An introduction to product planning and development


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An introduction to product planning and development

  1. 1. Product Planning and Development Maxwell Ranasinghe B.Sc. ( Business Administration) Hons. MAAT, Attorney at Law, CPM ( New Haven- USA)
  2. 2. Product Planning and Development <ul><li>Introduction to a product </li></ul><ul><li>Tangibility continuum of a product </li></ul><ul><li>Product Classification </li></ul><ul><li>Branding </li></ul><ul><li>Packaging </li></ul><ul><li>Product life Cycle </li></ul><ul><li>Introduction to new product planning </li></ul>
  3. 3. Definition of a product <ul><li>Product could be defined as </li></ul><ul><li>Anyhting that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or a need - Phillip Kotler. </li></ul>
  4. 4. Product could be of any of the following <ul><li>A physical product – Table, Car, Pen </li></ul><ul><li>Person - Bathiya and Santhus, Sanga, ranil, Mahinda, Anarkali, Anjalina Jollie, Mervin S </li></ul><ul><li>Place- Anuradhapura, Rathnapura, London, Jerusalem </li></ul><ul><li>Organisation - SLIM, CIM, UN, UNP, JVP, UNI LEVER, DIALOG </li></ul><ul><li>Idea - Freedom, democracy, Anti Corruption, Social Justice, Anti Drugs, MADD, Family Planning </li></ul><ul><li>Services – education, lawyers service, bank service </li></ul>
  5. 5. Product Scope- Three Aspects <ul><li>1. Physical Aspect- is the physical aspect of the product. What it is ? E.g. It is a herbal tooth paste </li></ul><ul><li>2. Functional Aspect – is what is does? </li></ul><ul><li>E.g. It cleans tooth/ prevents tooth decay </li></ul><ul><li>Symbolic Aspect- is what it means to the users emotion? </li></ul><ul><li>E.g. The satisfaction of a person “free from tooth decay” </li></ul>
  6. 6. The Product Attributes The Product Tangible Atrributes Design, Features, performances, Branding Packaging Intangibel Attributes Image, Value, Perception
  7. 7. <ul><li>Product Sub category- Further categorization of a product category eg. Toilet Soap category may be sub categorized as beauty soap and herbal soap </li></ul><ul><li>Product Brand- There could be one or many brands in sub categories of the product line such as Lux and Dove </li></ul><ul><li>Product Mix Consistency- how closely related the various product lines are in terms of channel distribution, promotion or in other ways </li></ul>
  8. 8. Product category Product Lines Product sub category Product Brands Product width
  9. 9. Tangibility Continuum of a products <ul><li>Tangibility continuum discuss about to a what degree a product is tangible or intangible. </li></ul><ul><li>It is practically difficult to find a totally tangible product or a totally intangible product in the modern world of marketing </li></ul><ul><li>In many products there are physical goods as well as service components. </li></ul>
  10. 10. Tangibility Continuum Pure tangible Tangible goods with service Hybrid- Equal Major service with goods Pure intangible Pencil Car restaurant Air line Lecture
  11. 11. Product Classification Products Consumer Industrial Convenience shopping Speciality Unsought Staple Impulse Emergency Materials and parts Capital Items Supplies & services Raw Materials Manufactured Materials Installations accessories Supplies Business services
  12. 12. Side talk
  13. 13. Product Life Cycle Theory ( PLC) <ul><li>It is assumed that a product will have a life cycle from development to decline. </li></ul><ul><li>It is measured in relation to time and sales. </li></ul><ul><li>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. </li></ul>
  14. 14. Stage of Life cycle <ul><li>1. Development stage </li></ul><ul><li>2. Introductory stage </li></ul><ul><li>3. Growth stage </li></ul><ul><li>4. Maturity stage </li></ul><ul><li>5. Declining stage </li></ul>
  15. 15. PLC <ul><li>Dev Intro Growth Maturity Decline </li></ul>Sales Profit losses Time Sales
