For basic marketing management courses - Booze Allen Hamilton new product classification scheme, New product development and Classification, Branding, Brand Equity, Packaging, Labeling, Product Life Cycle
2. Digital Payments in India
Rs. 34,00,000 Crores by 2020.
11% of GDP
By 2023 Non cash transactions > cash
transactions
Paytm (One97 Communications Ltd), Mobikwik
(One Mobikwik Systems Pvt Ltd), Oxigen
Services (India) Pvt. Ltd, Citrus Payment
Solutions Pvt. Ltd, Freecharge and others
Micro Transactions
Which Industry would benefit by it?
2
4. World’s most innovative companies
Who are the competitors?
What is its core business (66%)?
much more than just an Internet search and
advertising company
Mission is “to organize the world’s information and
make it universally accessible and useful.”
Freewheeling new-product development process
lightning-quick development of iGoogle
Google Labs
Gmail, Blog, Checkout, Picasa, Android, Chrome,
Google Maps & Earth,
4
5. Google engineers are encouraged to spend 20
percent of their time developing their own new-product
ideas.
Google Doodles
Gmail – automatic separation of mails into promotions
/social feeds
5
6. In dynamic markets companies must constantly introduce
new products and services to keep up with changing
consumer wants and needs.
Consumer "Needs and Wants" Change, Diet Coke
Product Reaches The End Of Its Product Life Cycle – Xbox
360 (Shorter PLC)
Environmental Changes – ICICI Bank delivers e statements
for saving accounts.
Competitors
Breakthrough Innovations – increasing technological
capabilities
Markets grow larger
Failure of previous products
6
10. New product line
(New-to-the-firm products, New category entry):
Includes new brands and brand extensions - Products
that take a firm into a category new to it.
Ex.: P&G brand shampoo or coffee, Hallmark gift items, Canon laser
printer, McDonald’s McCafe drinks (lattes, cappucinos, frappes,
smoothies, etc.), ITC Sunfeast biscuits
10
11. New-to-the-world product
(Breakthrough product, Pioneering product, Revolutionary
product, “Really new” product, Radical innovation,
Discontinuous innovation, Disruptive innovation, New-new
product) - (10% of new products): Very new products &
technology that create a whole new market and change buyer
behavior. Ex.: Polaroid camera, Sony Walkman, Ipod
1. a. Revolutionize existing product categories (e.g., electronic
typewriters, electric cars, hybrid cars)
2. b. Create entirely new categories (e.g., Federal Express, dental
fillings)
11
12. Improvements to existing Products
- Improvements/revisions/enhancements/upgrades to existing
products (26%): Current products made better. Ex.: P&G’s
continuing improvements to Tide detergent
Ex: 3rd-generation Amazon Kindle: lighter, thinner, faster page turns, sharper
display resolution, longer battery life, twice the storage E.g., iPod Touch
Reasons: Changes in consumer tastes, technology, and
competition
Quality modifications – Changes in material or production processes related to a product’s
dependability and durability
- Raise quality: To gain a competitive advantage
- Reduce quality: To offer a lower price
12
13. Addition to existing product line: Includes product line extensions
and flankers (26%): Products that flesh out the product line in
current markets. Ex.: Tide Liquid, Apple’s iMac, HP LaserJet 7P.
1. A. (Product) line extension – Existing product line, existing brand
name: Derivatives of a company’s core (anchor, flagship, parent)
product – Additional colors, sizes, flavors, styles shapes, scents,
quality levels, features, package sizes, forms, etc.
Use if closely related items and for other reasons for using a
brand franchise extension strategy. E.g., iPhone, iPhone 3G,
iPhone 4 (video camera, faster processor); iPhone 5S (video calling,
better reception, longer battery life, new hardware design)
E.g., Pepsi & Coke
13
14. 2. Functional modifications – Changes affecting a
product’s versatility, effectiveness, convenience
or safety; usually requiring product redesign.
E.g., greener, more energy efficient, faster,
lighter, smaller
E.g., Amazon E-Kindle Reader 2.0, video
game consoles
3. Aesthetic/Form modifications – Changes in the
sensory appeal of a product such as altering taste,
texture, sound, smell, or appearance.
E.g., New Coke
14
15. Repositioning: (7%): Products that are
retargeted for a new use/application. Also
includes retargeting to new users/ new
target markets.
