An introduction to product planning and development

Product Planning and Product Planning and DevelopmentDevelopment

Product Planning and Product Planning and DevelopmentDevelopment

Maxwell RanasingheMaxwell RanasingheB.Sc. ( Business Administration) Hons. MAAT, B.Sc. ( Business Administration) Hons. MAAT,

Attorney at Law, CPM ( New Haven- USA) Attorney at Law, CPM ( New Haven- USA)

Product Planning and Development

• Introduction to a product• Tangibility continuum of a product• Product Classification• Branding • Packaging• Product life Cycle• Introduction to new product planning•

Definition of a product

• Product could be defined as• Anyhting that can be offered to a

market for attention, acquisition, use or consumption that might satisfy a want or a need- Phillip Kotler.

Product could be of any of the following

• A physical product – Table, Car, Pen• Person- Bathiya and Santhus, Sanga,

ranil, Mahinda, Anarkali, Anjalina Jollie, Mervin S

• Place- Anuradhapura, Rathnapura, London, Jerusalem

• Organisation- SLIM, CIM, UN, UNP, JVP, UNI LEVER, DIALOG

• Idea- Freedom, democracy, Anti Corruption, Social Justice, Anti Drugs, MADD, Family Planning

• Services – education, lawyers service, bank service

Product Scope- Three Aspects

• 1. Physical Aspect- is the physical aspect of the product. What it is ? E.g. It is a herbal tooth paste

• 2. Functional Aspect – is what is does? • E.g. It cleans tooth/ prevents tooth decay• Symbolic Aspect- is what it means to the

users emotion?• E.g. The satisfaction of a person “free

from tooth decay”

The Product Attributes

The Product

Tangible AtrributesDesign, Features,

performances, BrandingPackaging

Intangibel AttributesImage, Value, Perception

• Product Sub category- Further categorization of a product category eg. Toilet Soap category may be sub categorized as beauty soap and herbal soap

• Product Brand- There could be one or many brands in sub categories of the product line such as Lux and Dove

• Product Mix Consistency- how closely related the various product lines are in terms of channel distribution, promotion or in other ways

Product category

Product Lines

Product sub category

Product Brands

Product width

Tangibility Continuum of a products

• Tangibility continuum discuss about to a what degree a product is tangible or intangible.

• It is practically difficult to find a totally tangible product or a totally intangible product in the modern world of marketing

• In many products there are physical goods as well as service components.

Tangibility Continuum

Pure tangible

Tangible goods with service

Hybrid- Equal

Major service with goods

Pure intangible

Pencil

Car restaurant Air line

Lecture

Product ClassificationProducts

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

Side talk

Product Life Cycle Theory ( PLC)

• It is assumed that a product will have a life cycle from development to decline.

• It is measured in relation to time and sales.

• 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.

Stage of Life cycle

• 1. Development stage• 2. Introductory stage• 3. Growth stage• 4. Maturity stage• 5. Declining stage

PLC• Dev Intro Growth Maturity Decline

Sales

Profit

losses

Time

Sales

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

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

Importance of P L C to Marketers

• Important tool for forecasting and strategic planning

• It shows that product have a limited life span

• It graphically shows the trend in sales and profitability

• It shows the need to adopt different strategies in various stages

•

PRODUCTS THAT COME AND GO ( FAD)

Limitation of the PLC • Many products may not have a life

cycle as depicted by PLC• Stages of PLC are difficult to distinguish • Identifying where one stage ends and

the other begins is very difficult• Traditional shape may not occur. Eg.

Fad items• Ignores the application of marketing

mix activities• Strategic decisions can change the PLC

eg. repositioning

Side talk

Services• 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.

• Services have unique features that differentaite from physical goods

• Intangibility• Variability• Inseparability• Perishability• Ownership

• V I²PO

Planning for New Products

• Long term survival of many firms in the competitive world depends on launching new products successfully.

• Planning for new products is an essential and demanding strategic activity.

• There could be many types of new products

Types of new products

Innovative Products

Replacementproducts

ImitativeProducts

• Innovative Products– These products are new to the world and new to the

company.– They are truly new to the customers and they

provide completely different alternatives to existing products

– Eg. . Vaccine for AIDS

• Products based on Nano Technology• Heat seeking missile• Computers

• Replacement products– Although these products are new to

customers or even to the company, they are essentially improvements or redesigns of existing products

– Digital phones replaced the analogues– Disposable racers replaced the old blade

base racers– Shaving foam and gels have replaced the

shaving soaps

• Imitative Products– These products are new to the company and not

new to the market– Many products come in this form to the market– 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

– Eg. After celltel> mobitel> dialog> Hutch– After Signal > clogard> supirivicki> sudnatha– After Bata slipper > DSI> Ceypa> ranpa– After Mercedes Benze> Ford> GM> Toyota>

Nissan–

Reasons for introducing new products

• To suit the changes in customers needs

• To adopt new technological advances and avoid obsolence

• To match competition• Product Life Cycle Concept• To bring down the cost

Customer need analysis

• . 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 Expectation

• GAP

Level met by the product

Side talk

If the gap is understood well, one could find

opportunities to • Introduce new products• Make improvements in existing

products• Make improvements in production

process• Make improvements in supporting

services.

