PRODUCT

PLANNING AND
DEVELOPMENT
WHAT IS A PRODUCT?
 Products include physical products; includes services, places,
persons, and ideas.
 Products buyers are basically of 2 types

a) Consumers

b) Industries
 Whether a product is a consumer product or a business product

depends on how it is used

The Total Product
Product
quality Physical
Seller’s characteristics
services of goods

Seller’s
Price
reputation

Colour Brand

Product
warranty Packaging

Design
CONSUMER GOODS CLASSES
Consumer products can be classified by the buying
behaviour of the consumers:
Convenience goods are bought with little time and
effort, such as milk, bread, a chocolate bar.
Shopping goods are those where extensive
comparison is the norm-- cars, furniture, clothes.
Specialty goods are those for which consumers have
a strong brand preference. BMW, Armani.
Unsought goods are those now unknown to the
consumer or, if known, undesired.
CLASSIFYING BUSINESS PRODUCTS
Raw materials: unprocessed, become part of other
manufactured products
Manufactured parts and materials: processed products
that become part of other products
Installations: major buildings and equipment

Accessory equipment: used in operations, include

computers, desks, tools
Operating supplies: low value, used by most firms,
convenience products for businesses
INNOVATION IS REQUIRED BECAUSE
Products go through life cycles-- you need new ones coming on
stream.

Profits highest when products new.

Consumers more selective: they look carefully at each purchase.

Also a little jaded.

High failure rates in the 75% range.

Innovative= truly unique

Leads to new products: Improved, with valuable new benefits
Imitative, another “me too” product.
 PRODUCT MIX DECISION (PRODUCT HIERARCHY)
 Product Mix/Assortment: A product mix consists of all the product lines and items that a particular
seller offers for sale. An organization with several product lines has a product mix
 Product Line Width- it refers to the number of different product lines the company has.

For example Colgate markets a fairly contained product mix, consisting of personal and home care
products.
 Product Line Length- it refers to the total number of items the company carries within its product

lines.
For example Colgate in its oral care line includes Colgate toothpaste, Colgate tooth brushes, and
Colgate teeth whitening solution.
 Product Line Depth- it refers to the number of versions a product is given by the company.

For example Colgate to has a number of toothpaste varieties that includes Colgate white, Colgate white
with salt, Colgate Sugar free, Colgate Gel Blue, Colgate Gel Red, Colgate Max fresh, Colgate for
Sensitive teeth, etc.
 Product Line Consistency- it refers to how closely relate the various products lines are in use,

production requirement, distribution channels or some other way. This is difficult

as different products perform different functions for buyers
PRODUCT MIX
Product Lines

Kodak
Product Line Length

Digital Medical Professiona

Camera Camera l Camera

Easy share
series (14 3 version Pro Series
variants)

Product width
3 Levels of Product and Service
Augmented Product:
Credit and Delivery,
Installation, Warranty,
After Sales Service

Actual Product:
Brand Name,
Features, Design,
Packaging, Quality
level

Core
Produc
t
5 Levels of Product and Service

Potential Product

Augmented Product

Expected Product

Generic Product

Core Product
Product Life Cycle (by Theodre Levitt, 1965)
NEW PRODUCT ADOPTION AND DIFFUSION

Adoption process: The decision-making activity of an

individual through which the new product is accepted.
Diffusion: The process by which an innovation is spread
through a social system over time.
The Everett Rogers Diffusion of innovations theory
 ADOPTER CATEGORIES
• Researchers have identified five categories of
individual adopters for new products:
– Innovators — 3% of the market.
– Early adopters — 13% of the market.
– Early majority — 34% of the market.
– Late majority — 34% of the market.
– Laggards — 16% of the market.
• In addition, some individuals — non-adopters
— never accept the innovation.
 PLC Duration
Varies with every product
•Can be controlled by marketing efforts
•Changes with technology introductions
•Inventions
•Disruptive innovations
Rogers Bell Curve explaining Technology Adoption
EXCEPTION TO PLC
ADOPTION-DIFFUSION PROCESS
 Different new products are adopted by consumers at
different rates
 The individual consumer goes through certain stages
before adopting a new product
 Marketers must be interested in first creating
awareness, then interest, then trial, before the
consumer is considered an adopter
 Some people are genuine innovators, while others
wait and try later; some never adopt
STAGES IN THE ADOPTION PROCESS

Awareness: customer is exposed to the product

Interest: interest and information seeking

Evaluation: assessment of the advantages and disadvantages

of the new product
Trial: customer tries the product in low-risk situation; may be a
sample or test drive
Adoption: customer decides to buy the product

Confirmation: customer decides to stay with the product;

attempts dissonance reduction
 CRITERIA FOR NEW PRODUCTS

There must be Must satisfy key Must be Must fit with the Should also be
adequate market financial criteria compatible with company’s compatible with
demand: this is environmental marketing production
necessary but standards structure capabilities,
not sufficient for satisfy legal
success requirements,
and fit with
corporate goals
and objectives
 NEW PRODUCT DEVELOPMENT

Idea Generation Idea Screening Concept Development

and Testing

Marketing Strategy
Product Development Business Analysis
& Development

Test Marketing Commercialisation

THE NEW PRODUCT DEVELOPMENT PROCESS
• A new product is best developed through a series of six
stages:
 The first two stages provide a focus for generating new-product ideas
and a basis for evaluating them.