Can be physical or psychological
repositioning, often entailing a new brand image.
Ex.: Aspirin repositioned as a safeguard against
heart attacks; Coke retargeted as a Family product
15
16. Cost Reduction (11%): New products
that provide the customer similar
performance but at a lower cost (better value).
May be more of a “new product” in terms of
design or production at the same or lower
price.
E.g., MacDonald's
16
17. New Product Options
Acquisition
Buy other companies, patents from other companies, license or
franchise etc.
Reckitt Benckiser acquired Paras Pharma (Moov, Krack, D’Cold,
Itchgaurd)
Tata Motors – Jaguar & Land Rover
Development (Organic Growth)
New variants of automobiles
New products in own laboratory/R&D
New Products
Colgate – Oral care (toothpaste, mouthwash, toothbrush),
Personal Care (bodywash, liquid handwash, hair care, skincare,
shave preps), Home Care(Dishwash), Professional Oral care
(Sensitive, tooth whitening, specialty cleaning, fluoride therapy)
17
18. Challenges in New Product
Development – some examples
Kodak – long time leader in film market
vanished coz of digital photography.
Selco Solar Pvt. Ltd. – provides sustainable
energy solutions and services to rural
households & businesses. Photovoltaic solar
modules, solar lighting systems, solar
inverters, cookstoves
Incremental Innovation, disruptive innovation,
18
19. New Product Failure
Indian Context – (1994-95), 53% (Success rate new products)
Europe Context – 10%
US Context – 5%
Ignored or misinterpreted marketing research, overestimate of
market size, high development costs, poor design or ineffectual
performance, incorrect positioning, advertising, price, insufficient
distribution support, intense competition, inadequate ROI or payback.
Shortage of important ideas in certain areas (Steel or detergent)
Fragmented markets (lower sales & profits)
Social, economic & governmental constraints (safety &
environmental concerns)
Cost of development
Capital shortages
Shorter required development time
Poor launch timing
Shorter PLCs
Organizational Support
19
20. Organizational Arrangements
Customer driven engineering
Internal Changes
Budgeting for New-Product Development
As many projects, % of sales what competition spends,
backward calculation
Organizing New Product Development
Product Managers, growth leaders, high-level
management committee, new-product development dept
Cross functional teams – venture teams, intraprenuers
(skunkworks)
Stage-Gate System – process in stage & gate is a
checkpoint, Funnel, spiral development process.
21. New-Product Development Strategy
Acquisition refers to the buying of a whole
company, a patent, or a license to produce
someone else’s product
New product development refers to original
products, product improvements, product
modifications, and new brands developed
from the firm’s own research and
development
Two ways to obtain new products
24. Discussion Question
In groups of six come up with one idea for a
new product.
kitchen Appliances, office supplies, laptop
accessories, food products, bathroom
accessories, children’s toys, baby
products, gaming tablet for children,
energy efficient vehicle etc.
25. New-Product Development Process
Idea generation is the systematic search for new-product ideas
Sources of new-product ideas
Internal
External
Idea Generation
26. New-Product Development Process
Internal sources refer to the
company’s own formal research
and development, management
and staff, and intrapreneurial
programs
External sources refer to sources
outside the company such as
customers, competitors,
distributors, suppliers, and
outside design firms
Idea Generation
28. Idea Generation
Distributors (consumer problems & new product
possibilities) & Suppliers (new concepts, techniques &
materials)
Competitors (ads, buy)
Trade magazine shows & seminars
Government agencies, advertising agencies, marketing
research firms, university, commercial laboratories, &
inventors.
New Product consultants & design firms
Online collaborative communities
Customers, Tata-Indica
Turn customers into co creators
External Sources
29. New-Product Development Process
Inviting broad communities of people—
customers, employees, independent
scientists and researchers, and even the
public at large—into the new-product
innovation process.
Crowdsourcing
30. Idea Generation
7 ways to draw new ideas from your customers
Observe how customers are using your product
Ask customers about their problems with your product
Ask customers about their dream product
Use customer advisory board to comment on your
company’s ideas
Use web sites for new ideas
Form brand community of enthusiasts who discuss your
product
Encourage or challenge your customers to change or
improve your product
31. Idea Generation
Lateral Marketing
Petrol Station stores = Petrol + food
Cyber Cafes = cafeteria + internet
Sony Walkman = audio + portable
Shopping Malls = merchandise + food + cinema + fun
places
32. New-Product Development Process
Identify good ideas and drop poor ideas
Standard format – describe the product, customer value
proposition, the target market & competition, rough
estimations of market size, price, development time & costs,
manufacturing costs & rate of return.
