Integral University

Lucknow
DEPARTMENT OF COMMERCE AND MANAGEMENT
Name: Sameera khan
Enrollment no: 2000102006
Subject: Product and Brand Management
Semester/ Year: 3rd / 2nd
Branch: MBA/Group B
Code: BM504
Assignment 1
Q1. Construct a New Product Component Model for Indian People.

Answer- Product managers only manage the brands produced and

introduced into the market. This goes to show that a company has to
first develop a product or follow any legal means to acquire a product
in order to sell it to the target market. For this reason, it may not be out
of place if we appraise the ways through which a company obtains a
product. A company can use any of the following ways to get a product,
among others.

• Merger with other company, such as the one between Nigerian

Breweries and Consolidated Breweries, which increases the product
portfolio of both companies.
• Acquisition of an existing company or brand, such as 7Up and Pepsi;
Coca-Cola and Limca as well as acquisition of Mainstreet Bank limited
from Asset Management Company of Nigeria (AMCON) by Skye Bank
Plc.

• Licensing rights, such as Nigerian Bottling company makers of Coke

under license from Coca-Cola Inc. of USA.

• Franchising arrangement, like that of McDonalds or Kentucky Fried

Chicken (KFC) throughout the world.

• Management contracting, as a system of marketing expert services

such as coaching and technical advisory jobs. For example, the job of
Zidane at Real Madrid or Mourinho of Manchester United.

• Leasing, a written or implied contract by which an owner (lessor) of

an asset grants another party (lessee) the right to use and possess it
exclusively for a specified period of time based on some conditions in
return for a periodic rental payment.

• Hire purchase option for some specific assets.

• New product development option by which the company internally

follows certain stages to come up with a new product.

Out of the aforementioned ways of obtaining a new product, the main

focus of this section is to discuss the process involved in developing a
new product by a company.

2.1. New product development process

New product development (NPD) is a complete process of creating and

bringing a new product to market. New product development is the
process of exploiting market opportunity by turning it into a product or
service available for sale. A good understanding of customer needs and
wants, the competitive environment and continuous practices, and
strategies to better satisfy the customer requirements and increase
their market share regulate development of new products. The notion
of new product needs to be explained here. By and large, the newness
of a product depends on what the customer or target market consider
as new. For this reason, a new product can be an invention (entirely
new which does not exist before), innovation (new to the company but
existing in the industry), or product modification (changing the package,
size, design and other features). There are eight steps involved in new
product development namely:

• Idea generation

• Idea screening

• Concept development and testing

• Business analysis

• Marketing strategy development

• Product development

• Test marketing

• Commercialization

• Idea generation: It is the act of getting as many ideas as possible.

Ideas for new products can be obtained from customers, sales
representatives, employees, distributors, company’s research and
development department, competitors, focus groups, or brainstorming.
Lots of ideas are generated about the new product and out of these
ideas some are implemented. Idea generation or brainstorming of new
product, service, or store concepts usually begins when market
opportunities are identified so as to support your idea screening phase.

• Idea screening: It is the process of screening the ideas generated in

order to do away with those ideas that are not consistent with the
company’s objectives and resources. This is with a view to eliminate
ideas that are not feasible, viable, and acceptable. Many organizations
use different criteria in screening the ideas, but in general, screeners
often look at the viability, feasibility, and acceptability of the ideas at
hand.

• Concept development and testing: The ideas that pass through the
screening stage are then developed into concept on paper stating
clearly the marketing and engineering details of the product. In
essence, the concept will indicate the target market for the product, its
benefits, features, and attributes as well as the planned proposed
selling price for the product. Similarly, concept should contain the
estimated cost of producing the product and its perceived competing
brands in the chosen market. When the concept is developed, it has to
be tested by asking a number of prospective customers to evaluate the
idea based on its feasibility and marketability.

• Business analysis: This stage of the new product development

process is geared toward evaluating the overall cost, sales revenue, and
profit potentials of the contemplated product idea. This is achieved
through such analysis as industry’s market potential, market size and
growth rate, sales forecast and demand estimation, as well as the
estimated profitability, and break-even point for the target product.
The main purpose of this analysis is identifying those ideas that are
apparently feasible and financially viable. Ideas that are not viable can
also be dropped at this stage.

