Product Planning and Development

1. Product Planning and Development Chapter 3

2. Definitions • Product • Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. • Service • A form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Goal 1: Understand products and their classifications

3. Product

4. Services

5. Levels of a product

6. Levels of Product • Core Product what the buyer really buying. For example a woman buying lipstick she buys more than lip color, or a person buying Nokia N97, is buying more than a wireless mobile phone, like email, internet, web browsing, pictures etc. • Actual Product the product planner must turn the core benefits into actual product. That is design, quality level, a brand name, and packaging. • Augmented product when consumer buy the Nokia N97, the company and its dealer also might give buyers a warranty on parts and workmanship, instruction on how to use the device

7. What are the three levels of this product?

8. Classification of product • Consumer product Product that are bought by the consumers for personal use. Consumer products include Convenience, Shopping, Specialty and Unsought Products. • Industrial Product Product bought by individuals and organizations for further processing or for use in conducting a business.

9. Consumer products

10. Industrial products

11. Types of Consumer Products Goal 1: Understand products and their classifications Convenience Shopping Specialty Unsought Frequent purchases bought with minimal buying effort and little comparison shopping Low price of product Producer made widespread distribution of product. Mass production and promotion by producer For Example. Soap, candy, newspaper and fast food.

12. Types of consumer products Convenience products

13. Types of Consumer Products Goal 1: Understand products and their classifications Convenience Shopping Specialty Unsought Consumer product that the consumer, in the process of selection and purchases, characteristically compares on such basis as suitability, quality, price and style. Less frequent purchases More shopping effort for comparisons. Higher than convenience good pricing Selective distribution in fewer outlets Advertising and personal selling For example. Furniture, clothing, cars, major appliances, hotel and airline services.

14. Types of consumer products Shopping products

15. Types of Consumer Products Goal 1: Understand products and their classifications Convenience Shopping Specialty Unsought Consumer product with unique characteristics or brand identification for which a significant group of buyers are willing to make a special purchasing effort. High price Exclusive distribution Carefully targeted promotions For example, specific brand types of cars, like Lamborghini, designer clothes, and services of a medical or legal specialist.

16. Types of consumer products Specialty products

17. Types of Consumer Products Goal 1: Understand products and their classifications Convenience Shopping Specialty Unsought Unsought Products are products you haven't actively been looking for. These are products whose purchase is unplanned by the consumer but occur as a result of marketer’s actions. Such purchase decisions are made when the customer is exposed to promotional activity, such as a salesperson’s persuasion or purchase incentives like special discounts offered to certain online shoppers. Consumer product that the consumer either does not know about or knows about but does not normally think of buying Little product awareness and knowledge (or if aware, sometimes negative interest) Aggressive advertising and personal selling by producers and resellers For example. Blood donation, life insurance. gravestone.

18. Industrial product • Three groups of industrial product and services. • Material and parts • Capital items • Supplies and services.

19. Industrial product Material and parts Material and parts include raw material and manufactured material and parts used for reprocessing in industries. For example material parts, fruit, vegetables, example of manufactured parts are, iron, cement, wires

20. Industrial product Capital parts Supplies and services Capital parts are industrial products that use in the production or operations, including installation and accessory equipment. For example Generators, drills, large computer systems. Supplies include operating supplies (lubricants, paper, pencil) and repair and maintenance items (paint) Business services include maintenance and repair services (window cleaning, computer repair)

21. Product and Service Decisions Key Decisions Goal 2: Learn decisions companies make regarding products Individual Product Product Line Product Mix • Product attributes (benefits) (Quality, features, style and design) • Branding( a brand is a name, term, sign, or design or combination of these) that identifies the maker or seller of a product or services and differentiate them from those of competitors. • Packaging-the activities of designing and producing the container or wrapper for a product. • Labeling-label range from simple tags attached to products to complex graphics, label indentifies the product or brand. Label might also describe several things about the product, like who made it, where it was made, when it was made, its contents, and how it is to be used and how to use it safely. • Product support services- include warranty and after sale services and spares.

