Principles Of Marketing

Topic 4: New Product Decision

Process

102-MMM-Topic 4
Topics…
 Aspects of Production Planning and Development
 New Product Decision Process
 Causes of New Product Failure
 Organizational Arrangement for New Product
Development
 Test Marketing
 Branding and Packaging – Purpose, Types and New
Trends, Functions, Factors
 Types of New Product
 Test Marketing of New Product
Aspects of Production & Development

 Resources of the business:

 Inorder to start any business, we need to focus on the available
resources and the utilization of them effectively and efficiently
 The total financial resources and manpower resources have to be
planned to meet both short term and long term need of business
 Competition:
 Every where and every aspect of today's business scenario is
based on the understanding competition and beating them
diplomatically
 All have to follow a proper set of rules to compete them and
grow into the market place without sacrifice consumers and
profit ratios, with satisfaction and on edge with technology
 In accordance with the findings of market research, the product
should be developed or modified in order to suit consumer need
Aspects of Production & Development

 Huge Capital Investment:

 The world today is growing fast with respect to the potential and IT.
Today’s technology will become old in few yrs only. Hence acceptance if
any particular technique and method had become risky.
 Then again launching a new product is very costly affair
 The need for expensive capital equipment in the manufacturing process
cause many organizations to remain away from the introduction of new
product
 Rate of Product Failure:
 New product failed into the market because they didn’t met
expectations of consumer
 The marketing manager has the responsibility to find out the cause of
product failure, which may be defective quality, unattractive physical
features, inappropriate sizw, high cost, short life of product, off seasons
placement into the market, exaggerations in advertisement etc
Aspects of Production & Development

 Decreasing size of Market Target:

 Now days, there is a tendency to concentrate on advanced
markets, developed areas and guaranteed customers due to
less risk and less expenses in disposing off the product
 In segmentations, many companies focused on small market
places to have major share and more profit margins
 Consumer Resistance:
 Due to high levels of inflation, the purchasing power of
consumer has come down
 Making choice from several options and with different price
tags, is too difficult to select and consume
 As a result, marketers find it difficult to attract the public’s
attention to the new ideas
Aspects of Production & Development

 Other Factors:
 Government rules and regulations in market place
 Consumers are not protected by law, so faith on new product is
very less
 Expectations of returns on investment is very high from
multinational manufacturers, so there are limitations into new
offerings
 New product is based on the objective, towards the satisfaction
of consumer’s need and expectations from product
 Other objective is marketing channels, distributions, promotions
and price
 Understanding changes in need and getting them implemented
into new product development
New Product Development Process

 Idea Creation
 Idea Screening
 Testing Concepts
 Business & Marketing Analysis
 Development
 Market Testing
New Product Development Process
 Idea Creation:
 New ideas may come from company’s own R&D Centers which is
responsible for surveying the market and consumer and finding out
their expectations and requirements in the light of present product
and competitions in the market
 Getting ideas is also very heavy task for management team
 Idea generation is a continuous, systematic search for new product
opportunities
 It involves delineating sources of new ideas and methods for
generating them
 After this, selecting the best and workable idea is big deal
New Product Development Process
 Idea Screening:
 New ideas are evaluated with respect to business capabilities regarding
production, sales, finance, engineering skills, designing, promotional
methods, and other feasibilities
 After the firm identifies potential products, it must screen them
 In product screening poor, unsuitable or otherwise unattractive ideas are
weeded out from further actions
 Today many companies use a new product screening checklist for
preliminary evaluation
 In it, firms list the new product attributes considered most important and
compare each idea with those attributes
 The checklist is standardized and allow ideas to be compared
New Product Development Process
 Testing Concepts:
 Concept testing presents the consumers with a proposed product and
measures attitudes and intentions at this early stage of development
 Concept testing is a quick and inexpensive way of measuring consumer
enthusiasm. It asks potential consumers to react to a picture, written
statement or oral description of a new product

 Business & Marketing Analysis

 After successful execution and acceptance of concept of new product,
we need to focus on the existing business and market position
 A through analysis is very important to make a new product, successful,
attractive and profitable into the market place
New Product Development Process
 Product Development:
 Once the business idea sounds okay to the management team, then it will be
served to R&D team for actual development of concept
 Here the actual journey of converting a Virtual Product Model of new product
into Actual Product Model will start
 The development process is again get covered up in following steps :
 Prototype Development and Consumer Testing
 Brand Naming
 Packaging
 Test Marketing
 Launching of the product
 Commercialization
Failure of New Product

 Inadequate Market Analysis

 Defect in Product
 Higher Cost then estimated
 Incorrect Position
 Poor Timing
 Competition
 Social & Government Restrictions
 Ineffective Advertisement
 Inadequate Sales force
Organizational Arrangement & PM

 New Product Committees

 New Product Department
 New Product Venture Team
 Product Manager Tasks:
 Formulations of Product Objectives
 Planning the Budget
 Monitor the Project
 Develop a Product Risk Analysis
Test Marketing
 After the product is passed through functional and
consumer tests, the next step in product development
is Test Marketing
 Philip Kotler: Test Marketing is the stage at which the
product and marketing programme are introduced into
more realistic market settings
 Here, one can learn how large the market is and can
note the customer's reacting of handling and using of
product
 It is also useful to understand the competitive reactions
and effectiveness of marketing techniques
Test Marketing: Advantages