• Marketing strategy development: The most viable ideas that scaled

through the previous stages can be used as good candidates for
marketing strategy development. In its basic form, this stage calls for
formulating the product, pricing, distributing, and promotion strategies
to be used in marketing the proposed products when it is introduced. It
is pertinent to note that these strategies should be flexible such that it
can be modified to conform to the dynamism of the environment.

• Product development: It is at this stage that the actual or physical

prototype of the successful idea will be produced. For example, if a
company is producing an auto car it will produce a car prototype-like
toy car containing all the features and designs specified in the concept
development stage. If it is a service, a complete service package will be
developed ready for test marketing.

• Test marketing: Here, the company will test the product (and its
packaging) in typical usage situations by conducting focus group
customer interviews, dealer research or test it at trade shows to
determine customer acceptance or otherwise. The company can use
the outcome of the test to make adjustments on the planned marketing
strategy where necessary. However, a company has to be extra careful
in test marketing its planned new product in order not to expose it to
competitors who can easily see and imitate it to come up with their
own version sometimes even quicker and better than the initiator.

• Commercialization: This is the final stage of the development process

in which the new product will be launched or born. Once it is
introduced, it is no longer under the company’s control but that of the
market. Here a company has to decide on when, where, and how to
introduce the product. The timing of the launch is critical as it can make
or mar the product’s success. For example, launching a new ice-cream
during cold season is a wrong timing. The place or venue of launching
should also be strategic and closer to the target market. Similarly, a
company has to decide on how it can launch the product. There are two
main options here namely waterfall and sprinkler approaches. In
waterfall approach, a company decides to commercialize it at once in
the whole market, which is, introducing it to the whole Nigerian market
at a go for instance. The other option is to launch it gradually from one
section to another up to the time that the whole market is covered,
thus using sprinkler technique. However, the choice of an option
depends on the nature of the market, company’s resources and level of
competition in the market.

• In addition, to make its commercialization successful, a company

should produce and place an effective promotion to create awareness
after ensuring that the products are adequately distributed throughout
the market. This is because it will be counterproductive for a company
to promote a product that cannot be found in the market by potential
buyers.

• Nevertheless, it is important to note that these steps may not be

followed religiously as some stages may be eliminated or done
concurrently in order to reduce the time that the new product
development process takes. There are two types of new product
development strategies namely proactive and reactive product
development strategies. Most leading companies in the industry see
new product development as a proactive process, where resources are
allocated to identify market changes and seize upon new product
opportunities before they occur. Conversely, a reactive strategy is
adopted by follower and strong challengers in which nothing is done
until problems occur or the pioneer company introduces an innovation.
And because product development process typically requires both
engineering and marketing expertise, cross-functional project teams
are usually formed to execute the task. The team is responsible for all
aspects of the project, from initial idea generation to final
commercialization, and they usually report to senior management or
project manager as the case may be. Thus, the path to develop
successful new products points out three key processes that can play
critical role in product development. They are talking to the customer,
nurturing a project culture, and keeping it focused.

2.2. New product adoption process

• The key to successful new product introduction is its acceptance by

the customers and this is determined by the adoption process.
Adoption process is a series of stages by which a consumer decides to
adopt a new product or service. In today’s competitive world, a
consumer is faced with a lot of choices from a number of competing
products. A consumer often passes through five stages in deciding to
adopt or accept an innovation from awareness to adoption. These
stages are briefly explained below.

• Awareness: This is the step where major marketers spend a huge sum
of money to create awareness about their innovation. This can be done
through intensive advertising campaigns, aggressive selling, use of
consumer and dealer sales promotion, and e-marketing
communication.
• Information search: Following the dissemination of adequate
information about the product, buyers in the market will be aware of
the product and will look for more information in order to know it
better. People search for information from company adverts, dealers,
sales agents, and other consumers.

• Evaluation: Here, the prospective buyer uses the information

obtained to compare different product features and benefits such as
price, performance, quality, availability, or durability. All this is an
attempt to make rational decision.

• Trial: It is usually done on products with low unit value and higher
degree of divisibility. For technical products and other bigger assets,
marketers use demonstration to enhance its trial ability. This is,
however, difficult in services as services are generally intangible in
nature. However, service marketing managers do find ways of offering
trial packs to users, but it is easier in product marketing through sales
promotional activities like giving out free samples, contests, premiums,
discounts, etc.