Stages of new product development

• 1. Idea Generation• 2. Idea Screening• 3. Concept Development & testing• 4. Marketing Strategy• 5. Business Analysis• 6. Product Development• 7. Test Marketing• 8. Commercialisation ( Launch)

Idea Generation• Finding promising new ideas is the

starting point in the new-product development process.

• Idea generation ranges from incremental improvements to existing products to new to the world products.

• ( produce a drug to reduce cholesterol with less side effects = improvement

• produce a drug that cures AIDS = new to the world product)

Sources of new ideas

• Internal• Customers• Competitors• Outside inventors• Channel members• Consultants

Side talk

Methods of generating new ideas

• Search• Searching new product idea publications,

research publications, the internet, exhibitions, conventions

• Marketing Research• 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.

• Technical research• Firm’s internal research laboratories and other

external laboratories could generate new idea for you.

Screening Evaluating and business analysis.

• Screening• There should be a very clear cut

screening policy that would reject the unpromising product ideas and further the promising ideas.

• Two basic questions need to be answered at the screening stage.

• Is the idea could be practically developed into a product with development, production,marketing and financial capabilities of the company?

• Is the venture commercially feasible? ( market attractiveness,profitability, social and environmental concerns)

• Evaluation• After the initial screening more

comprehensive evaluation is required. It is better to have a buyers reaction also into the evaluation process.

• 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.

Concept development & testing

• Idea has to be developed into a concept• A concept is a detailed version of the idea

stated in a meaningful consumer terms. • The developed concept will be tested

among a sample of consumers. • This will be presented to the target market

in words or pictures.• Few questions will be asked to check

whether the target market will buy the product.

Concept Cars year 2008

Marketing Strategy Development

Product• Brand name selection and registration• Government regulations as to pricing,

packaging and labeling etc• Determine packaging, sizes, shapes,

colours, other properties• Guarantee period

Pricing• Finalise pricing strategy- Premium/

skimming, penetrative, mark up etc

• Dealer/distributor margings• Bulk selling discounts• Credit periods

Distribution• Select channels of distribution• Transportation • Point of Sales Materials ( POSM)• Display racks, stand etc.

Promotion• Selection and briefing an

advertising agency• Finalise segmentation and target

markets• Finalise the positioning strategy• Have a theme• Communication budgets• Finalise advertising

plan/promotion plan

Business Analysis

• Business analysis estimates the commercial performance of the proposed product.

• Revenue forecast • Cost Estimation • Profit Projections-• Acceptable level of profit for a given

product development- • Assess the amount of risk involve

Product Development and testing

• Prototype• User Tests• Manufacturing development• Component developments and

collaborative product developments various specialised manufacturers

get involved.

Test Market the product

• During the test marketing, the marketers offer the product for sale in a limited area where they can measure the response.

• 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.

• Based on the results of test marketing, marketers determines how the marketing mix should be adjusted before a full scale launch.

Malli Ehenum Cup Eka Issuwa Ah!

Ah Mokada putha wenda Yanne?

Katada Adambara…

• 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.

• If test marketing welcomes competition and gives ideas for competitors and the product could be copied easily one can avoid the test marketing.

Launch product• First let the company wide employees

know about the product and its features and marketing objectives of the firm

• Determine method of launch• Selection of venue for launch• Selection of media for launch• Brief distributors about the product• Press conference• Distribute promotional material • Execution of advertising strategy• • …

STAGES IN ADOPTION PROCESS

• AWARENESS – the consumer become aware of the innovation but lack information about the product

• INTEREST – the consumer is induced to seek information about the innovation

• EVALUATION – the consumer consider whether to try the innovation

• TRIAL– the consumer tries the innovation to improve his or her estimate of its value

• ADOPTION – the consumer decide to make full and regular use of the innovation

Diffusion of innovation

• Innovators 2.5% -- willing to try new idea at a risk

• Early adopters 13.5%-- opinion leaders , adopt new ideas early but carefully

• Early majority 34% -- deliberate they adopt new ideas before the average person

• Late majority 34% they adopt only after a majority of people have tried it.

• Laggards 16% -- suspicious of changes and only adopt when all options are exhausted

Questions and Answers and Exam Technique

Vibagayak Nethiwa Pass karanne nedda ?

Vibage fail vunath marketing karanna puluwni !!!!!!

Wedeh lehesi nehe!

Meka godak denek anaganna wedak…… Ha.. Ha

…. Parissamin…..

Maxwell