Product Planning

Product planning is the process of creating a product idea and following through on it until the product is introduced to the market. Additionally, a small company must have an exit strategy for its product in case the product does not sell. Product planning entails managing the product throughout its life using various marketing strategies, including product extensions or improvements, increased distribution, price changes and promotions.

Developing the Product Concept

The first phase of product planning is developing the product concept. Marketing managers usually create ideas for new products by identifying certain problems that consumers must solve or various customer needs. For example, a small computer retailer may see the need to create a computer repair division for the products it sells. After the product idea is conceived, managers will start planning the dimensions and features of the product. Some small companies will even develop a product mock-up or model.

Studying the Market

The next step in the product planning process is studying the competition. Most small companies will order secondary research information from vendors such as the NPD Group and Forrester Research. Secondary research usually provides details on key competitors and their market share, which is the percent of total sales that they hold in the marketplace. Some companies may also do a SWOT analysis (strengths, weaknesses, opportunities and threats), according to NetMBA.com, which will help them compare their strengths and weaknesses against those of key competitors. The business can then determine places in which it has an advantage over the competition to identify areas of opportunity. For example, a small company with a high-quality image may be able to find additional markets for its products.

Marketing Research
A small company should consider doing both qualitative and quantitative marketing research for its new product. Focus groups are an example of qualitative information. Focus groups allow companies to ask their consumers about their likes and dislike of a product in small groups. A focus group allows the company to tweak the product concept before testing it through phone surveys--a more quantitative marketing research function. Phone surveys enables a company to test its product concept on a larger scale, the results of which are more predictable across the general population.

Product Introduction
If the survey results prove favorable, the company may decide to sell the new product on a small scale or regional basis. During this time, the company will distribute the products in one or more cities. The company will run advertisements and sales promotions for the product, tracking sales results to determine the products potential success. If sales figures are favorable, the company will then expand distribution even further. Eventually, the company may be able to sell the product on a national basis.

Product Life Cycle

Product planning must also include managing the product through various stages of its product life cycle. These stages include the introduction, growth, maturity and decline stages, according to QuickMBA.com. Sales are usually strong during the growth phase, while competition is low. However, continued success of the product will pique the interest of competitors, which will develop products of their own. The introduction of these competitive products may force a small company to lower its price. This low pricing strategy may help prevent the small company from losing market share. The company may also decide to better differentiate its product to keep its prices steady. For example, a small cell phone company may develop new, useful features on its cell phones.

Product Development
Definition: The overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product Innovative new products are the fuel for the most powerful growth engine you can connect to. You can grow without new products--AT&T sold essentially the same telephones for decades while becoming the world's largest telecommunications concern--but most small companies will find it difficult to grow at all, much less rapidly, without a constant stream of new products that meet customer needs. How do you know when you need new products? Early detection of a problem with existing products is critical. The following eight symptoms of a declining product line will provide clues far enough in advance to help you do something about the problem before it's too late. Not all the symptoms will be evident in every situation, but you can start suspecting your product line when more than just one or two crop up.

1. You're experiencing slow growth or no growth. A short-term glitch

in product sales can happen any time. If, however, company revenue either flattens or declines over an extended period, you have to look for explanations and solutions. If it isn't the economy or some outside force beyond your control, if your competitors didn't suddenly become more brilliant, if you still have confidence in your sales force, and if there are no major problems with suppliers, examine your product line.

2. Your top customers are giving you less and less business. It may
not be worth your trouble to determine your exact market share when a rough idea of where you stand will suffice. But knowing how much business you get compared to your competitors is critical. Every piece of business your competitors are getting is business you aren't getting--and may never get. If your customers' businesses are growing and the business you get from them isn't, your product may be the culprit. Chances are, someone else is meeting your customers' needs.

3. You find yourself competing with companies you've never heard of. If you've never heard of a new competitor or don't know much about
them, watch out! They have found a way to jump into a market with new products and technology that could leave you wondering what hit you. It might not be that your product has a fundamental flaw. It's more often the case that someone has brought innovation to the industry. You earn no points for status quo thinking.

4. You're under increasing pressure to lower your prices. No one

likes to compete strictly on price. When your product is clearly superior and offers more value than lower-priced competitors, you don't have to. Everyone understands that great new products eventually run their course and turn into commodities. One day, a customer tells you she can't distinguish the benefits of your widget from those of one or more of your competitors, and now you are in a price squeeze. If you want the business, you have to lower your prices to stay competitive. If that was where it ended, things might stabilize, although at a lower price level. But lower prices usually mean lower profit margins, which usually mean less investment in keeping the product current, which means more price pressure, lower margins? and so it goes.

5. You're experiencing higher-than-normal turnover in your sales force. Good salespeople want to win customers so they can make more
money. When they have trouble competing, they can't win customers or make money. So they look for new opportunities and challenges that will bring them what they want. You'll always have turnover, but heavy turnover is a symptom of something very wrong. It could be an ill-advised change in the compensation scheme or a new sales manager coming in with a negative attitude. But it could also be that members of your sales team are frustrated because they're having trouble selling your products. When business owners start to pressure their sales forces to get order levels up, morale drops because the salespeople know there isn't much they can do.

6. You're getting fewer and fewer inquiries from prospective customers. We all dread the time when the phone stops ringing and
prospects stop coming in. When advertising or other forms of promotion aren't creating the results you want, and you see fewer positive results

from the money spent, something could be wrong with the way customers see your company. An obsolete product line positions you as an obsolete company.

7. Customers are asking for product changes you can't or don't want to make. Here is a not-too-subtle sign that your product may no
longer meet market needs. There will be times when you have to decide whether filling a customer's request is in your company's best interests. When customers say "I want it this way," you may want to say no because you doubt you could ever recover the costs of the change, even by raising the selling price. But when the customer says "I want it this way, and it's standard at ABC Widgets," you should suspect you aren't keeping up with changing customer needs. When your competitors have leapt ahead of you in features and benefits, you must either catch up or leap ahead of them with innovations of your own, or you'll fall so far behind you become a marketplace postscript.

8. Some of your competitors are leaving the market. In the short term,
this sounds great. Your competitors drop out, and you pick up the business they leave behind. The pie is shrinking, and as it does, business gets better than ever. But beware: This is a classic signal of a declining market. Nobody walks away from a growth business. Vibrant growth markets attract new competitors; they don't discourage them.