• Adoption: Based on the outcome of the trial process, this is where

the consumer finally decides to adopt the product. It is expected that
the customer will continue to buy the product repeatedly based on the
satisfaction he/she derives from using the product or service.
Otherwise, the process might end in rejection.

2.3. Product life cycle and its stages

• Products are like human beings; they spend their life in the market.
Some stay longer in the market, while others have a shorter life span.
However, unlike human beings whose life is in the hands of God, the
life of a product is controlled by the company and its market. It
depends on whether it is adopted or rejected by the target market.
Therefore, because companies know that the products, they sell all
have a limited lifespan, majority of them invest heavily on new product
development in order to make sure that their businesses continue to
grow. By and large, the product life cycle has four very clearly defined
stages, each with its own characteristics. These stages are introduction,
growth, maturity, and decline stage.

• Introduction Stage: Once a product is launched in the market, it

enters into the introduction stage. This is the first stage in an ideal
product life cycle. It is characterized by high promotion and intensive
distribution especially for fast moving consumer goods (FMCG). These
marketing activities often lead to increase in costs at the initial stage
particularly for a company with a pioneering status which has to spend
a lot to create awareness. It is at this stage that the product is formally
born and it enters the competitive field in the market. This goes to
show that once in a market, the product’s life is determined by the
market forces and the ability of the company to manage the product
successfully in the market. Thus, if the product is accepted in the
market, it will attract other competitors to the market if the market has
no or low entry barriers. Otherwise, it may even die at this stage. This
happened with Fanta blackcurrant soft drink brand of Nigerian Bottling
company makers of Coca-Cola which died immediately after
introduction.

• Growth stage: The growth stage is the next phase of the “S” shaped
product life cycle. The growth here means increased sales of the
product because it is widely accepted by the target market. As the sales
rise, the market will also grow and revenues will now upset the initial
cost of developing and launching the product resulting to profit
generation. To maintain the growth momentum, a company has to
emphasize brand preference in its promotion rather than brand
awareness.

• Maturity stage: When sales stabilize and market is saturated the

maturity stage sets in. This is probably the most competitive time for
most products and businesses. Companies here need to consider the
strategy of product modifications, market expansion, or marketing mix
modification, which might give them a competitive advantage. The aim
here is to get more customers for the product. Organizations usually
like to maintain their products in this stage in order to enjoy the cash
inflows from the market, but it is very difficult to manage.

• Decline stage: This stage is characterized by steady decrease in sales

and profit in the market. This may be because the product has lost its
appeal with the customers or presence of better products in the market
or the product becomes obsolete, and therefore needs further
improvements. Companies do not like this stage because of its adverse
consequences and will do everything possible to avoid it. However, for
some products this stage is inevitable, and as a result, measures should
be put in place to either resuscitate the product or phase it out of the
market. In general, the main objective of the product life cycle stages is
to enable product managers to know how they can enhance the
performance of the products within the context of the company’s
business strategies.

2.3.1. Product life cycle patterns

• Some products follow the idealized S-shaped life cycle as explained

above, while others follow some patterns depending on how they are
managed in the market by the company. This goes to show that
product management plays a major role in determining the length of a
products life cycle. A product can follow a pattern known as growth-
slump-maturity pattern. This kind of pattern usually encounters a rapid
growth initially but later in the life cycle sales decline with a
stabilization at a certain level. One of the examples of such product in
Nigeria is the GlobalCOM mobile communication services which
experienced a very high sales volume at introduction but slumped
down and stabilizes presently.

• The cycle-recycle pattern depicts a two-phased product life cycle. At

the initial phase, a product goes through the ideal stages probably up to
decline stage. But after using some strategies to reinvigorate and re-
launch the product in the market, it starts another life cycle and
depending on how it is managed, it may stay longer or shorter in the
market. A good example here is Maclean toothpaste in Nigeria, which
went out of the market before it was later re-introduced into the
Nigerian market as a new product thus starting a new life cycle entirely.

• Another common pattern is called scalloped pattern. This is where

sales enjoy a succession of growth periods based on the discovery of
new product characteristics, uses, or users. Omo and Maggi cube
brands in Nigeria show a scalloped life cycle because of the way each of
these brands is managed for a long period of time.