Productivity refers to the physical relation between the quality produced (output) and the quantity of resource used in the course of production (input) Productivity (P) =output (O)/input (I) Output implies production while input means land, labour, capital, management etc. Productivity measures the efficiency of the production system. Higher productivity means producing more from a given amount of input or producing a given amount with minimum level of inputs.
Productivity and production are two different terms. Productivity is a relative term indicating the ratio between total output and the total inputs used therein on the other hand production is an absolute concept, which refers to the volume of output. The volume of production may increase but productivity may decline due to inefficient use of resource. Efficient use of input may increase productivity but the volume of production may not increase. Production refers to the end result of production system whereas productivity reflects its efficiency.
Benefits derived from higher productivity are as follows: It helps to cut down cost per unit and thereby improve the profits. Gains from productivity can be transferred to the consumers in from of lower priced products or better quality products. These gains can also be shared with workers or employees by paying them at higher rate. A more productive entrepreneur can have better chances to exploit export opportunities. It would generate more employment opportunities.
Productivity may be measured either on aggregate bases or on individual basis, which are called total and partial productivity respectively.This index measures the efficiency in the use of all the resources.
Partial productivity Indices, depending upon factors used, it measures the efficacy of individual factor of production. Following are productivity indices for individual inputs.
Productivity is outcome of several interrelated factors, which may broadly be divided into two categories- human factors and technological factors. Human Factors: (a) Ability to work and(b) Willingness to work Technological Factors Managerial factors Natural Factors Sociological Factors Political Factors Economic Factors
A product that opens an entirely new market A product that adopts or replaces an existing product A product that significantly broadens the market for an existing product An old product introduced in a new market An old product packaged in a different way An old product marketed in a different way
Innovative products New product lines – to allow the firm to enter an existing market Addition to product line – to supplement the firm’s existing product line Improvements and revisions of existing product Repositioned products – existing products targets at new market Cost reduction new product that provide similar performance at lower cost
New to the world – high definition TV, ipod, flat screen TV, Probiotic Ice Cream Product improvement & replacement :SPEED by BPCL Cost reduction new product: Moser Baer.
Increase/defend market share by offering more choice or updating older products Appeal to new segments Diversify into new markets Improve relationship with distributors Maintain the firm’s reputation a leading edge company Even out peaks and troughs in demand Make better use of the organizations resources
To replace declining product To take advantage of new technology To defeat rivals To maintain/increase market share To keep up with rivals To maintain competitive advantage To fill gap in the market
This is the strategic stage The firm assesses It current product portfolio Opportunities and threats The firm then determines the type of product which would best fit in with the corporate strategy
New product development is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the Growth or survival of the organisation.
Idea Generation Idea Screening Concept development and testing Market strategy development Business Analysis Test marketing Commercialization
Idea generation is continuous, systematic search for new product opportunities. It involves delineating sources of new ideas and methods for generating them. Ideas for new products can be obtained from basic research using a SWOT analysis (OPPORTUNITY ANALYSIS), Market and consumer trends, companys R&D department, competitors, focus groups, employees, salespeople, corporate spies,
The object is to eliminate unsound concepts prior to devoting resources to them. The screeners must ask 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 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?
Concept testing present the consumer with a proposed product and measure attitudes and intention at this early stage of development. Concept testing of prototypes can help avoid costly mistakes.
Includes development of three part strategy plan1. Describe the market’s size, structure, and behaviour, the planned product positioning, and the sales, market share, and profit goals for first few years.2. Outlines the planned price, distribution strategy, and marketing budget for the first year.3. Describes the long-run sales and profit goals and marketing-mix strategy over time.
Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market Estimate profitability and breakeven point
Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan
Commercialization involves implementing a total marketing plan and full production Launch the product Produce and place advertisements and other promotions Fill the distribution pipeline with product Critical path analysis is most useful at this stage