If you decide to develop new products as part of your growth plan, you're in good company. Small companies like yours contribute at least half of the major industrial innovations occurring in the United States, according to the SBA. At the same time, approximately one-third of all new products are unsuccessful, and in some industries the percentage of failures is much higher. The way to increase your chances of coming up with good ideas is to follow the tested track to new product development success. New product development can be described as a five-stage process, beginning with generating ideas and progressing to marketing completed products. In between are processes where you evaluate and screen product ideas, take steps to protect your ideas, and finalize design in an R&D stage. Following are details on each stage:

Generating ideas. Generating ideas consists of two parts: creating an idea and
developing it for commercial sale. There are many good techniques for idea creation, including brainstorming, random association and even daydreaming. You may want to generate a long list of ideas and then whittle them down to a very few that appear to have commercial appeal.

Evaluating and screening product ideas. Everybody likes their own ideas,
but that doesn't mean others will. When you are evaluating ideas for their potential, it's important to get objective opinions. For help with technical issues, many companies take their ideas to testing laboratories, engineering consultants, product development firms, and university and college technical testing services. When it comes to evaluating an idea's commercial potential, many entrepreneurs use the Preliminary Innovation Evaluation System (PIES) technique. This is a formal methodology for assessing the commercial potential of inventions and innovations.

Protecting your ideas. If you think you've come up with a valuable idea for a
new product, you should take steps to protect it. Most people who want to protect ideas think first of patents. There are good reasons for this. For one thing, you will find it difficult to license your idea to other companies, should you wish to do so, without patent protection. However, getting a patent is a lengthy, complicated process, and one you shouldn't embark on without professional help; this makes the process expensive. If you wish to pursue a patent for your ideas, contact a registered patent attorney or patent agent. Many firms choose to protect ideas using trade secrecy. This is simply a matter of keeping knowledge of your ideas, designs, processes, techniques or any other unique component of your creation limited to yourself or a small group of people. Most trade secrets are in the areas of chemical formulas, factory equipment, and machines and manufacturing processes. The formula for Coca-Cola is one of the best-recognized and most successful trade secrets.

Finalizing design research and development. Research and development

is necessary for refining most designs for new products and services. As the owner of a growing company, you are in a good position when it comes to this stage. Most independent inventors don't have the resources to pay for this costly

and often protracted stage of product introduction. Most lenders and investors are trapped by a Catch-22 mentality that makes them reluctant to invest in ideas until after they're proven viable in the marketplace. If you believe in your idea, you can be the first to market. R&D consists of producing prototypes, testing them for usability and other features, and refining the design until you wind up with something you think you can make and sell for a profit. This may involve test-marketing, beta testing, analysis of marketing plans and sales projections, cost studies, and more. As the last step before you commit to rolling your product out, R&D is perhaps the most important step of all.

Promoting and marketing your product. Now that you have a ready-forsale product, it's time to promote, market and distribute it. Many of the rules that apply to existing products also apply to promoting, marketing and distributing new products. However, new products have some additional wrinkles. For instance, your promotion will probably consist of a larger amount of customer education, since you will be offering them something they have never seen before. Your marketing may have to be broader than the niche efforts you've used in the past because, odds are, you'll be a little unsure about the actual market out there. Finally, you may need to test some completely new distribution channels until you find the right place to sell your product.

A Format for Production Planning

Production planning originated in the 1960s, but back then the system operated in a backwards fashion. All of the planning was based on the delivery date and working back through the production stages from there. In the 21st century, companies must adapt to new ways of planning and scheduling product processes. With the introduction of lean manufacturing techniques, planning needs to be just as streamlined if not more so to increase productivity, keep up with demand and maximize the company's return on investments.

Streaming Data
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It used to be that planning and productions schedules were done on a week-to-week basis. Companies of today need to have "real-time" data in order to be effective and competitive. All levels of the production planning process must be able to access current, up-tothe-minute data in order to properly plan production schedules. This form of planning is part of the newest generation of planning called the APS -- advanced planning and scheduling -- system.

Bracketed Scheduling
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Scheduling used to be based upon the proposed delivery date. Now production planning needs to be moving in a forward direction. Delivery dates are based on when production will actually begin. All of the factors involved, including inventory, tooling, manpower and material availability, are combined into an equation that determines a more realistic estimate of the delivery date for the customer.

Visibility
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Most lean manufacturing environments are using a made-to-order attitude when it comes to production planning. This approach gives the manufacturer the ability to monitor the actual progress of the order instead of using complex algorithms to define what resources will be needed to complete it. This real-time method streamlines the inventory-control aspect of planning.

Delivery Promises
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Failing to keep delivery-date promises has always been the bane of any production environment. Using the APS system to allocate and order supplies before the production even begins helps keep the delivery promises more realistic. Add to that the ability of obtaining up-to-date data on all of the aspects of the project and delivery dates become more of a reality than a guess.

Multi-Site Planning
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Interdependency of production between two or more sites has always been a problem in production planning. When multiple sites are need to complete the whole project, organization and proper planning are essential. New APS systems allow the planners the ability to communicate with other manufacturing sites to streamline the flow process and significantly reduce downtime.

Cost Optimization
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Optimizing the cost performance of any production project is paramount for companies. Efficiency of the planning and scheduling teams is essential to lowering costs by delivering on time, reducing downtime, reducing defects and keeping the supply inventory to a minimum while still applying the pull method of production. Lowering costs makes the product even more valuable.

Dynamic Planning
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Dynamic planning should also be employed to prepare the company for the "what if" situations that always arise. Having plans already made to accommodate a variety of different scheduling possibilities is just good business. With a dynamic planning structure built into the already existing plans, companies can change over to different projects without all of the usual chaos.

Stages in Production Planning

Production planning is important to any business that manufactures because it identifies how the business is going to meet customer needs to generate revenue. As explained by Production Planning, the entire purpose of production planning is to minimize production cost and time while maximizing resources. Production planning has three distinct stages that help an organization meet this objective.

Mapping and Research

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In the mapping stage of production planning, also known as the planning or research stage, business leaders gather data to determine the needs of the customer. For example, they may review previous sales records of similar products and find that sales have steadily increased. This data would allow a projection of the number of products the company should manufacturer. This is known as capacity planning. They also determine the materials necessary for production, the cost of those materials and what other resources (e.g., staff) are required. Lastly, business leaders identify what stages will be present in the manufacturing sequence and how long each sequence should take. As part of setting up the product life cycle, managers may use process flow diagrams to eliminate redundancies and identify trends.