 The next three stages deal with ideas and are the least expensive.

 In their haste, some companies skip stages — the most common

omission being market tests.
DEVELOPMENT OF NEW PRODUCT STRATEGY

Company Goals Product Strategy Examples

Defend market Introduce addition to existing Pizza Hut’s “Cheese

share produce line/ revise existing stuffed Pizza” and
product “Tikka Paneer Pizza”

Strengthen Introduce a really new product Apple I-phone

reputation as an - not just an extension of an
innovator existing product
TEN WORLD-CLASS PRODUCT FAILURE
S
1. New Coke.
2. Crystal Pepsi
3. McDonald’s Arch Deluxe Burger
4. Polaroid Instant Film
5. Levi’s Type 1 Jeans.
6. Ford Edsel.
7. IBM’s PCjr.
8. Sony Betamax.
9. Apple Lisa.
10. Apple Pippin
11. Macintosh Portable
12. Macintosh TV
A BRAND IS A PERSON’S GUT
FEELING ABOUT A PRODUCT,
SERVICE, OR ORGANIZATION.
DEFINITION:
 According to Kotler and Armstrong, ‘a brand is a name, term, sign,
symbol or design or a combination of these that identifies the maker
or seller of a product, or services’.

BRAND-
A name or symbol used to identify the source of goods or services, and to differentiate
them from those of others.
Clyde C. Tuggle, Coca-Cola, Senior Vice President, Worldwide Public Affairs & Communications
LIFE CYCLE OF A BRAND
 Brand Recognition- They know your name but don’t prefer it over
competition.

 Brand Preference- They pick your brand based on previous

experience with it.

 Brand Insistence- Won’t accept alternatives eq. monopoly status.

 Generification- your brand becomes synonymous with the category .

You may be cannibalized by your own success.
SIGNIFICANCE OF BRANDING:
 To Buyer
 A brand helps buyers in identifying the product that they like/dislike.
 It identifies the marketer.
 It helps reduce the time needed for purchase.
 It helps buyers evaluate quality of products, especially if they are unable to judge
a product’s characteristics.
 It helps reduce buyers’ perceived risk of purchase.
 The buyer may derive a psychological reward from owning the brand (e.g., Rolex
watches or Mercedes).
SIGNIFICANCE OF BRANDING:
 To Seller:
 A brand differentiates product offering from competitors.
 It helps segment market by creating tailored images.
 It identifies the companies’ products making repeat purchases easier for
customers.
 It reduces price comparisons.
 It helps the firm introduce a new product that carries the name of one or more of
its existing products.
 It promotes easier cooperation with intermediaries with well-known brands
 It facilitates promotional efforts.
 It helps in fostering brand loyalty, thus helping to stabilize market share.
 Firms may be able to charge a premium for the brand.
 DIFFERENCE BETWEEN BRAND IDENTITY AND BRAND IMAGE
Brand Identity Brand Image
1 Brand identity develops from the source or the Brand image is perceived by the receiver or the
company. consumer.
2 Brand message is tied together in terms of brand Brand message is untied by the consumer in the form of
identity. brand image.
3 The general meaning of brand identity is “who The general meaning of brand image is “How market
you really are?” perceives you?”
4 It’s nature is that it is substance oriented or It’s nature is that it is appearance oriented or tactical.
strategic.
5 Brand identity symbolizes firms’ reality. Brand image symbolizes perception of consumers

6 Brand identity represents “your desire”. Brand image represents “others view”
7 It is enduring. It is superficial.
8 Identity is looking ahead. Image is looking back.
9 Identity is active. Image is passive.
10 It signifies “where you want to be”. It signifies “what you have got”.
11 It is total promise that a company makes to It is total consumers’ perception about the brand.
consumers.
PACKAGING
 Packaging is the encasement of products in packages, protective
wrappings or other external covering that can provide protection,
information, security and marketing benefits.

Advantages Disadvantages
• Serves as protection for the • Cost money to make
product • Takes a while to be made which
• Advertises the company with might slow down the production
it's design of the product as a whole
• Can be designed to suit the • Time consuming to design
theme • Might accidently offend certain
• Can be designed to appeal to ethnic groups if used offensive
target market symbols or designs
• Can be made to fit in the point
of sale