R-W-W Screening Framework:
Is it real? (real need)
Can we win?
Is it worthdoing?
A Drop-error
Go-error
Idea Screening
33. New-Product Development Process
Product idea is an idea for a possible product that the company
can see itself offering to the market
Product concept is a detailed version of the idea stated in
meaningful consumer terms
Product image is the way consumers perceive an actual or
potential product
Concept development
Concept 1 (family car)
Concept 2 (sporty compact)
Concept 3 (green car)
Concept 4 (MUV)
Concept Development and Testing
34. New-Product Development Process
Concept testing refers to testing new-product concepts with
groups of target consumers
A word or picture description or physical presentation
Concept Development and Testing
35. New-Product Development Process
Marketing strategy development refers to the initial
marketing strategy for introducing the product to the market
Marketing strategy statement includes:
Description of the target market
Value proposition – planned price, distribution & marketing
budget
Sales and profit goals – planned long run sales, profit &
marketing strategy.
Marketing Strategy Development
36. New-Product Development Process
Business Attractiveness of proposal
Business analysis involves a review of the sales,
costs, and profit projections to find out whether
they satisfy the company’s objectives
Sales history of similar products & conduct market
surveys
Expected costs & profits – marketing, R&D,
operations, accounting & finance costs
Financial attractiveness
Marketing Strategy Development
37. New-Product Development Process
Involves the creation and testing of
one or more physical versions by the
R&D or engineering departments
Requires an increase in investment
Shows whether the product idea
can be turned into a workable
product.
Product prototype, safety &
effectiveness
Each morning in Reading, England, up to 80
men shave at the Gillette® testing center
for a total of 20,000 shaves a year. The men
shave in front of a two-way mirror, and are
observed, filmed and interviewed. The
condition of their skin is a measurement for
key learnings used as the basis of
development for new razors and skin
products.
Product development
38. New-Product Development Process
Test marketing is the stage at which
the product and marketing
program are introduced into more
realistic marketing settings
Provides the marketer with
experience in testing the product
and entire marketing program
before full introduction
Company tests – STP, 4Ps & budgets
Test marketing costs are high but
preferable than cost of making a
major mistake
Test Marketing
40. New-Product Development
Process
Advantages of simulated test markets
Less expensive than other test methods
Faster
Restricts access by competitors
Disadvantages
Not considered as reliable and accurate due to the
controlled setting
Marketing Strategy Development
41. New-Product Development Process
Marketing Strategy Development
When firms test
market
• New product
with large
investment
• Uncertainty
about product
or marketing
program
When firms may
not test market
• Simple line
extension
• Copy of
competitor
product
• Low costs
• Management
confidence
45. Managing New-Product Development
Sequential new-product development company
departments work closely together individually to
complete each stage of the process before passing
it along to the next department or stage
Increased control in risky or complex projects but
may be slow
New-Product Development Strategies
46. Managing New-Product Development
Team-based new-product development Company
departments work closely together in cross-
functional teams, overlapping in the product-
development process to save time and increase
effectiveness
New-Product Development Strategies
47. Managing New-Product Development
Systematic new-product development
innovative development approach that collects, reviews,
evaluates, and manages new-product ideas
Creates an innovation-oriented culture
Yields a large number of new-product ideas
New-Product Development Strategies
49. Branding
“A name, term, sign, symbol, or design, or a
combination of them, intended to identify the
goods or services of one seller or group of
sellers and to differentiate them from those of
competitors.”
Introduction
50. Role of Brands Consumer
Benefits
Brands:
• Identify source/maker
• Simplifies decision making
• Reduces risk
50
51. Role of Brands
Brands:
• Simplify product handling
• Protect unique features
• Create loyalty
• Establish barriers to entry
Marketer Benefits
51
52. Scope of Branding
Creating difference between
products
Brand
•Marketers need to teach
consumers who the
product is – by giving it a
name & other brand
elements to identify it- as
well as what the product
does.