Scheduling
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Once managers have finished all their research, they proceed to the scheduling phase. The managers piece together a production schedule that meets the customer's needs and that suits the resources the company has. The dates of each manufacturing activity may not be concrete, but the managers put down estimated end and start dates and assign staff to the production process.

Coordination
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Manufacturing begins after the scheduling phase. At this point, everyone is working together to create the product according to the project schedule. The managers periodically inspect the manufactured product and compare the production results to the production schedule goals. They then adjust the production schedule as needed. For example, if a manager finds that only 100 units of a toy are complete at the end of a month when 150 were scheduled, then the manager knows that he must extend the production schedule. Alternately, the manager may make resource adjustments such as hiring more staff to get the schedule back on track.

Product Development
The creation of products with new or different characteristics that offer new or additional benefits to the customer. Product development may involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche.

Four-Step Process of Product Planning

Product planning is a four-step process. The process is most active during the first stage of the product life cycle.

STEP-1, IDEA GENERATION:

New product ideas can come from within the firm-from managers, employees (or) research and development (R&D) laboratories. They can also come from the outside-from company distributions and inventors. New ideas may be either market-oriented (or) technology-oriented. The most obvious source of new ideas is marketing, which must be in tune with the needs of customers. Market studies may reveal better ways of serving established markets. Technological innovations can affect either the product (or) the processes. Inventories can also improve processes within the production system, which in turn may create new products.

STEP-2, SCEENING:
There may be a number of new product ideas but it has to be decision about which one will be the worthwhile. Some ideas do not fit the companys mission. Others are dismissed for failing to meet. i) Market criteria, ii) Production operations criteria, iii) Financial criteria. Marketing criteria include competitors, effects on current products, marketability to present customers, promotional requirements ad changes in distribution channels, operations criteria include technical feasibility and capability with current processes, work force, equipment and facility locations. Financial criteria include investment requirements, risk expected annual sales, profit margin per unit and anticipated length of products life cycle.

STEP-3 DEVELOPMENT AND TESTING:

Next, the technical feasibility is thoroughly protested, which often involves considerable engineering work. Prototypes may be built for testing and analysis of the products features. Beyond engineering production operations gets involved in assessing process, facility and material needs. Finally, marketing tests in limited markets may help to gauge customer reactions to the specific features of the product and the way it is presented before it is actually marketed. The end

result may give an assurance that the product is technically feasible, can be economically produced in quantity and has customer appeal.

STEP -4 FINAL PRODUCT DESIGN:

During final product design, product characteristics are designed in detail. This detail may include the specifications process formulae and drawings. Substantial investments in financial and human resources are committed at this stage. Production begins and marketing starts its promotional program with sales meeting and preview presentations at trade exhibits.

8 Step Process Perfects New Product Development

Every entrepreneur knows that productivity is one of the key ingredients for successful product development. One of the two key processes in Roberts Rules of Innovation is the NEW PRODUCT DEVELOPMENT PROCESS. A formalized, NPD process also referred to and best practice: the Stage Gate Process is a must, from simple to sophisticated. The New Product Development process is often referred to as The StageGate innovation process, developed by Dr. Robert G. Cooper as a result of comprehensive research on reasons why products succeed and why they fail. When teams collaborate in developing new innovations, having the following eight ingredients mixed into your teams new product developmental repertoire will ensure that its overall marketability will happen relatively quick, and accurately making everyone productive across the board.

Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well as current marketing trends, one can distance themselves from the competition by generating ideologies which take affordability, ROI, and widespread distribution costs into account. Lean, mean and scalable are the key points to keep in mind. During the NPD process, keep the system nimble and use flexible discretion over which activities

are executed. You may want to develop multiple versions of your road map scaled to suit different types and risk levels of projects.

Step 2: Screening The Idea

Wichita, possessing more aviation industry than most other states, is seeing many new innovations stop with Step 2 screening. Do you go/no go? Set specific criteria for ideas that should be continued or dropped. Stick to the agreed upon criteria so poor projects can be sent back to the idea-hopper early on. Because product development costs are being cut in areas like Wichita, prescreening product ideas, means taking your Top 3 competitors new innovations into account, how much market share theyre chomping up, what benefits end consumers could expect etc. An interesting industry fact: Aviation industrialists will often compare growth with metals markets; therefore, when Boeing is idle, never assume that all airplanes are grounded,

Step 3: Testing The Concept

As Gaurav Akrani has said, Concept testing is done after idea screening. And it is important to note, it is different from test marketing. Aside from patent research, design due diligence, and other legalities involved with new product development; knowing where the marketing messages will work best is often the biggest part of testing the concept. Does the consumer understand, need, or want the product or service?

Step 4: Business Analytics

During the New Product Development process, build a system of metrics to monitor progress. Include input metrics, such as average time in each stage, as well as output metrics that measure the value of launched products, percentage of new product sales and other figures that provide valuable feedback. It is important for an organization to be in agreement for these criteria and metrics. Even if an idea doesnt turn into product, keep it in the hopper because it can prove to be a valuable asset for future products and a basis for learning and growth.

Step 5: Beta / Marketability Tests

Arranging private tests groups, launching beta versions, and then forming test panels after the product or products have been tested will provide you with valuable information allowing last minute improvements and tweaks. Not to mention helping to generate a small amount of buzz. WordPress is becoming synonymous with beta testing, and its effective; Thousands of programmers contribute code, millions test it, and finally even more download the completed end-product.

Step 6: Technicalities + Product Development

Provided the technical aspects can be perfected without alterations to post-beta products, heading towards a smooth step 7 is imminent. According to Akrani, in this step, The production department will make plans to produce the product. The marketing department will make plans to distribute the product. The finance department will provide the finance for introducing the new product. As an example; In manufacturing, the process before sending technical specs to machinery involves printing MSDS sheets, a requirement for retaining an ISO 9001 certification (the organizational structure, procedures, processes and resources needed to implement quality management.) In internet jargon, honing the technicalities after beta testing involves final database preparations, estimation of server resources, and planning automated logistics. Be sure to have your technicalities in line when moving forward.

Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are purchasing your good or service, and technical support is consistently monitoring progress. Keeping your distribution pipelines loaded with products is an integral part of this process too, as one prefers not to give physical (or perpetual) shelf space to competition. Refreshing advertisements during this stage will keep your products name firmly supplanted into the minds of those in the contemplation stages of purchase.

Step 8: Post Launch Review and Perfect Pricing

Review the NPD process efficiency and look for continues improvements. Most new products are introduced with introductory pricing, in which final prices are nailed down after consumers have gotten in. In this final stage, youll gauge overall value relevant to COGS (cost of goods sold), making sure internal costs arent overshadowing new product profits. You continuously differentiate consumer needs as your products age, forecast profits and improve delivery process whether physical, or digital, products are being perpetuated.

Remember: The Process Is Loose

The entire new product development process is an ever evolving testing platform where errors will be made, designs will get trashed, and loss could be recorded. Having your entire team working in tight synchronicity will ensure the successful launch of goods or services, even if reinventing your own wheel. Productivity during product development can be achieved if, and only if, goals are clearly defined along the way and each process has contingencies clearly outlined on paper.

Levels of Product
There are 3 levels of products

Core Product- Marketers must first define what the core BENEFITS the product will provide the customer. Actual Product-Marketer must then build the actual product around the core product. May have as many as five characteristics: o Quality level o Features o Brand name o Packaging all combined to carefully deliver the core benefit(s).

Augmented Product-offer additional consumer benefits and services. o Warranty o Customer training

Classifying Products
Products can be classified depending on who the final purchaser is. Components of the marketing mix will need to be changed depending on who the final purchaser is.

Consumer products: destined for the final consumer for personal, family and household use. Business to business products: are to satisfy the goals of the organization.

The same product can be purchased by both, for example a computer, for the home or the office.

The following are classifications for consumer products:

Convenience: Packaging is important to sell the product. Consumers will accept a substitute. Marketers focus on intense distribution, time utility. Convenience products can be categorized into staple (milk), impulse (not intended prior to shopping trip). Shopping: Consumers expend considerable effort planning and making purchase decisions. IE appliances, stereos, cameras. Consumers are not particularly brand loyal. Need producer intermediary cooperation, high margins, less outlets than convenience goods. Use of sales personnel, communication of competitive advantage, branding, advertising, customer service etc. Attribute based (Non Price Competition), product with the best set of attributes is bought. If product attributes are judged to be similar, then priced based. Specialty: Buyer knows what they want and will not accept a substitute, IE Mercedes. Do not compare alternatives. Brand, store and person loyal. Will pay a premium if necessary. Need reminder advertising. Unsought: Sudden problem to resolve, products to which consumers are unaware, products that people do not necessary think of purchasing.

The following are classifications for Business to Business products:

Production Goods o Raw Materials: o Component parts: becomes part of the physical product

Process materials: not readily identifiable part of the production of other products Support Goods o Major Equipment: o Accessory Equipment: Type writers and tools o Consumable Supplies: IE Paper, pencils or oils o Business to Business services: Financial, legal marketing research etc.
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Elements of a Product Mix

If an organization is marketing more than one product it has a product mix.

Product item--a single product Product line--all items of the same type Product mix--total group of products that an organization markets

Depth measures the # of products that are offered within each product line. Satisfies several consumer segments for the same product, maximizes shelf space, discourages competitors, covers a range of prices and sustains dealer support. High cost in inventory etc. Width measures the # of product lines a company offers. Enables a firm to diversify products, appeals to different consumer needs and encourages one stop shopping. Proctor & Gamble example in class. Why so many different products? Different needs of different target markets for the same product. Channels of distribution economies etc.

Product Positioning and Product Repositioning

This refers to a place a product offering occupies in consumers' minds on important attributes, relative to competing offerings. How new and current items in the product mix are perceived, in the minds of the consumer, therefore reemphasizing the importance of perception.

New Product -- need to communicate benefits Established Products -- need to reinforce benefits

Ideal Characteristics
Need to introduce products that possess characteristics that the target market most desires, ideal. Product positioning is crucial. Consumers desires refer to the attributes consumers would like the products to possess--IDEAL POINTS. Whenever a group of consumers has a distinctive "ideal" for a product category they represent a potential target market segment. A firm does well if its attributes (of the product) are perceived by consumers as being close to their ideal. The objective is to be "more ideal" than the competitors. Each product must provide some unique combination of new features desired by the target market. Instead of allowing the customer to position products independently, marketers try to influence and shape consumers concepts and perceptions.

Existing Products
Handout...Here Comes the Sun to Confound Health-Savvy Lotion Makers
^ | | Old Position | New Position | | | Glamour--------------------------------------------------Health | | | | | |

Traditional sun tan lotion positioned as aiding in getting a very glamorous deep tan etc. Dermatologist reports...skin cancer etc.

Lifestyle needs change, move to more health conscious (previously discussed) Need to reposition sun tan lotion as a healthy way to be exposed to the sun. Target market has shifted from the left quartile to the right quartile as far as needs are concerned. Sun tan marketers need to do same as far as changing consumers perception for the product. How?

Change Promotion: "Tan don't Burn" The St. Tropez Tan vs. Ultra Sweat Proof Serious tan for...Be Sun Smart Change Product: Sunscreen and sunless tanning agent.

Handout...BMW Banks on Affordability...

^ Very Safe | Lexus/infiniti | Mercedes | BMW | | | Cheap--------------------------------------------------Expensive | | | | | | | Very Unsafe

BMW, to reposition up to the left Due to the exchange rate, Lexus moves to the right Why did they repositition? Safety Affordability Competitors include Infiniti, Lexus, Mercedes Benz and Aurora If you already have a brand in the market, must be sure to avoid cannibalization. Attributes and brand image should give a product distinct appeal.

New Product Positioning When developing a new product, a company should identify all the features that are offered by all its major competitors. Second, identify important features/benefits used in making purchase decisions. Determine the overall ranking of features by importance and relate the importance of each feature to its "uniqueness". For example you wouldn't buy a spreadsheet program that if it didn't perform basic math, so basic math is very important. However since every spreadsheet has that its an "important fundamental feature", instead of an "important differentiating feature". The flip side would be a spreadsheet that displays all numbers in binary (01) instead of "normal" numbers (0-9). This is unique but not important. The evaluation becomes a 2 x 2 matrix with uniqueness on the X-axis and importance on the Y-axis.
^ X Important to TM (Stockbroker) X Math functions | Import Data | | | | | ----------------------------------------------------------Unique | | | | | | | X Binary Data

If the feature is in the upper right hand corner then you have probably got a winning feature.