  16. 16. Introductory Growth Maturity Declining Relatively short Relatively short Longer period Longer or short Sales are usually slow and profits ar low Sales increase and profits will be high Sales growth become slow but volume big Drop in the sales Competitors will watch New competitors enter More competition and over capacity Competitors do not enter due to low margings Distribution has just begun More distributors take up the product Many distributors and undercutting Distributors reduce or give up
  17. 17. Introductory Growth Maturity decline Positioning and brand awareness Brand image is established Many brands fight each other Brand image is low Promotion budget very high Promo budget may be increased Promo budget may be standard or low Not much promotions done Only one or two manufacturers Few manufacturers Many manufactuers Abundoning manufacturing High Product failure rate 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
  18. 18. Importance of P L C to Marketers <ul><li>Important tool for forecasting and strategic planning </li></ul><ul><li>It shows that product have a limited life span </li></ul><ul><li>It graphically shows the trend in sales and profitability </li></ul><ul><li>It shows the need to adopt different strategies in various stages </li></ul>
  20. 20. Limitation of the PLC <ul><li>Many products may not have a life cycle as depicted by PLC </li></ul><ul><li>Stages of PLC are difficult to distinguish </li></ul><ul><li>Identifying where one stage ends and the other begins is very difficult </li></ul><ul><li>Traditional shape may not occur. Eg. Fad items </li></ul><ul><li>Ignores the application of marketing mix activities </li></ul><ul><li>Strategic decisions can change the PLC eg. repositioning </li></ul>
  21. 21. Side talk
  22. 22. Services <ul><li>Service is is any act or performance that one party can offer another that is essentially intangible . It does not result in ownership of anything- Kotler. </li></ul><ul><li>Services have unique features that differentaite from physical goods </li></ul><ul><li>Intangibility </li></ul><ul><li>Variability </li></ul><ul><li>Inseparability </li></ul><ul><li>Perishability </li></ul><ul><li>Ownership </li></ul><ul><li>V I²PO </li></ul>
  23. 23. Planning for New Products <ul><li>Long term survival of many firms in the competitive world depends on launching new products successfully. </li></ul><ul><li>Planning for new products is an essential and demanding strategic activity. </li></ul><ul><li>There could be many types of new products </li></ul>
  24. 24. Types of new products Innovative Products Replacement products Imitative Products
  25. 25. <ul><li>Innovative Products </li></ul><ul><ul><li>These products are new to the world and new to the company. </li></ul></ul><ul><ul><li>They are truly new to the customers and they provide completely different alternatives to existing products </li></ul></ul><ul><ul><li>Eg. </li></ul></ul><ul><ul><li>. Vaccine for AIDS </li></ul></ul><ul><ul><ul><li>Products based on Nano Technology </li></ul></ul></ul><ul><ul><ul><li>Heat seeking missile </li></ul></ul></ul><ul><ul><ul><li>Computers </li></ul></ul></ul>
  26. 26. <ul><li>Replacement products </li></ul><ul><ul><li>Although these products are new to customers or even to the company, they are essentially improvements or redesigns of existing products </li></ul></ul><ul><ul><li>Digital phones replaced the analogues </li></ul></ul><ul><ul><li>Disposable racers replaced the old blade base racers </li></ul></ul><ul><ul><li>Shaving foam and gels have replaced the shaving soaps </li></ul></ul>
  27. 27. <ul><li>Imitative Products </li></ul><ul><ul><li>These products are new to the company and not new to the market </li></ul></ul><ul><ul><li>Many products come in this form to the market </li></ul></ul><ul><ul><li>One or few companies may come out with an innovative or replacemnet products but many will copy the technology and come out with simillar products. They are called mee- too products </li></ul></ul><ul><ul><li>Eg. After celltel> mobitel> dialog> Hutch </li></ul></ul><ul><ul><li>After Signal > clogard> supirivicki> sudnatha </li></ul></ul><ul><ul><li>After Bata slipper > DSI> Ceypa> ranpa </li></ul></ul><ul><ul><li>After Mercedes Benze> Ford> GM> Toyota> Nissan </li></ul></ul>