52
53. Brand Promise
What the brand must
be and do for
consumers.
A brand promise is the marketers
vision of what the brand must be
and do for consumers. Customers
will decide, based on what they
think and feel about the brand, if
they will accept any marketing
action or program.
53
55. Product vs. Brand
A product is something that is
made in a factory
A brand is something that is bought
by a customer.
A product can be copied or
replaced by a competitor.
A brand is unique.
A product can be quickly
outdated.
A successful brand is
timeless.
55
Service – P – Hotel, Brand -
Convenience Product – P – Salt, Brand –
Shopping Product – P – Furniture, Brand –
Specialty Product – P – Professional Digital Camera, Brand -
Unsought Product – P – Life Insurance, Brand –
Private Brand –
National Brand –
Industrial Brand -
56. Brands Vs Products
A brand is more than a product, because it can have
dimensions that differentiate it in some way from other
products designed to satisfy the same need.
Some brand create competitive advantages with
product performance. Gillette
Other brands create competitive advantage through
non product related items. Coca-Cola.
Brands carry different types of associations.
Brands are most valuable assets (intangible)
56
57. Brands – meaning
Derived from old Norse word brandr which means “to burn”
(Owners of livestock used to mark their animals to identify
them)
AMA definition
Variety of brand name strategy. Samsung, P&G, Retailers
Brand names on people’s name RPG, based on places
(British Airways), Animals or birds names (Dove soap,
Kingfisher), Others (Apple, Shell)
Use of word with inherent product meaning (Bookmyshow),
important attributes (Duracell)
Prefixes & Suffixes that sound scientific, natural, or
prestigious (intel, Lexus)
Logos & symbols can be based upon people, places, things
& abstract images
57
61. The added value endowed on
products and services because of
the brand.
Reflected in the way consumers
think, feel, & act wrt to brand as well
as in the prices, market share, &
profitability.
Brand Equity
62. Customer-based Brand Equity
Differences in
consumer response
Consumers’ brand
knowledge
(thoughts, feelings, images,
experiences, and beliefs).
Perceptions,
preferences, and
behaviors
Customer-based brand equity is the differential effect brand knowledge
has on consumer response to the marketing of the brand. Can be positive
and negative.
Three key ingredients of customer-based brand equity are:
62
63. Definitions of Brand Equity
“Brand equity is the set of brand assets and liabilities linked to the
brand, its name, and symbol, that adds or subtracts value to a product
or service for a firm/ or its customers” (David Aaker).
“Brand equity is the set of associations that permits the brand to earn
greater volume than it would without the brand name” (Marketing
Science Institute).
“Brand equity is everything the customer walks into the store with”
(Peter Farquhar).
“A set of associations which are most strongly linked to a brand name”
(Andrea Dunham).
76. Brand Names & URLs
Useful for Brand Awareness & Brand Associations –
Compaq, Yahoo, Tide, Dove
Descriptive – Singapore Airlines, Hit, Gati, Ivory
Suggestive – suggests a benefit or function –
Colorstay lipsticks, Head & Shoulders, Mop & Glo,
Aquaguard, Eveready, Sugar Free
Classical – based on Greek, Latin or Sanskrit words
Arbitrary – no relationship with the company/Product
– Apple Computers, Camel
78. URLs
Keep it as simple as possible
Avoid Clichés
Avoid the .com
Brand v/s description – helps only short term
Unique personality
Unexpected combination (motley fool)
Reinvent a real word
Make new words
79. Logos & Symbols
1. Corporate names & Trademarks – Coca-
Cola, Nestle, Tata, Maruti, Johnson &
Johnson
2. Abstract or non-word mark logos are also
known as symbols- Mercedes star, Rolex
crown, Nike swoosh, Olympic rings
3. Many logos fall between these 2 extremes –
Ralph Lauren’s polo player, Playboy’s
Bunny, McDonald’s Golden Arch, Apple
Logo
80. Benefits
Visual nature of logos & symbols – easy
recognition & recall
Versatile- can be updated transferred across
cultures
Can be appropriate for a range of product
categories-Surf, Dettol, Lux
81. Characters
A symbol that takes on human or real life
characteristics
McDonald’s Ronald
Disney Characters –
Asian Paints – Gattu
Pillsbury Doughboy
Kellogg's Bear
Frosted Flakes -Tony the Tiger
Duracell Bunnies
Hush Puppies
82. Benefits
Enhance brand personality & build
relationship with customers – Disney for kids
Valuable Licensing properties – Barbie dolls,
Spiderman, Superman etc., All Disney
Characters
Can be updated to suit the changing times