This is known as feature positioning, as opposed to product positioning. One can then see what type of customer needs the important (and perhaps unique) features.

If your spreadsheet accepts continuous data in real-time (such as stock market data) while Lotus 1-2-3 doesn't, you'd position your spreadsheet as a "real-time spreadsheet with all calculations needed by Wall Street." Its a claim that tells something unique about your product, who it's for, and by implication, that Lotus 1-2-3 can't do it.

Developing and Managing Products

To compete effectively and achieve goals of an organization, the organization must be able to adjust its product mix. Need to understand competition and customer attitudes and preferences.

Developing New Products

Need to develop new products. A new product can be:

Continuous Innovation...No new buyer behavior to learn, i.e. -products not previously marketed by the firm, but by others Dynamic Continuous Innovation...minor education needed for consumers to adopt product Discontinuous Innovation...entirely new consumption patterns

Handout...In Battle over Video Disk Standard What will be the winning format? New Product (Technology) Need to appeal to:
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Hollywood Ultimate consumers

Battle between:
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Sony and Phillips Toshiba, Pioneer and Time Warner

Swing voter...Matsushita Electric Industry (Toshiba/Pioneer) DVD could transform movie business (like CDs for music) Movie studios can resell all movies in new format therefore very important to them, also sell through market, video rentals are decreasing, due to competing service.

Set of requirements:
o o o o o o

135 mins on 1 disc quality superior to vhs cd quality audio able to add multiple languages parent lockout system iron clad copying protection

Sony announced going ahead (Vaporware!) If 2 systems go to market, best system will win, only one technology can survive, WINNER WINS BIG...LOSER LOSES BIG (DUE TO INVESTMENT) VHS vs Betamax

For a new product to succeed it must have:

desirable attributes be unique have its features communicated to the consumer (mkt support necessary)

Developing new products is expensive and risky. Failure not to introduce new products is also risky. IE Timex

Firms develop new products in two ways:

By acquisition, i.e. Timex bought Guess and Monet Jewellers in 1992, bringing in new products to their product mix. Internal development, this is what we are going to focus on.

17,363 (8,077 food) new items hit supermarket and drug stores in 1993, according to marketing experts, a 9.3% increase over 1992. Launching a new product name along with new product is very risky and expensive therefore 75% of new products were brand-extension brands in 1993, up from 68% in 1992 (continuous innovations)

Why New Products Fail

Lack of differentiating advantage Poor marketing plan Poor timing Target market too small Poor product quality No access to market

Seven phases to new product development:

1. New Product Strategy Development
Only a few ideas are good enough to reach commercialization. Ideas can be generated by chance, or by systematic approach. Need a purposeful, focused effort to identify new ways to serve a market. New opportunities appear from the changes in the environment.

2. Idea Generation
Continuous systematic search for new product opportunities.
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Marketing oriented sources--identify opportunities based on consumer needs, lab research is directed to satisfy that research. 1800#s, research etc. Laboratory oriented sources--identify opportunities based on pure research or applied research.

Intrafirm devises--brain storming, incentives and rewards for ideas. 3Ms Post it, from choir practice. Hewlett Parkards lab is open 24 hrs. day. Analyzing existing products, reading trade publications.

Brainstorming for your group project. Ideas should not be criticized, no matter how off-beat they are.

3. Product Screening and Evaluation

New product check list; list new product attributes considered most important and compare each with these attributes. Check list is standardized and allows ideas to be compared. --General characteristics, Marketing Characteristics and Production Characteristics. Ideas with the greatest potential are selected for further research. Do they match the organizations goals (DuPont and ICI have many patents that they have not exploited for this very reason.) Look at companies ability to produce and market the product. Need to look at the nature and wants of the buyers and possible environmental changes.

4. Business Analysis
Analyze potential contribution to sales, costs and profits. Does the product fit into the current product mix? What kind of environmental and competitive changes can be anticipated? How will these changes effect sales etc.? Are the internal resources adequate? Cost and time line of new facilities etc.? Is financing available? Synergies with distribution channel etc. MIS to determine the market potential sales etc. Patentability should be determined, last 17 years, 14 years for a pharmaceutical product. Find out if it is technically feasible to produce the new product. If you can produce the new product at a low enough cost so as to be able to make a profit.

5. Product Development
Develop a prototype, working model, lab test etc. Attributes that consumers have identified that they want must be communicated through the design of the product.

6. Test Marketing
Can observe actual consumer behavior. Limited introduction in geographical areas chosen to represent intended market. Aim is to determine the reaction of probable buyers. It is the sample launch of the Marketing Mix. Determine to go ahead, modify product, modify marketing plan or drop the product. PROS are:
o o o o o

Lessens the risk of product failure. Reduces the risk of loss of credibility or undercutting a profitable product. Can determine the weaknesses in the MM and make adjustments. Can also vary parts of the MM during the test market. Need to select the appropriate MM and check the validity.

CONS are:
o o o

Test market is expensive. Firm's competitors may interfere. Competitors may copy the product and rush it out. IE Clorox detergent with bleach P&G. "In a live test you've tipped your hand, and believe me, the competition is going to come after you. Unless you have patented chemistry, they can rip you off and beat you to a national launch" -Director of Marketing at Gillette's Personnel division.

Alternatively can use a simulated test market. Free samples offered in the mall, taken home and interviewed over the telephone later.

7. Commercialization
Corresponds to introduction stage of the Product Life Cycle. Plans for full-scale marketing and manufacturing must be refined and settled. Need to analyze the results of the test market to determine any changes in the marketing mix. Need to make decisions regarding warranties etc (reduces consumers risk). Warranties can offer a competitive advantage. Spend alot of $s on advertising, personnel etc. Combined with capital expenditure makes commercialization very expensive.

Need to consider:

the speed of acceptance among consumers and channel members; intensity of distribution, production capabilities, promotional capabilities, prices, competition, time period to profitability and commercialization costs.