22. Examples of Packaging

23. Examples of Packaging

24. Product and Service Decisions Key Decisions Goal 2: Learn decisions companies make regarding products Individual Product Product Line Product Mix • Product line • A group of products that are closely related because they may: • function in a similar manner • be sold to the same customer groups, • be marketed through the same types of outlets • fall within given price ranges • For example- HP computers, Scanners, Printers, fax machines.

25. Product Line

26. Product and Service Decisions Key Decisions Goal 2: Learn decisions companies make regarding products Individual Product Product Line Product Mix • Product mix • Consists of all the product lines and items that a particular seller offers for sale. • For example- Samsung product mix consists of GSM phones, LCD, Computers, Laptops, Washing Machines, Micro waves, digital cameras

27. Product mix

28. New Product Development& Product Life-Cycle

29. New Product Development Process Idea Generation Screening Concept Development and Testing Business Analysis Product Development Market testing Commercialization

30. New Product Development ProcessStep 1. Idea Generation Internal Sources: Research and Development can be done in market for more new and customer oriented ideas. Employees can also give good ideas according to the objectives and capability of organization For example, Samsung has built a special center to encourage and support new product innovation ideas internally by their employees.

31. New Product Development ProcessStep 1. Idea Generation External Sources: Customers. The Company can analyze customer questions and complaints to find new product that better solve consumer problems. Competitors. The company buy competitors product to analyze their sale, and to see how it works and decide whether they should bring out a new product of their own. Distributors. Distributer are close to the market and can pass information about consumer problems and new product possibilities. Suppliers. Suppliers can tell the company about new concepts, techniques and materials that can be used to develop new product.

32. New Product Development ProcessStep 2. Idea Screening Process to spot Good ideas &drop Poor ones; • The screeners must ask at least 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 on which 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?

33. New Product Development ProcessStep 3. Concept Development & Testing Develop the Marketing and Engineering Details • Who is the target market and who is the decision maker in the purchasing process? • What product features must the product incorporate or delivers? • What benefits will the product provide? • How will consumers react to the product? • How will the product be produced most cost effectively (with lowest price)? • What will it cost to produce the product? • Testing the concept by asking a sample of prospective customers that what they think of the idea.

34. New Product Development ProcessStep 4. Business Analysis Business Analysis • Estimate likely selling price based upon competition of same and substitutes products in the market by customer feedback. • Estimate sales volume based upon size of market • Estimate profitability and breakeven point of your product that you wants to offer in the market.

35. New Product Development ProcessStep 5. Product Development Product Development; Developing the product concept into physical product in order to ensure that the product idea can be turned into a workable product.

36. New Product Development ProcessStep 6. Market Testing Test the product (and its packaging) in the market on small scale in typical usage situations. Conduct focus group customer interviews or introduce at trade show or seminars to target customers. Make adjustments where necessary, as suggested by the target customers in the test marketing session. Produce an initial sample of the product and sell it in a test market area to determine customer acceptance and feedback for improvement.

37. New Product Development ProcessStep 7. Commercialization • Commercialization means launching the product in the market on large scale. • Produce and place advertisement and other promotions in the market. • Fill the distribution pipeline with products which you wants to launch. • Critical path analysis is most useful at this stage which means that you should analyze each possible best option for launching the product in the market.

38. Product Life Cycle Sales and Profits ($) Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Losses/ Investments ($)

39. Introduction Stage of the PLC Sales Low sales Costs High cost per customer Profits Negative Marketing Objectives Create product awareness and trial

40. Growth stage of PLC Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Maximize market share

41. Maturity Stage of PLC Sales Peak sales Costs Low cost per customer Profits High profits Marketing Objectives Maximize profit whiledefending market share

42. Decline Stage of PLC Sales Decreasing sales Costs Low cost per customer Profits Low profits Marketing Objectives Trying to servive whiledefending existing market share

43. End of Chapter