 Greater Control over new product

 To understand consumers behaviour properly
 To get exact reactions of consumers on usage
 A value input to a sales forecast
 Management can take proper decisions
 Helps to prepare marketing plans
 Evaluation of marketing techniques
 Reaction on product and price factors
 Understanding competitions move in market
Test Marketing: Process
 The number of cities to be included
 Selection of Cities
 Undertake basic marketing research before test
marketing
 Duration of Test
 Average Repurchase Period
 Competition & Cost
 Collecting the necessary information
 Launching
 Commercial introduction of the product
 A low test marketing in a new area
 Notification of the product if necessary
Test Marketing: Methods

 Test marketing is a controlled experiment where the

entire product and marketing programme is tried out
for the first time in a small number of well chosen and
authentic sales environments
 Consumer Goods Market Testing
 Sales Waves Research
 Simulated Test Marketing
 Controlled Test Marketing
Test Marketing: Methods
 Consumer Goods Market Testing:
 To find out how a new product is accepted and adopted, its
purchase frequently, trial purchase, repeat purchase etc
 Sales Waves Research:
 Free for trial, then reduced price for 4-5 times
 Simulated Test Marketing:
 Based on ads shown and money distributed among the
consumers, the test is conducted on which product is bought and
for which company
 Controlled Test Marketing:
 A few stores are selected and they are asked to stock a new
product. The sales results are then analyzed. The consumers are
later interviewed for feedback
Branding - 1
 A brand name is a means of identification of the
product as well as means of differentiation of the
branded product from its rivals
 Branding means giving a distinctive name or mark to a
product for its identification form the rival products
 Branding simplifies commercial process, advertising and
promotional support to get noticeable into the market
 A brand is a signature on a constantly renewed,
creative process
 A brand is what a customer buys, hopes, expects
 A brand can be easily distinguished or recognized in the
market from the rival products
Branding - 2

 A well promoted brand name which has earned

reputation in the market is very difficult to compete with
 The brand is broadly applied to all identifying marks such
as trade marks, trade names, trade symbols, pictures,
design of the packages, distinctive coloring schemes or
lettering
 It sometime stands with the endorsement of great
personalities as Brand Ambassador
Branding: Purpose

 Increasing competition
 Need for advertising and publicity
 Development of consumer brand – Consciousness
as a brand image in mind. It create demand in
market
 Importance of packaging as a distinct marketing
function. Branding and packaging go hand in hand
Branding: Importance

 Ensure control over market, when brands are

successfully and effectively promoted, very existence of
the middlemen depends upon a continued supply of
each brand
 Endorsement of new item with existing brand lines
 Advantage for sales and product line
 Bright and clean chit image is possible on broader front
 It offers protection to the customer also
 Easy to handle competition
 Branding also reduces price flexibility
Packaging

 The art or science concerned with the development and use of

material, methods and equipments for applying a product to a
container or vice-versa designed to protect through the various stages
of distributions
 A good package represents a combination of the designer’s creative
skills and product knowledge along with the marketing and sales
knowledge of the manufacturer’s management team
 The development of packaging is thus the sum total of the talents of
the designer, the researcher, the technical, the advertising personnel,
the sales department and the top management
Objective & Types
 Objectives of Packaging:
 To supply a consumer need
 To increase total consumer demand
 To redistribute demand of consumers in the favour of the organization
 To reduce the costs through efficient handling methods, better and less
expensive, greater reduction of waste and lower distribution costs
 To improve profit margin by improving the product image
 Types of Packaging:
 Re-Use Packaging: Plastic Tin or jars
 Family Packaging: Cosmetics
 Multiple Packaging: Box or Bundle Packaging
 Ecological Packaging: Returnable Bottles & Containers
 Fractional Packaging: Variation based on volume
 Refill Packaging: Printer Cartage
New Trends in Packaging

 Coupon Pack: Shampoo, Toothpaste

 Money Pack: With Discount Offers
 Pack-In-Premium Pack: Gift Packs
 Premium Pack: Executive and Prestige Packing
 Self Liquidator: Re-usable packs-Water bottles etc
Packaging: Importance & Factors

 Importance:
 Protection, Handling Convenience, Storage Convenience,
Convenience in Use, Economy, Minimal Loss, Reusability,
Self Service, Consumer Difference, Integrated Marketing
Concept
 Affecting Factors:
 Cost of Package, Package Design, Package Test, Package
Size
Types of New Product
 New to the world: For entirely new market
 New Product Lines: New product into existing market
 Additions to the Existing Product Line: New product that supports
existing product line
 Repositioning: For new market segments
 Improvement to Existing Product: With more value added or
improved features in existing product line
 Cost Reduction: Cost cutting in overall product line without
compromising the quality and quantity of product line
Thank You

102-MMM-Topic 4