83. Slogans
Short phrases that contain descriptive or
persuasive information
Adds verbal reinforcement
Design of slogans
TO build awareness and image
Product sense and beyond (zindagi ke saath bhi .. Ke
baad bhi)
Updation of slogans
Find out contribution of existing slogan
Find out what more you wish to enhance
Retain good qualities of earlier slogan and build up on
that
84. Slogans
Just Do it
When it absolutely positively has to be there
overnite
No more tears
Diamonds are forever
We try harder
Pal banaye magical
85. Benefits
Often rich and colorful – attention getting and
help in creating brand awareness
Help Brands in breaking through the “clutter”
in the market
Communicate a key product benefit –
reliability, speed – Sprint telecom
86. Jingles
Musical – easy recall - Airtel
Reinforce brand positioning and enhance
POD’s or POP’s
Useful when designing Ad campaigns
“Desert rose” – jaguar
The axe song
Helps in repetitive reminding
87. Packaging
Identify the brand – strong brand association
with packaging style of company
Convey descriptive & persuasive information
Facilitate product transportation & protection
& storage
Assist at-home storage (bottles and refill)
88. Packaging
Aid Product consumption (screw-on cap in
soft drink)
“Color vocabulary” (product and category)
Innovations can boost sales – Soft drink cans,
2 litre bottles, chocolates in smaller packs,
shampoos and hair oils in sachets – enhance
product usage & consumption
89. Packaging
Heineken beer – green bottle
Cadbury- purple
Kit-Kat – red
Kodak films – yellow
Pepsi - blue
90. Packaging Essentials
Know your consumer
Take the big-picture approach
Aesthetics + Function
Know your distribution channels
Educate Management
91. All activities of designing
and producing the
container for a product.
Packaging
Packaging has been defined as “ an activity which is
concerned with protection, economy, convenience and
promotional consideration.”
According to William J Stanton,“Packaging may be
defined as the general group of activities in product
planning which involves designing and producing the
container or wrapper of product.”
92. Cool Water cologne comes in bottle
(Primary package) in a cardboard box
(secondary package) in a corrugated
box (shipping package) containing six
dozen of bottles in cardboxes
Packaging
Colour, functional &
structural design imp
aspects
99. Labeling
“Label is a part of product, which carries verbal
information about the product or seller. It may be a
small slip or printed statement .”
It may be a part a package or it may be attached to the
product.
It convey verbal information about the product and
seller.
According to William J Stanton,“ The label is the part
of the product which carries verbal information about
the product or the seller (manufacturer or middlemen).
A label may be part of the package or it may be a tag
attached directly to the product.”
99
104. Product development
Develops a new product idea
Sales are zero and investment costs mount
Introduction
Slow sales growth and profits are nonexistent
Heavy expenses of product introduction
Growth
Rapid market acceptance and increasing profits.
Maturity
Slowdown in sales growth and profits level off or
decline
Decline
Sales fall off and profits drop
Product Life-Cycle Strategies
104
105. Product Life Cycle
Do all products follow PLC?
Coca-cola, Gillette, American Express,
Lifebuoy, Lux, Dalda, Lipton, TATA etc.
Product class – longest life cycle, stays longer
in mature stage
Product form – standard PLC shape, manual
typewriters, dial telephones
Brand – can quickly change because of
changing competitive attacks & responses
(Surf, Tide, Nirma, Wheel and Sunlight, 501
bars)
105
106. Style, Fashion, and Fad Life Cycles
A basic &
distinctive mode of
expression
Home, clothing
(formal, casual)
Lasts for
generations
Renewed interest
Currently accepted or
popular style in a
given field
Formal business
attire in 1990s to
business casual
today
Grow slowly, remain
popular for a while
and then decline
slowly
Temporary periods of
unusually high sales
driven by consumer
enthusiasm &
immediate product or
brand popularity
Peak early & declines
very fast
Acceptance cycle is
very short
107. Product Life-Cycle Strategies
Slow sales growth
Little or no profit
High distribution and promotion expense
Firms focus on those buyers who are the most ready to buy,
higher income groups
Prices are higher
To be first can be rewarding but risky & expensive
Introduction Stage
108. Introduction Stage
Pioneer Brands
Adv – producer advantages,
economies of scale, patents,
technology leadership
What about pioneers like
Reynolds & Netscape?
