windows so just imagine the incredible market! But how many Americans regularly clean their home windows? Not many. You really have two markets.
1.

2.

The window washers of the world: They already believe in the virtue of clean windows and regularly spend time cleaning them. For this group, youre subtracting from their work and therefore giving them the gift of time and delivering better results in the process. The rest of us: I know I should probably clean my windows more often but heck theyre going to get dirty anyway. (Yes Im married and drive my wife nuts with this kind of logic.) First, you have to persuade me of the value of sparkling clean windows and then youve got to convince me your product is the best for the job. And finally, youll most likely need to cajole me into actually using the product since it will require extra work on my behalf.

And that was the problem we ran into with our product. For the 1% of the shops that regularly double-checked their work, the product both simplified and improved doubletheir processes. For the other 99%, it was a much more challenging sales and implementation/adoption process. In some cases, the users took to it like fish to water and now cant imagine not having the product. But for a large percentage it took endless cajoling and handholding, and then as soon as we left, they stopped using it.

PROCESS OF PRODUCT POSITIONING

 Positioning is not what you do to a product but what you do to the mind of the prospect. It is used to fill the gap created due to mismatch between wish image and current image. Positioning is defined as the act of designing the companys offering and image to occupy distinctive place in the target markets mind. Why positioning?  To provide competitive edge  To create distinctive place of product/service  Creating tangible frame of mind

 Image is the picture of the organization as perceived by a target groups Types of images:  Current image-the way the company is seen by imagedifferent groups  Mirror image-the way that a company thinks it is imageseen by different groups  Wish image-the way that company would like to imagebe seen by different groups

Positioning process
Generally, the product positioning process involves: 1. Defining the market in which the product or brand will compete (who the relevant buyers are). 2. Identifying the attributes (also called dimensions) that define the product 'space. 3. Collecting information from a sample of customers about their perceptions of each product on the relevant attributes. 4. Determine each products' share of mind.

5. Determine each products current location in the product space. 6. Determine the target market's preferred combination of attributes (referred to as an ideal vector). 7. Examine the fit between: The positions of competing products The position of your product The position of the ideal vector 8. Position.

The main points that should be remember are:

Positioning is the final part of the SEGMENT TARGET - POSTION process Positioning is undoubtedly one of the simplest and most useful tools to marketers.

 Positioning is all about perception. Perception differs from person to person e.g. what you perceive as quality, value for money in terms of worth, etc, is different to my perception. However, there will be similarities in certain cases. After segmenting a market and then targeting a consumer, next step will be to position a product within that market. It refers to a place that the product offering occupies in consumers minds on important attributes, relative to competing offerings.

Examples of Process Of Positioning

For example, few people have trouble envisioning a word processor as a typewriter in a computer example, (though one day, few people will know what a typewriter is) or a software database as the equivalent of an electronic file cabinet. Other products, however, are more challenging. A classic example is Lotus Notes. If you're in the industry, you've certainly heard about it. Take a minute and think about what you know about this product. What, exactly, does it do? Does any particular image or symbol spring to mind when you think about it? Unless you use it, probably not. If you're like most people, several phrases may spring to mind like groupware, replication, documents, and workflow management. But you are probably unable to connect the product to any coherent image or concept. The Lotus Notes' documentation, rather pathetically, highlighted this problem best. For example, as Web technology is integrated into existing applications, products are increasingly example, described as Web-enabled word processors, spreadsheets, databases, etc. It is not necessary to Webspend much time conceptualizing these products time and the market have already done it. To return to Notes for a minute, the growth of the Web finally allowed Lotus to position Notes as a WebWeb-based application with collaborative abilities. But, even with this leg up, Notes still has a nebulous identity in the market. An example of this idea in action is when Xerox introduced a new product for managing faxes. Instead of proclaiming it as a new product in a new category, Xerox positioned it as an extension of existing fax technology. It may not always be feasible, or desirable, to use a shelter or an umbrella to help position a product. In some cases, a product may simply not fit an existing category, or there may be marketing baggage associated with that category you dont wish to carry.

Product positioning mean the process by which marketers try to create an image or identity in the minds of their target market for its product.

By attribute By benefit Product Categories Usage Occasions Users By price or quality By competitor By product or service class

Market segment of interest. Market segment's size and customer population. Identify important competitors and discover their strengths and weaknesses. Establish a market share goal that will provide a commanding position.

Describe how the product will be differentiated, positioned, promoted, priced, supported and serviced. Estimate your costs and establish a budget. Sell the steak's sizzle.