  28. 28. Reasons for introducing new products <ul><li>To suit the changes in customers needs </li></ul><ul><li>To adopt new technological advances and avoid obsolence </li></ul><ul><li>To match competition </li></ul><ul><li>Product Life Cycle Concept </li></ul><ul><li>To bring down the cost </li></ul>
  29. 29. Customer need analysis <ul><li>. Information is required as to the expectation of the customer and to what extent the existing products meet that expectation. Then the gap between the two could be observed </li></ul><ul><li> Expectation </li></ul><ul><li> GAP </li></ul><ul><li>Level met by the product </li></ul>
  30. 30. Side talk
  31. 31. If the gap is understood well, one could find opportunities to <ul><li>Introduce new products </li></ul><ul><li>Make improvements in existing products </li></ul><ul><li>Make improvements in production process </li></ul><ul><li>Make improvements in supporting services. </li></ul>
  32. 32. Stages of new product development <ul><li>1. Idea Generation </li></ul><ul><li>2. Idea Screening </li></ul><ul><li>3. Concept Development & testing </li></ul><ul><li>4. Marketing Strategy </li></ul><ul><li>5. Business Analysis </li></ul><ul><li>6. Product Development </li></ul><ul><li>7. Test Marketing </li></ul><ul><li>8. Commercialisation ( Launch) </li></ul>
  33. 33. Idea Generation <ul><li>Finding promising new ideas is the starting point in the new-product development process. </li></ul><ul><li>Idea generation ranges from incremental improvements to existing products to new to the world products. </li></ul><ul><li>( produce a drug to reduce cholesterol with less side effects = improvement </li></ul><ul><li>produce a drug that cures AIDS = new to the world product) </li></ul>
  34. 34. Sources of new ideas <ul><li>Internal </li></ul><ul><li>Customers </li></ul><ul><li>Competitors </li></ul><ul><li>Outside inventors </li></ul><ul><li>Channel members </li></ul><ul><li>Consultants </li></ul>
  35. 35. Side talk
  36. 36. Methods of generating new ideas <ul><li>Search </li></ul><ul><li>Searching new product idea publications, research publications, the internet, exhibitions, conventions </li></ul><ul><li>Marketing Research </li></ul><ul><li>Meet product end 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. </li></ul><ul><li>Technical research </li></ul><ul><li>Firm’s internal research laboratories and other external laboratories could generate new idea for you. </li></ul>
  37. 37. Screening Evaluating and business analysis. <ul><li>Screening </li></ul><ul><li>There should be a very clear cut screening policy that would reject the unpromising product ideas and further the promising ideas. </li></ul><ul><li>Two basic questions need to be answered at the screening stage. </li></ul><ul><li>Is the idea could be practically developed into a product with development, production,marketing and financial capabilities of the company? </li></ul><ul><li>Is the venture commercially feasible? ( market attractiveness,profitability, social and environmental concerns) </li></ul>
  38. 38. <ul><li>Evaluation </li></ul><ul><li>After the initial screening more comprehensive evaluation is required. It is better to have a buyers reaction also into the evaluation process. </li></ul><ul><li>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. </li></ul>
  39. 39. Concept development & testing <ul><li>Idea has to be developed into a concept </li></ul><ul><li>A concept is a detailed version of the idea stated in a meaningful consumer terms. </li></ul><ul><li>The developed concept will be tested among a sample of consumers. </li></ul><ul><li>This will be presented to the target market in words or pictures. </li></ul><ul><li>Few questions will be asked to check whether the target market will buy the product. </li></ul>
  40. 40. Concept Cars year 2008
  41. 41. Marketing Strategy Development <ul><li>Product </li></ul><ul><li>Brand name selection and registration </li></ul><ul><li>Government regulations as to pricing, packaging and labeling etc </li></ul><ul><li>Determine packaging, sizes, shapes, colours, other properties </li></ul><ul><li>Guarantee period </li></ul>