First movers & Second movers
(Wikipedia & Google)
Imitators surpasses
innovators (Manufacturers of
PC, Dell & Compaq are they
leaders today?)
Golder & Tellis (Pioneer
advantage: marketing logic or
marketing legend? JMM May
1992) – inventor, product
pioneer & Market pioneer.
109. Product Life-Cycle Strategies
Sales increase
New competitors enter the market
Price stability or decline to increase volume
Consumer education
Profits increase
Promotion and manufacturing costs gain
economies of scale
Promotion expense-sales ration declines
The Men’s cosmetic market in South Asia
(3800 Crores) growing by more than 21%
Fair & Handsome, Fair & Lovely Max
Fairness, Oxylife men creme bleach,
Garnier Men range, Amway India
Growth Stage
110. Marketing Strategies: Growth Stage
Improve product quality and add new product
features and improved styling
Add new models and flanker products
Enter new market segments
Increase distribution coverage and enter new
distribution channels
Shift from product-awareness advertising to
product-preference advertising
Lower prices to attract next layer of price-
sensitive buyers
111. Product Life-Cycle Strategies
Slowdown in sales, Many suppliers, Substitute products, Overcapacity leads to
competition, Increased promotion and R&D to support sales and profits
Divided into three phases –
Growth – sales growth rate starts to decline, no new distribution channels to fill in,
new competitors emerge
Stable – sales flatten because of market saturation, most potential have tried the
product
Decaying maturity – sales slowdown creates overcapacity in industry which leads
to intensified competition, frequent markdowns, increase advertising, trade &
consumer promotion, increase R&D budgets, Weaker competitors withdraw.
Leaders are giant firms, quality leaders, service leaders & cost leaders
Market specialists, product specialists & customizing firms
Some firms abandon weaker products, concentrates on more profitable products
Autos, Televisions, watches, cameras etc
Bajaj scooters & motorcycles
Maturity Stage
112. Marketing Strategies: Maturity Stage
Market Modification
Expand number of brand users by:
1. Converting nonusers
2. Entering new market segments
3. Winning competitors’ customers
Convince current users to increase usage by:
1. Using the product on more occasions
2. Using more of the product on each occasion
3. Using the product in new ways
Product Modification
Quality improvements – increase functional performance
Feature improvements – size, weight, materials, supplements,
& accessories
Style improvements – increase aesthetic appeal
Marketing Program modification
Modifying non product elements (price, distribution &
communication
113. Product Life-Cycle Strategies
Reasons
Technological advances, shift in consumer tastes, increased
competition
Overcapacity, increased price cutting, & profit erosion
Eg Sewing machine, newspapers – slow decline
Eg Floppy discs, VCR – rapid decline
Maintain the product or reduce the no of products
Harvest the product (withdrawing from smaller segment,
weaker trade channels, cutting marketing budgets, & reducing
prices further)
Drop the product
Decline Stage
114. Marketing Strategies: Decline Stage
Identify ageing products
Establish a system for identifying them (Product-review committee)
Exit barriers in the industry (P&G stayed in declining liquid-soap
business)
Increase firm’s investment (to dominate the market and strengthen its
competitive position)
Maintain the firm’s investment level until the uncertainties about the
industry are resolved.
Decrease the firm’s investment level selectively by dropping
unprofitable customer groups, while simultaneously strengthening the
firm’s investment in lucrative niches
Product Life-Cycle Marketing Strategies
115. Product Life-Cycle Marketing Strategies
Marketing Strategies: Decline Stage
Harvesting (“milking”) the firm’s investment to recover cash
quickly. Reducing product costs or business’s costs gradually &
maintaining sales
Cut in R&D costs, plant & equipment costs. Reduce product quality,
sales force size, marginal services & advertising expenses. Without
letting know the customers, competitors & employees.
Difficult but can increase cash flow substantially.
Divesting the business quickly by disposing of its assets as
advantageously as possible.
How much inventory & service to maintain for past customers.
115