View
225
Download
0
Category
Preview:
Citation preview
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 1/48
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 2/48
Chapter
8
Developing and managingproducts
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 3/48
Learning objectives
1 Define the terms product item, product lineand product mix
2 Explain the concept of product life cycles
3 Explain the importance of developing newproducts
4 Describe the six categories of new products
5 Explain the steps in the new-product
development process6 Explain the diffusion process through which
new products are adopted
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 4/48
1Define the terms product item,
product line and product mix
Learning objective
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 5/48
1 Product items, lines and
mixes
Product item
Product line
Product mix
A specific version of a productthat can be designated as a
distinct offering among anorganisation’s products (DOCOMO)
A group of closely relatedproduct items (Swift Desire)
All products that anorganisation sells.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 6/48
1 Benefits of product lines
• Product line pricing is a pricing strategy that uses oneproduct with various class distinctions. An example wouldbe a car model that has various model types that changewith performance and quality. This pricing process is
evaluated through consumer value perception, productioncosts of upgrades, and other cost & demand factors.
• Why form product lines?– advertising economies– package uniformity
– standardised components– efficient sales and distribution– equivalent quality
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 7/48
1 Product mix width
• The number of product lines anorganisation offers:
– diversifies risk– capitalises on established reputations.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 8/48
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 9/48
1 Adjustments
Productmodification
Productrepositioning
Product lineextension or
contraction
Adjustments toproduct items,lines and mixes
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 10/48
1 Product modifications
• Quality modification
• Functional modification
• Style modification
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 11/48
1 Planned obsolescence
• The practice of modifying products so thosethat have already been sold become obsoletebefore they actually need replacement.
• Obsolescence is the state of a being whichoccurs when an object, service or practice isno longer wanted even though it may still bein good working order. Obsolescence
frequently occurs because a replacement hasbecome available that is superior in one ormore aspects.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 12/48
1 Repositioning
• Why reposition established brands?
– changing demographics
– declining sales– changes in social environment.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 13/48
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 14/48
1 Product line contraction
• Symptoms of product line over-extension
– some products have low sales or cannibalisethe sales of other items
– resources are disproportionately allocated toslow-moving products
– items have become obsolete because of new-product entries.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 15/48
2Explain the concept of
product life cycles
Learning objective
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 16/48
2 Product life cycle
• A concept that provides a way to tracethe stages of a product’s acceptance,
from its introduction (birth)to its decline (death).
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 17/48
2 Product life cycle (cont.)
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 18/48
2 Introductory stage
• Full-scale launch of new products– High-failure rates
– Little competition
– Frequent product modification
– Limited distribution
– High marketing and production costs
– Negative profits
– Promotion focuses on awareness andinformation
– Intensive personal selling to channels
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 19/48
2 Growth stage
• Second stage– Increasing rate of sales
– Entrance of competitors
– Market consolidation
– Initial healthy profits
– Promotion emphasises brand ads
– Goal is wider distribution
– Prices normally fall
– Development costs are recovered
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 20/48
2 Maturity stage
• A period during which sales increase ata decreasing rate– Declining sales growth
– Saturated markets– Extending product line
– Stylistic product changes
– Heavy promotions to dealers and consumers
– Marginal competitors drop out– Prices and profits fall
– Niche marketers emerge.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 21/48
2 Decline stage
• Where sales keep declining over arelatively long period of time
– Long-term drop in sales– Large inventories of unsold items
– Elimination of all nonessential marketingexpenses
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 22/48
2 Product category
• All brands that satisfy a particular typeof need.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 23/48
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 24/48
3Explain the importance of developing new
products
Learning objective
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 25/48
3 Why new products?
• New products are needed to sustaingrowth, profits and replace obsolete
items (3G to replace 2G soon)• Ultimately in a FMCG market nine out of
ten new listed products fail
• Product death occurs due to market
changes and the decline in quality,quantity and viability of consumerresearch.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 26/48
4Describe the six categories
of new products
Learning objective
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 27/48
4 New product
• A product new-to-the-world, themarket, the producer, the seller or some
combination of these.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 28/48
4 Categories of new products
• Six categories of new products:
1 new-to-the-world (Ex. Flat bed travel inlong haul flights)
2 New-product lines
3 product line additions
4 improvements/revisions
5 repositioned products6 lower-priced products.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 29/48
5Explain the step in the
new-product development process
Learning objective
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 30/48
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 31/48
5 New-product
development process• New-product strategy
• Idea generation
• Idea screening
• Business analysis
• Development
• Test marketing• Commercialisation
• New product.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 32/48
5 Idea generation
• Sources of new-product ideas:
– customers
– employees– distributors
– competitors
– research and development
– consultants
– creative thinking.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 33/48
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 34/48
5 Idea screening
• The first filter in the product-development process, which eliminates
ideas that are inconsistent with theorganisation’s new-product strategy, orare inappropriate for some otherreason.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 35/48
5 Concept test
• A test to evaluate a new-product idea,usually before any prototype has been
created.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 36/48
5 Business analysis
• Considerations in business analysisstage:
– preliminary demand– cost
– sales
– profitability.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 37/48
5 Development
• Creation of prototype
• Marketing strategy
• Technical production feasibility• Final government approvals, if required.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 38/48
5 Test marketing
• The limited introduction of a productand a marketing program to determine
the reactions of potential customers in amarket situation.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 39/48
5 Choosing a test market
• Similar to planned distribution
• Relative isolation and free of influences
• Advertising availability; multiple media• Diversified cross-section
• No atypical purchase habits
• Representative population/income
• Not overly used or easily ‘jammed’ • Year-round sales stability
• Available research/audit and retailers.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 40/48
5 Alternatives to test
marketing• Single-source research using
supermarket scanner data
• Simulated (laboratory) market testing.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 41/48
5 Commercialisation
• Steps in marketing a new product:
– production
– inventory build-up– distribution shipments
– sales training
– trade announcements
– customer advertising.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 42/48
6Explain the diffusion process through
which new products are adopted
Learning objective
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 43/48
6 Diffusion
• The process by which the adoption of aninnovation spreads.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 44/48
6 Categories of adopters
• Categories of adopters in the diffusionprocess:
– innovators– early adopters
– early majority
– late majority
– laggards.
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 45/48
6 Categories of adopters
(cont.)
Pe rc e nt a g e o f a
d o p t e rs
Time
Innovators2.5%
Earlyadopters13.5%
Latemajority
34%
Earlymajority
34%
Laggards16%
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 46/48
8/7/2019 MKTG PP Ch08-Developing+&+Managing+Products
http://slidepdf.com/reader/full/mktg-pp-ch08-developingmanagingproducts 47/48
6 Product characteristics and
the rate of adoption• Product characteristics predict rate of
adoption.
– Complexity– Compatibility
– Relative advantage
– Observability
– Triability.
Recommended