An introduction to retail marketing and management

An introduction to New Product Development (NPD)New products Development: Product StrategyModule Code and Module TitleTitle of Slides1New Product Development- Managing Innovation within firmsLearning Objectives

Recognize that new products serve a variety of purposes depending on what is seen to be strategic imperativeExamine the concept of platforms in new product developmentAssess the importance of brand strategy in product developmentExplain how differentiation and positioning contribute to a products success in the market placeRecognize the importance of marketing research in the effective development of new products

Module Code and Module TitleTitle of Slides2Product Development OpportunitiesNew product platformsInvolves major development effort to create a new family of products based on new common platform e.g. Digital photographyDerivatives of existing platformsDevelop existing platform usually to ensure existing products are updated e.g. Honda develop small petrol engines and apply this technology to various application such as lawn mower and motorcyclesModule Code and Module TitleTitle of Slides3Product Development OpportunitiesIncremental improvements to existing productsInvolve adding or modifying features of existing products to keep the product lineKeep product updated and competitive e.g. Packaging or changing designFundamentally new productsTaking product to new and unfamiliar marketsMore risky but may help to secure long term future of the firm e.g. Breathable fabric

Module Code and Module TitleTitle of Slides4Product StrategyCompetitive Strategy Short Term(tactic)Filling out product lines with different product sizes or added features to deter entrant to marketMinor product changes can be employed to secure distributors' loyalty rather than stocking rival offeringsUnlikely to employ full NPD processLimited research or market testingLimited to determining acceptable price levels or alternative advertising messagesModule Code and Module TitleTitle of Slides5Product StrategyCompetitive Strategy Long TermSeek more profound contribution from new productsNew product categories to be develop within the same, related, or new technology areasSeek new customer segments or traditional customer baseRadical product development through marketing, technical research, development and testingModule Code and Module TitleTitle of Slides6Product StrategyProduct PortfoliosAnalyzing the organizations total collection as a portfolioShare growth matrix or Boston MatrixClustering of the portfolio in one quadrant (e.g. high share/high growth) can be viewed as unhealthy.Different portfolio models: To give the strategist an overview that could reveal current or potential problems or opportunities in product strategyModule Code and Module TitleTitle of SlidesIntroductionThe business portfolio is the collection of businesses and products that make up the company. The best business portfolio is one that fits the company's strengths and helps exploit the most attractive opportunities.The company must:(1) Analyse its current business portfolio and decide which businesses should receive more or less investment, and(2) Develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should no longer be retained.7The Competitive EnvironmentSpeculation of the external environment deals with the following issues:Estimates would be needed about what would be changeHow the industry competitive structure may alterHow regulatory framework may evolveCustomer needs may be a further area in which to speculate

Module Code and Module TitleTitle of Slides8Differentiation and PositioningDifferentiationValue for money propositionBased upon superior qualitySuperior qualityBetter materialsBetter performanceNew featuresAvailability of better service

Module Code and Module TitleTitle of Slides9Product DifferentiationLevitts ideaThe core product- comprise the essential basics needed to compete in a product marketThe expected product- adds in what customers have become accustomed to as normal in the product marketThe augmented product- offers features, services or benefits that go beyond normal expectationsThe potential product- would include all the features and services that could be envisaged as beneficial to customerModule Code and Module TitleTitle of SlidesThe Core Product e.g. A car need wheels, transmission, engine and a rudimentary chassisThe expected product e.g. a car would be a reasonably comfortable interior and a range of accessories10Product PositioningRefers to the perceptions customers have about the product e.g. Innovative, functional, old fashioned, exclusive, frivolous, funSelecting an appropriate positioning can make a difference to success or failuresIt determines what the organization tells the market about the productWho it tells and how it tellsE.g. P&G position 2 identical product very differently. Sure target at young males 18 to 25 and Secret target young females 12 to 24.Module Code and Module TitleTitle of Slides11Examples of Product Positioning StrategyPricing ExamplesQuality examplesService examplesDistribution examplesPackaging examples Module Code and Module TitleTitle of SlidesProduct PositioningPositioning studies Begin with determining a relevant set of productsThe criterion for inclusion on how they may be perceived by customer to be choice alternativesA list of determinant attributes is generatedIdentify the list of attributes that are salient in discrimination among the alternativesModule Code and Module TitleTitle of Slides13Product StrategiesProduct StrategyFirmHowProduct ProliferationHondaOn entering the European motorcycle market Honda offered an enormously wide range of engine sizesValue ToyotaOffer a high quality product with emphasis on reliabilityDesignSony/AppleEmphasize good design in all of their products, frequently pioneering unique styles and offering elegance and easy to use productsInnovation3MDevelop reputations for product innovation with strong technology cultureServiceAmerican ExpressForefront of service development and pioneering many service offeringsModule Code and Module TitleTitle of Slides14Product Performance FactorsPerformance in operationReliabilitySale priceEfficient deliveryTechnical sophisticationQuality of after sales serviceDurabilityEase of useSafety in useEase of maintenanceParts availability and costAttractive appearance/shapeFlexibility and adaptability in useAdvertising and promotionOperator comfortDesignModule Code and Module TitleTitle of Slides15Brand ExtensionThe use of an established brand name on a new product in the same product field or in a related fieldTake advantage of carry over effects from the original brandPool of goodwill among consumers and distributorsE.g. Unconventional size e.g. Giant, Jumbo, Fun

Module Code and Module TitleTitle of Slides16Brand ExtensionCarry Over EffectExpertise- Original product had established and maintained itself, the product is like to have accrued a reputation for high level competence in its field. Users therefore feel comfortable and assured in making repeat buys

Prestige- Some customers envisage certain images and confer status on the use of them. Brands benefit from particular kinds of associations and symbolism which they have become

Access- Well established original product have access to the best suppliers and distributors. Extension would capitalize these relationship to its initial launchModule Code and Module TitleTitle of Slides17What is Market Entry?Activities related with the bringing a product or services to a target market.During the planning stage, a company will consider ;The barriers to enter the marketThe cost of marketingSales & deliveryExpected outcomes of entering the market.

Module Code and Module TitleTitle of SlidesFailure to Market Entry Lack of products meeting the local demand & needsFailure to differentiate from existing retailers.Lack of market research.Module Code and Module TitleTitle of SlidesMarket EntryEntry Timing- Pioneer or First mover advantage

Pioneers can set the standards, establish a distinctive quality position, take the lead in the continuing evolution of technology, and gain valuable experience in manufacturing and distribution(buzzell and Gale, 1987)A weak, tentative first mover, without the motivation or resources to grow the market, can spend years making losses only to be superseded by a stronger follower.(green et al 1995)Module Code and Module TitleTitle of Slides20Launch and Continuing ImprovementProduct platform evolution and brand extensions What is the next generation of the product? Can the basic product platform be enhanced and should this lead to brand extension?Market evolution Will there be a lengthy introductory period before any rapid growth? Will new market segment become apparent or can they be created? What is the geographic scope be widened?Competitive Evolution How soon will competitors arrive? How Predictable is their entry? What distinction ectModule Code and Module TitleTitle of Slides21Withdrawing ProductsChronic poor sales performance is a good indicator of withdrawing productsInvestigation should focus on how organization managed its effortsExit cost would feature strongly e.g. Contract with suppliers/distributors/leaseConsider active commitment to stay in declining industry in anticipation of increasing market shareModule Code and Module TitleTitle of Slides22TutorialWould you agree that product portfolio analysis is too simplistic to be of much value?Module Code and Module TitleTitle of Slides23