Product Planning and Development
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Transcript of Product Planning and Development
CHAPTER 3
Product Planning and Development
Definitions
Product Anything offered to a market for attention,
acquisition, use, or consumption that might satisfy a need or want.
Service A form of product that consists of activities, benefits
or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.
Goal 1: Understand products and their classifications
Product
Services
Levels of a product
Levels of Product Core Product
what the buyer really buying. For example a woman buying lipstick she buys more than lip color, or a person buying Nokia N97, is buying more than a wireless mobile phone, like email, internet, web browsing, pictures etc.
Actual Productthe product planner must turn the core benefits into actual product. That is design, quality level, a brand name, and packaging.
Augmented productwhen consumer buy the Nokia N97, the company and its dealer also might give buyers a warranty on parts and workmanship, instruction on how to use the device
What are the three levels of this product?
Classification of product
Consumer productProduct that are bought by the consumers for personal use. Consumer products include Convenience, Shopping, Specialty and Unsought Products.
Industrial ProductProduct bought by individuals and organizations for further processing or for use in conducting a business.
Consumer products
Industrial products
Types of Consumer Products
ConvenienceShoppingSpecialtyUnsought
Frequent purchases bought with minimal buying effort and little comparison shopping
Low price of product Producer made
widespread distribution of product.
Mass production and promotion by producer
For Example. Soap, candy, newspaper
and fast food.Goal 1: Understand products and their classifications
Types of consumer products
Convenience products
Types of Consumer Products
ConvenienceShoppingSpecialtyUnsought
Consumer product that the consumer, in the process of selection and purchases, characteristically compares on such basis as suitability, quality, price and style.
Less frequent purchases More shopping effort for
comparisons. Higher than convenience good
pricing Selective distribution in fewer
outlets Advertising and personal selling For example. Furniture, clothing,
cars, major appliances, hotel and airline services.
Goal 1: Understand products and their classifications
Types of consumer products
Shopping products
Types of Consumer Products
ConvenienceShoppingSpecialtyUnsought
Consumer product with unique characteristics or brand identification for which a significant group of buyers are willing to make a special purchasing effort.
High price Exclusive distribution Carefully targeted
promotions For example, specific brand
types of cars, like Lamborghini, designer clothes, and services of a medical or legal specialist.Goal 1: Understand products and their
classifications
Types of consumer products8 - 16
Specialty products
Types of Consumer Products
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ConvenienceShoppingSpecialtyUnsought
Unsought Products are products you haven't actively been looking for.
These are products whose purchase is unplanned by the consumer but occur as a result of marketer’s actions. Such purchase decisions are made when the customer is exposed to promotional activity, such as a salesperson’s persuasion or purchase incentives like special discounts offered to certain online shoppers.
Consumer product that the consumer either does not know about or knows about but does not normally think of buying
Little product awareness and knowledge (or if aware, sometimes negative interest)
Aggressive advertising and personal selling by producers and resellers
For example. Blood donation, life insurance. gravestone.Goal 1: Understand products and their
classifications
Industrial product
Three groups of industrial product and services.
1. Material and parts2. Capital items3. Supplies and
services.
Industrial product
Material and parts Material and parts include raw material and manufactured material and parts used for reprocessing in industries.
For example material parts, fruit, vegetables, example of manufactured parts are, iron, cement, wires
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Industrial product
Capital parts
Supplies and services
Capital parts are industrial products that use in the production or operations, including installation and accessory equipment.
For example Generators, drills, large computer systems.
Supplies include operating supplies (lubricants, paper, pencil) and repair and maintenance items (paint)
Business services include maintenance and repair services (window cleaning, computer repair)
Product and Service Decisions
Individual Product
Product Line Product Mix
Product attributes (benefits) (Quality, features, style and
design) Branding( a brand is a name,
term, sign, or design or combination of these) that identifies the maker or seller of a product or services and differentiate them from those of competitors.
Packaging-the activities of designing and producing the container or wrapper for a product.
Labeling-label range from simple tags attached to products to complex graphics, label indentifies the product or brand. Label might also describe several things about the product, like who made it, where it was made, when it was made, its contents, and how it is to be used and how to use it safely.
Product support services- include warranty and after sale services and spares.