Buyers' Product Adoption Process

1. Awareness Buyers become aware of the product 2. Interest Buyers seek information and is receptive to learning about product 3. Evaluation Buyers consider product benefits and determines whether to try it 4. Trial

Buyers examine, test or try the product to determine usefulness relative to needs 5. Adoption Buyers purchase the product and can be expected to use it when the need for the general type of product arises. Rate of adoption depends on consumer traits as well as the product and the firm's marketing efforts.

Diffusion Process
The manner in which different members of the target market often accept and purchase a product (go through the adoption process) 1. Innovators Techno-savvies first customers to buy a product, 2.5 % of consumers 2. Early Adopters Tend to be opinion leaders. Adopt new products but use discretion, 13.5% 3. Early Majority 34% of consumers, first part of the mass market to buy the product 4. Late Majority Less cosmopolitan and responsive to change, 34% 5. Laggards

Product Life Cycle

PLC can be applied to:

product category (Watch) product style (Digital) a product item/brand (Timex)

Four Stages to the Product Life Cycle: 1. 2. 3. 4. Introduction Growth Maturity Decline

The following material refers to the PLC as far as the product category is concerned unless otherwise stated.

Introduction
Failure rate for new products can range from 60%-90%, depending on the industry. A product does not have to be an entirely new product, can be a new model (car).

Marketing Mix(MM) considerations

Need to build channels of distribution/selective distribution Dealers offered promotional assistance to support the product...PUSH strategy. Develop primary demand/pioneering information, communications should stress the benefits of the product to the consumer, as opposed to the brand name of the particular product, since there will be little competition at this stage and you need to educate consumers of the product's benefits.

Price skimming...set a high price in order to recover developmental costs as soon as possible. Price penetration...set a low price in order to avoid encouraging competitors to enter the market, also helps increase demand and therefore allows the company to take advantage of economies of scale.

Growth
Need to encourage strong brand loyalty, competitors are entering the market place. Profits begin to decline late in the growth stage. May need to pursue further segmentation.

MM considerations
May need to perform some type of product modification to correct weak or omitted attributes in the product. Need to build brand loyalty (selective demand), communications should stress the brand of the product, since consumers are more aware of the products benefits and there is more competition, must differentiate your offering from your competitors. May begin to move toward intensive distribution-the product is more accepted, therefore intermediaries are more inclined to risk accepting the product. Price dealing/cutting or meeting competition, especially if previously adopted a price skimming strategy. Handout...Coca Cola Launches Fruit-Drink line... Category doubled in size last year to about $300m - $325m Coca Cola's entrant-Fruitopia expect sales this year to reach $400m Fruitopia is in the Introductory stage when the Alternative Beverage market is in the Growth stage. New competitors like Coca Cola will help grow the size of the market.

Maturity
Sales curve peaks-severe competition, consumers are now experienced specialists.

MM Considerations
A product may be rejuvenated through a change in the packaging, new models or aesthetic changes. Advertising focuses on differentiating a brand, sales promotion aimed at customer (PULL) and reseller (PUSH). Move to more intense distribution

Price dealing/cutting or meeting competition Provides company with a large, loyal group of stable customers. Generally cash cows that can support other products. Strategies during maturity include:

Modification of product...use line extensions Reposition Product Handout...New Life Savers Ads Grab Hold of Taste Reposition...Taste vs. moment Line extension, gummy savers, breath savers, holes (unsuccessful) Licensing name

Weaker competition will have left the market place.

Decline
Sales fall off rapidly. Can be caused by new technology or a social trend. Can justify continuing with the product as long as it contributes to profits or enhances the effectiveness of the product mix. Need to decide to eliminate or reposition to extend its life.

MM Considerations

Some competition drop out Need to time and execute properly the introduction, alteration and termination of a product. Handout...Cannibalism Is a Virtue in Computer Business Problems with high-tech products, relate to Product Adoption Process etc. Need to manage product mix through their respective life-cycles. When to decide to introduce new (modified) products that compete with the current product offering. With high-tech products, need to consider introducing new (and competing) products as the existing product is still in the growth stage of its life cycle.

Branding
Part of the actual product. Without brands, shoppers choice becomes arbitrary. Definition: A name, term, design, symbol or any other feature that identifies one seller's good or service as distinct from anothers.

Brand name is that part that can be spoken, including letters, words and #s, IE 7UP. Brand names simplify shopping, guarantee a certain level of quality and allow for self expression. Brand mark-elements of the brand that cannot not be spoken, IE symbol Trade Character IE Ronald McDonald, Pillsbury Doughboy Trade mark-legal designation that the owner has exclusive rights to the brand or part of a brand. 1990, US Patent & Trademark Office had 680,000 trademarks registered, 56,515 new in that year. Tradename-The full legal name of the organization. IE Ford, not the name for a specific product.

Benefits of Branding
Provides benefits to buyers and sellers TO BUYER:

Help buyers identify the product that they like/dislike. Identify marketer Helps reduce the time needed for purchase. Helps buyers evaluate quality of products especially if unable to judge a products characteristics. Helps reduce buyers perceived risk of purchase. Buyer may derive a psychological reward from owning the brand, IE Rolex or Mercedes.

TO SELLER:

Differentiate product offering from competitors Helps segment market by creating tailored images, IE Contact lenses

Brand identifies the companies products making repeat purchases easier for customers. Reduce price comparisons Brand helps firm introduce a new product that carries the name of one or more of its existing products...half as much as using a new brand, lower co. designs, advertising and promotional costs. EXAMPLE, Gummy Savers Easier cooperation with intermediaries with well known brands Facilitates promotional efforts. Helps foster brand loyalty helping to stabilize market share. Firms may be able to charge a premium for the brand.

Importance of Branding and How to Develop a Brand

Handout...American Movie Classics... Why does AMC Brand Itself? Increasing Competition, 500 channels etc. Need to differentiate Product offering so consumers associate satisfying need to see good movies to watching AMC Consumers cannot check all brands therefore need to make choice easier for them "We compete now with many movie channels, If consumers think of you without a Brand or personality, you become an inventory of pictures, In a world of hundreds of channels, you'll get lost". How does AMC Brand Itself? Advertise...emphasize need to keep movies in original state Boutiques in stores to sell "AMC Collection" License Audrey Hepburn image...spokesperson Co-promotion w/ United Artists Theaters sponsoring afternoon vintage movies. AMC news magazine at Newsstands. Logo and AMC Letters Releasing AMC movies on video TM = 72% over 35 years old Brand loyalty is declining due to an increase in similar new products for customers to chose from, and an increase in marketing activities to encourage brand switching and the increasing quality of private label products.

