Product mix/Product Assortment4 Elements :1. Width2. Length3. Depth4. Consistency
Product Line A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same channels, or fall within given price ranges Eg Life insurance
NEW PRODUCT DEVELOPMENT A product must be entirely new or changed in a functionally significant or substantial respect. Need of New product development
New product development process – 71. Idea generation2. Idea screening3. Concept development and testing4. Marketing strategy5. Business analysis6. Product development and testing7. Commercialization
1. Idea Generation Interacting with others- Customers- Dist channel members- Competitors- Sales force- MR and AD agencies- Suppliers- Top Mgt and Scientists and consultants.
Idea Generating techniques/Creativity techc- Brainstorming – Alex osborn- Problem analysis- Synectics – Willam Gordon
2.Idea screening Ideas 3 groups- Promising ideas- Marginal ideas- Rejects2 types of errors- Drop error- Go error
3. Concept Development and testingIs an elaborated version of the idea expressed in meaningful will Consumer term. Who will use the product What benefit should this product use the product When the consumer should use the product.
4. Marketing Strategy3 parts Target markets size, structure and behavior Outlines the planned price, Dist and marketing budget for one year Long run sales and profit goals and marketing mix strategy
5. Business AnalysisNeeds to prepare sales, cost and profit projections to determine whether they satisfy company objectives.
6. Product Design and Development Product idea can be translated into a technically and commercially feasible productR & D Prototype products – test Functional test – Alpha test Consumer test – Beta test
7. Market TestingConsumer goods market testing and business goods market testing. Consumer goods market testing- Ranking- Monadic test 1 – 7- Direct comparison test
- Sales – Wave research- Printed shopping list/Stimulated test marketing/accelerated test marketing- Controlled test marketing/mini market testing.
Business – goods market testing/industrial goods Alpha testing Beta testing Trade shows Distributor and dealer display rooms
Mgt faces Several decisions : How many test cities? Which Cities Length of tests What information What action to take?
8. Commercialization When ( Timing)- First entry- Parallel entry- Late entry Where ( Geographic strategy) To Whom ( Target – Market prospects)
The consumer Adoption process/StagesEverett . M . Rogers1. Innovators2. Early Adopters3. Early majority4. Late majority5. Laggards
PLC PLC curves are portrayed as bell shaped. This curve is typically divided into four stages: Introduction, growth, maturity and decline. S shaped sales curve
Product life Cycle /PLC4 things :1. Limited life2. Sales pass through distinct stages3. Profit rise and fall4. Different strategies
INTRODUCTION STRATEGIES PRODUCT – OFFER A BASIC PRODUCT PRICE – CHARGE COST – PLUS DISTRIBUTION – BUILD SELECTIVE DISTRIBUTION ADVERTISING – BUILD PRODUCT AWARENESS AMONG EARLY ADOPTERS AND DEALERS SALES PROMOTION – USE HEAVY SALES PROMOTION TO ENTICE TRIAL
GROWTH STRATEGIES PRODUCT – OFFER PRODUCT EXTENSIONS,WARRANTY PRICE – PRICE TO PENETRATE DISTRIBUTION – BUILD INTENSIVE DISTRIBUTION ADVERTISING – BUILD AWARENESS AND INTEREST IN THE MASS MARKET. SALES PROMOTION –REDUCE TO TAKE ADVANTAGE OF HEAVY CONSUMER DEMAND
MATURITY STRATEGIES PRODUCT – DIVERSIFY BRANDS AND ITEMS MODELS PRICE – PRICE TO MATCH OR BEST COMPETITIORS DISTRIBUTION – BUILD MORE INTENSIVE DISTRIBUTION ADVERTISING –STRESS BRAND DIFFERENCES. SALES PROMOTION –INCREASE TO ENCOURAGE BRAND SWITCHING
DECLINE STRATEGIES PRODUCT – PHASE OUT WEAK PRICE – CUT PRICE DISTRIBUTION – GO SELECTIVE : PHASE OUT UNPROFITABLE OUTLETS ADVERTISING –REDUCE TO LEVEL NEEDED TO RETAIN HARD – CORE LOYALS SALES PROMOTION –REDUCE TO MINIMAL LEVEL
PRICING 2nd P of marketing is Pricing A price is an expression of value. Price = Value Price = Something The firm must decide where to position its product on quality and price.
SIX STEP PROCEDURE/Pricing policies1. SELECTING THE PRICING OBJECTIVE2. DETERMING DEMAND3. ESTIMATING COSTS4. ANALYZING COMPETITORS COSTS, PRICE AND OFFERS5. SELECTING A PRICING METHOD6. SELECTING THE FINAL PRICE
1. Selecting the pricing objectives J.W. Kelvini- Short term pricing objectives- Long term pricing objectives
2. Determining demand Price Elasticity of Demand Income Elasticity of Demand Price sensitive