Key Decisions
Goal 2: Learn decisions companies make regarding products
Examples of Packaging8 - 22
Examples of Packaging8 - 23
Product and Service Decisions
Individual Product
Product Line Product Mix
Product line A group of products
that are closely related because they may: function in a similar
manner be sold to the same
customer groups, be marketed through
the same types of outlets
fall within given price ranges
For example- HP computers, Scanners, Printers, fax machines.
Key Decisions
Goal 2: Learn decisions companies make regarding products
Product Line
Product and Service Decisions
Individual Product
Product Line Product Mix
Product mix Consists of all the
product lines and items that a particular seller offers for sale.
For example- Samsung product mix consists of GSM phones, LCD, Computers, Laptops, Washing Machines, Micro waves, digital cameras
Key Decisions
Goal 2: Learn decisions companies make regarding products
Product mix
New Product Development&
Product Life-Cycle
New Product Development Process
1. Idea Generation 2. Screening3. Concept Development and Testing4. Business Analysis5. Product Development6. Market testing7. Commercialization
New Product Development ProcessStep 1. Idea Generation
Internal Sources:Research and Development can be done in market for more new
and customer oriented ideas.Employees can also give good ideas according to the objectives
and capability of organizationFor example, Samsung has built a special center to encourage and support new product innovation ideas internally by their employees.
New Product Development ProcessStep 1. Idea Generation
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External Sources:Customers. The Company can analyze customer questions and
complaints to find new product that better solve consumer problems.
Competitors. The company buy competitors product to analyze their sale, and to see how it works and decide whether they should bring out a new product of their own.
Distributors. Distributer are close to the market and can pass information about consumer problems and new product possibilities.
Suppliers. Suppliers can tell the company about new concepts, techniques and materials that can be used to develop new product.
New Product Development ProcessStep 2. Idea Screening
Process to spot Good ideas & drop Poor ones; The screeners must ask at least these questions:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment/target market?
What is the current or expected competitive pressure for the product idea?
What are the industry sales and market trends on which the product idea is based on?
Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and
delivered to the customer at the target price?
New Product Development ProcessStep 3. Concept Development & Testing
Develop the Marketing and Engineering Details • Who is the target market and who is the decision maker in
the purchasing process? • What product features must the product incorporate or
delivers? • What benefits will the product provide? • How will consumers react to the product? • How will the product be produced most cost effectively
(with lowest price)?• What will it cost to produce the product? • Testing the concept by asking a sample of prospective
customers that what they think of the idea.
New Product Development ProcessStep 4. Business Analysis
Business Analysis Estimate likely selling price based upon
competition of same and substitutes products in the market by customer feedback.
Estimate sales volume based upon size of market
Estimate profitability and breakeven point of your product that you wants to offer in the market.
New Product Development ProcessStep 5. Product Development
Product Development;Developing the product concept into physical product in order to ensure that the product idea can be turned into a workable product.
New Product Development ProcessStep 6. Market Testing
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Test the product (and its packaging) in the market on small scale in typical usage situations.
Conduct focus group customer interviews or introduce at trade show or seminars to target customers.
Make adjustments where necessary, as suggested by the target customers in the test marketing session.
Produce an initial sample of the product and sell it in a test market area to determine customer acceptance and feedback for improvement.
New Product Development ProcessStep 7. Commercialization
Commercialization means launching the product in the market on large scale.
Produce and place advertisement and other promotions in the market.
Fill the distribution pipeline with products which you wants to launch.
Critical path analysis is most useful at this stage which means that you should analyze each possible best option for launching the product in the market.
Product Life Cycle
Time
ProductDevelop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments ($)
Sales andProfits ($)
Introduction Stage of the PLC
SalesCostsProfits
Marketing Objectives
Low sales
High cost per customer
NegativeCreate product awareness
and trial
Growth stage of PLC
SalesCostsProfits
Marketing Objectives
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Maturity Stage of PLC
SalesCostsProfits
Marketing Objectives
Peak sales
Low cost per customer
High profitsMaximize profit while defending
market share
Decline Stage of PLC
SalesCostsProfits
Marketing Objectives
Decreasing sales
Low cost per customer
Low profitsTrying to servive while defending
existing market share
End of Chapter