Brand equity, financial value associated with the brand. Can be increased when licensing royalties can be gained.

Four Branding Decisions firms must make

Need to determine Corporate Name A firms name logo and trade characters. Over 1000 ongoing firms change names each year, DuPont If nature of business changes, may need to alter name--Southwest Airlines?? Allegheny Airlines change to US Air due to expansion in geographic markets. (United Brands changed name to CHIQUITA brands) Boston Chicken vs. Boston Market Geographic names not as popular as they used to be compared to surnames, descriptive names and coined names. Kiwi airlines--named after a bird that cannot fly

Types of Brands
Manufacturers Brands:
Initiated by the producer. 85% food items, all autos, 75% major appliances, more than 80% gasoline. Requires the producer to be involved in distribution, promotion, and to some extent, pricing. Brand loyalty is encouraged by quality, promotion and guarantees. Producer tries to stimulate demand, encouraging middlemen to make the product available (PULL)

Private Distributor Brands:

Initiated and owned by the resellers. 50% of shoes, 33% tire market, 13% food, 25% appliances. Manufacturers not identified in the product. Helps retailers develop more efficient promotion, generate higher margins and increase store image. Wholesalers brands-IGA Retailers brands Sears Kenmore, JC Penney's Stafford Executive. Presidents Choice, Loblaw, 1000 products Our Compliments, MF. by Nabisco

Master Choice, A & P Select, Safeway Kodak in Japan, market private label film since Mf. label not successful in marketplace, "COOP" for the Japanese Consumer Cooperative Union. DuPont, with Initiatives Inc, design/make fashion items, utilize its fiber resources and develop another customer for them. Work with retailers to design fashions. The competition between manufacturers brands and private brands (15% retail grocery) is intensifying. Handout...How Country's Biggest Brands Are Faring at the Supermarket Reason for increase in Private Brands:

Increasing prices of MB in 1980s with flat demand Increasing Quality of PB Increasing Promotion of PB PB offer retailers higher margins Offer regional products

Private brands have been growing: 1991 increase 4% 1992 increase 3% 1993 increase .8% Manufacturer brands are beginning to fight back.

Reduce price (marlboro monday, reduced 20%) Promotions focus on quality and directed at PL New product launches, line extensions. Focus on core products

PB are still popular, also consumers are purchasing PB products that were once bastions of MB, personal care etc., Beer/Cigarettes, another indication of consumers' growing confidence of the quality of PBs. Handout...Philip Morris Makes Dave's--Marketers of MB products (esp. Philip Morris) are developing products that appear to be PB products, in recognition to consumers growing preference for this type of product.

Abroad UK, Private Label is 36% of market. Why??

National Advertising Retailers are Marketers not landlords. Sainsburys launched 1400-1500 new products each year. 8000 of 16000 products are private label.

Generic Brands:
Indicates only product category. Began as low cost alternative in the drug industry. Less than 1% of supermarket revenue even though 85% stock them. Cheeper than branded items. Accounts for less than 1% of retail sales, was 10%.

Selecting a Brand Name

Criteria for choosing a name:

Easy for customers to say, spell and recall (inc. foreigners) Indicate products major benefits Should be distinctive Compatible with all products in product line Used and recognized in all types of media Single and multiple words Bic, Dodge Grand Caravan, IBM PC (letters), or a combination Mazda RX7 Availability, already over 400 car "name plates", this makes it difficult to select a new one. Use words of no meaning to avoid negative connotation, Kodak, Exxon Can be created internally by the organization, or by a consultancy Legal restrictions, i.e. Food products must adhere to the Nutrition Labeling and Education Act, 1990...May 8 1994 Handout...Let There Be 'Right'.... FDA, Pringles Right Crisps, as opposed to Light Only 1/3 less fat. Considered Pringles Right Choice/Idea. Light/Lite must be 1/2 fat of original content Reduced fat = 25% reduction

"Lite taste" can still be used :)...lite is a descriptor of the word taste, not of the actaul product!! Service-usually the company name, must be flexible enough to encompass activity of current services as well as new ones in the future (Southwest Airlines). Frequently use symbols, AT&Ts globe, Travellers insurance umbrella. Naming process goes from idea generation to idea evaluation to legal evaluation. Should define objectives--what value to the product should the name provide.

Protecting a Brand
Need to design a brand that can be protected through registration. Generic words are not protectable (aluminum foil), surnames and geographic or functional names are difficult to protect. To protect exclusive rights to a brand, must make certain that the brand is not likely to become considered an infringement on any existing registered brand. Guard against a brand name becoming a generic term used to refer to general products category. Generic cannot be protected. IE Aspirin, Shredded Wheat ETC. Xerox Rollerblade Thermos Kleenex

Branding Policies
First question is whether to brand or not to brand. Homogenous products are difficult to brand (Not Purdue, Robinson Brick). Branding policies are:

Individual Branding: Naming each product differently P&G, facilitates market segmentation and no overlap. Overall Family Branding: All products are branded with the same name, or part of a name, IE Kraft, promotion of one item also promotes other items. Line Family Branding: Within one product line. IE P&Gs Ivory line. Brand Extension Branding: Use one of its existing brand names as part of a brand for an improved or new product, usually in the same product category. 75% new products are brand extensions!!

Handout...Can Virgin Name sell Cola, Computers, Vodka and more. To use brand extensions the products should be either related (not the case for Virgin), or the brand name should have a value over and above the particular product category, i.e. a counter culture image for example. If that is the case, then it might work.

Brand Licensing
Approve use of trade marks on other products for a licensing fee. IE Harley Davidson with Cologne, McDonalds with McKids. PRO Gain extra revenue and free publicity and trade mark protection, also helps develop your brand, AMC CON Lack of manufacturing control, bombardment of unrelated products.

Packaging
Part of the actual product. Consists of a products physical container, label and/or insert. Approximately 10% of product selling cost. Development of a container and a graphic design for a product. Can effect purchase decisions IE pump dispenser on a tube of toothpaste. Packaging Functions include:

Protect product and maintain functional form, IE milk. Foil shop lifting Offer convenience, Usage (dispersement) Promote product by communicating features "last 5 seconds of mktg", Campbells...Read Article Develop reusable package for alternative use. Segmentation, tailored to a specific group Contact Lenses

Major Packaging Considerations

Packaging decision serve the channel members and the final consumer.