  42. 42. Pricing <ul><li>Finalise pricing strategy- Premium/ skimming, penetrative, mark up etc </li></ul><ul><li>Dealer/distributor margings </li></ul><ul><li>Bulk selling discounts </li></ul><ul><li>Credit periods </li></ul>
  43. 43. Distribution <ul><li>Select channels of distribution </li></ul><ul><li>Transportation </li></ul><ul><li>Point of Sales Materials ( POSM) </li></ul><ul><li>Display racks, stand etc. </li></ul>
  44. 44. Promotion <ul><li>Selection and briefing an advertising agency </li></ul><ul><li>Finalise segmentation and target markets </li></ul><ul><li>Finalise the positioning strategy </li></ul><ul><li>Have a theme </li></ul><ul><li>Communication budgets </li></ul><ul><li>Finalise advertising plan/promotion plan </li></ul>
  45. 45. Business Analysis <ul><li>Business analysis estimates the commercial performance of the proposed product. </li></ul><ul><li>Revenue forecast </li></ul><ul><li>Cost Estimation </li></ul><ul><li>Profit Projections- </li></ul><ul><li>Acceptable level of profit for a given product development- </li></ul><ul><li>Assess the amount of risk involve </li></ul>
  46. 46. Product Development and testing <ul><li>Prototype </li></ul><ul><li>User Tests </li></ul><ul><li>Manufacturing development </li></ul><ul><li>Component developments and collaborative product developments </li></ul><ul><li>various specialised manufacturers get involved. </li></ul>
  47. 47. Test Market the product <ul><li>During the test marketing, the marketers offer the product for sale in a limited area where they can measure the response. </li></ul><ul><li>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. </li></ul><ul><li>Based on the results of test marketing, marketers determines how the marketing mix should be adjusted before a full scale launch. </li></ul>
  48. 48. Malli Ehenum Cup Eka Issuwa Ah!
  49. 49. Ah Mokada putha wenda Yanne?
  50. 50. Katada Adambara…
  51. 51. <ul><li>Depending on the nature of the product and the sample size, cost and time of test marketing may vary. E.g. test marketing a car could be more expensive than test marketing a new cell phone. </li></ul><ul><li>If test marketing welcomes competition and gives ideas for competitors and the product could be copied easily one can avoid the test marketing. </li></ul>
  52. 52. Launch product <ul><li>First let the company wide employees know about the product and its features and marketing objectives of the firm </li></ul><ul><li>Determine method of launch </li></ul><ul><li>Selection of venue for launch </li></ul><ul><li>Selection of media for launch </li></ul><ul><li>Brief distributors about the product </li></ul><ul><li>Press conference </li></ul><ul><li>Distribute promotional material </li></ul><ul><li>Execution of advertising strategy </li></ul><ul><li>… </li></ul>
  53. 53. STAGES IN ADOPTION PROCESS <ul><li>AWARENESS – the consumer become aware of the innovation but lack information about the product </li></ul><ul><li>INTEREST – the consumer is induced to seek information about the innovation </li></ul><ul><li>EVALUATION – the consumer consider whether to try the innovation </li></ul><ul><li>TRIAL – the consumer tries the innovation to improve his or her estimate of its value </li></ul><ul><li>ADOPTION – the consumer decide to make full and regular use of the innovation </li></ul>
  54. 54. Diffusion of innovation <ul><li>Innovators 2.5% -- willing to try new idea at a risk </li></ul><ul><li>Early adopters 13.5%-- opinion leaders , adopt new ideas early but carefully </li></ul><ul><li>Early majority 34% -- deliberate they adopt new ideas before the average person </li></ul><ul><li>Late majority 34% they adopt only after a majority of people have tried it. </li></ul><ul><li>Laggards 16% -- suspicious of changes and only adopt when all options are exhausted </li></ul>
  55. 55. Questions and Answers and Exam Technique <ul><li>Vibagayak Nethiwa Pass karanne nedda ? </li></ul><ul><li>Vibage fail vunath marketing karanna puluwni !!!!!! </li></ul>
  56. 56. Wedeh lehesi nehe! Meka godak denek anaganna wedak…… Ha.. Ha …. Parissamin….. Maxwell