Cost--how much are customers willing to pay for the packaging? Preprinted cost, use UPC codes Must comply with the FDA packaging regulations. Make product tampering evident to the reseller and customer, cost benefit with liability Need to consider consistency among package designs--Family packaging...category consistent...Pringles Need to inform potential buyers of new products content, features, uses, advantages and hazards. Need to create a desirable image through color etc. Can be designed to appear taller or shorter (thin vertical lines for taller) People associate specific colors with certain feelings, Red with fire. Do not package meet in green!! Must meet the needs of resellers--transportation, storage and handling. Environmental responsibility.

Packaging and Marketing Strategy

Packaging can be a major component of the marketing strategy--giving a product a competitive advantage. Need to reevaluate packaging periodically. Altering the Package - must evolve with the times Change style of package Coke, Pepsi Pepsi freshness dating, need extensive marketing effort to communicate this. Coke's new contoured bottle "feel the curves" "the ultimate form of refreshment", with a silhouette of a coke bottle on a bill board. Considering a contoured can in the future!! Multiple Packaging Twin packs, six packs etc...won't work for salt!! Stimulate extra use. Helps gain customer acceptance. Handling Improved packaging Packaging changes during distribution, IE Cartons

Criticism of Packaging

Functional problems, Flour, sugar. Packages that are difficult to open. Recyclability. Safety issues (sharp) Package deception. Customer confusion IE different size designations, Giant, Econ etc. Increased costs attributed to packaging.

Labeling

Facilitates ID of a product Descriptive function Indicate the grade of the product Describe source of product, its content and major features How to use the product etc. Label can be a promotional tool Needs to fulfill federal obligations. Universal Product Code for Inventory and Information.

Product Planning and Development

Introduction to a product Tangibility continuum of a product Product Classification Branding Packaging Product Life Cycle Introduction to new product planning

Definition of a Product
Product could be defined as anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or a need Phillip Kotler.

Product could be of any of the following:

A physical product table, car, pen Person Bathiya and Santhus, Sanga, Ranil, Mahinda, Anarkali, Anjalina Jollie, Mervin S. Place Anuradhapura, Rathnapura, London, Jerusalem Organization SLIM, CIM, UN, UNP, JVP, UNILEVER, DIALOG Idea Freedom, democracy, anti-corruption, social justice, anti drugs, MADD, family planning Services education, lawyers service, bank service

Product Scope (three aspects)

1.) Physical Aspect is the physical aspect of the product. What it is? E.g. It is a herbal tooth paste 2.) Functional Aspect is what is does? E.g. It cleans tooth/prevents tooth decay 3.) Symbolic Aspect is what it means to the users emotion? E.g. The satisfaction of a person free from tooth decay

The Product Attributes

The Product

Tangible Attributes
Design, features, performances, branding, packaging

Intangible Attributes
Image, value, perception

Product Sub Category

Futher 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 Life Cycle Theory (PLC)

It is assumed that a product will have a life cycle from development to decline. It is measured in relation to time and sales. However every product may not go through the same life cycle or some products will stay for along without getting on to the declining stage.

Stage of Life Cycle

1. 2. 3. 4. 5. Development stage Introductory stage Growth stage Maturity stage Declining stage

Introductory Relatively short

Growth Relatively short

Maturity Longer period

Decline Longer or short

Sales are usually slow and profits are low Competitors will watch

Sales increase and profits will be high New competitors enter

Sales growth become slow but volume big More competition and over capacity Many distributors and undercutting

Drop in the sales

Competitors do not enter due to low margins Distributors reduce or give up

Distribution has just begun

More distributors take up the product

Introductory Positioning and brand awareness

Growth Brand image is established

Maturity Many brands fight each other

Decline Brand image is low

Promotion budget Promo budget Promo budget Not much very high may be increased may be standard promotions done or low Only one or two manufacturers Few manufacturers Many manufacturers Abundant manufactures

High product

Improve product quality and features

Many changes in the Marketing mix to be done

May have to take a decision to stay on or not

Importance of Product Life Cycle 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. E.g. Fad items Ignores the application of marketing mix activities Strategic decisions can change the PLC. E.g. Repositioning

Planning for New Products Long term survival of many firms in the competitive world depends on launching new products successfully. Planning for new products is an essential and demanding strategic activity. There could be many types of new product.

Types of New Products

1.) 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. E.g. Vaccine for AIDS Products based on Nano Technology Heat seeking missile Computers 2.) 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 3.) 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 and innovative or replacement products but many will copy the technology and come out with similar products. They are called mee-too products.

E.g. After celltel>mobitel>dialog>hutch After signal>clogard>supirivicki>sudnatha After Mercedes benze>ford>GM>Toyota Nissan

Reasons for Introducing New Products

To suit the changes in customers needs To adopt new technological advances and avoid obsolesce To match competition Product Life Cycle Concept To bring down the cost

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.) Commercialization (Launch)

Sources of New Ideas

Internal Customers Competitors Outside inventors Channel members Consultants

Methods of Generating New Ideas Searching new product idea publications, research publications, the internet, exhibitions, conventions Marketing Research Meet product and 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

Screening, Evaluating and Business Analysis

*Screening There should be a very clear cut screening policy that would reject the unpromising product ideas and further the promising ideas. Two basic questions need to be answered at the screening stage Is the idea could be practically developed into a product with development production, marketing and financial capabilities of the company? Is the venture commercially feasible? (market attractiveness, profitability, social and environmental concerns) *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.

Marketing Strategy Development

*Product Brand name selection and registration Government regulations as to pricing packaging and labeling etc Determine packaging, sizes, shapes, colours, other properties *Pricing Finalize pricing strategy premium/skimming, penetrative, mark up etc Dealer/distributor margins 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 Finalize segmentation and target markets Finalize the positioning strategy Have a theme Communication budgets Finalize 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

Product Development and Testing Prototype User tests Manufacturing development Component developments and collaborative product developments various specialized manufacturers get involved.

Test Market the Product 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 determine how the marketing mix should be adjusted before a full scale launch.

Launch Product 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

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