Transcript Product Items, Lines, and Mixes

Product Development
Types of New Product Introductions
High
New-to-world products
10%
New
product lines
20%
Improvements to
existing products
26%
Low
Additions
to existing
product lines
26%
Repositionings
7%
Cost
reductions
11%
High
Newness to market
Size of circle denotes number of introductions relative to total.
The New Product Development Process
Idea Generation
Business Analysis
Screening
Product Development
Concept Development & Testing
Test Marketing
Marketing Strategy
Commercialization
Product Development

Create (engineer) prototype versions of the physical
product.

Test for performance (lab)

Test prototypes with convenience samples for
functional, aesthetic, psychological performance
(taste, use, feel, appearance).

Actual or projected product comparison tests
(blind/not blind) with users/experts or influencers.
Test Marketing
 Completed
“offering bundles” designed
and prepared for marketing response
 Sales wave studies -- selected sample,
free trial, offered repeat brand options.
 Simulated Test Marketing
 Controlled Test Marketing
 Test Marketing
Test marketing should take full advantage of information gathering -- well
beyond sales projections
Commercialization
Scope
Timing
Location
Operational
Plan
New Product Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Loyalty?
Adopter Categories
Adopter Categorization on the Basis of
Relative Time of Adoption of Innovations
Innovators 2.5%
Late
Early
Majority Majority
34%
34%
Laggards 16%
Early Adopters 13.5%
Time of Adoption of Innovations
PLC and Boston matrix
Five product characteristics influence the
rate of adoption:
•
•
•
•
•
Degree of relative advantage
Degree of compatibility
Degree of complexity
Degree of divisibility or trial-ability or risk
Degree of communicability
SOME REASONS FOR NEW PRODUCT FAILURES
1. Market too small
2. Poor match or fit with company
3. Not new / Not different
4. No real benefit
5. Poor positioning Vs competition
6. Forecasting errors
7. Poor Timing
8. Competitive Response too good
9. Changes in Customer tastes
10. Poor after sales service
11. Insufficient return on investment
12. Lack of coordination in functions
13. Inadequate support
14. Poor recovery strategies
Place, Distribution, Channels, Logistics, Order
fulfillment, Supply Chain, Route-to-Market… …
Concepts
–
–
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Importance of distribution
Players in distribution
Objectives of distribution
Channels of distribution
–
–
–
–
Channel system – flows and costs
Channel structure for consumer products
Channel structure for services
Channel structure for industrial products
Channel Management Goals
• Efficiency vs Effectiveness
• Control vs. Flexibility
• Learning and Knowledge
Marketing Flows in a Channel
1. Physical Flow
Suppliers
Transporters
Warehouses
Manufacturer
Transporters
Warehouses
Dealers
Transporters
Customer
2. Title Flow
Suppliers
Manufacturer
Dealers
Customer
3. Payment Flow
Suppliers
Banks
Manufacturer
Banks
Dealers
Banks
Customer
4. Information Flow
Suppliers
Transporters
Warehouses
Banks
Manufacturer
Transporters
Warehouses
Banks
Dealers
Transporters
Banks
Customer
5. Promotion Flow
Suppliers
Advertising
Agency
Manufacturer
Advertising
Agency
Dealers
Activation
Agency
Customer
Costs Associated with channel functions
• Physical Possession: Breaking bulk , Storage and
delivery/installation cost
• Ownership: inventory carrying cost
• Promotion: personal selling, advertising, sales promo,
PR
• Negotiation: time and legal cost
• Financing: credit terms, terms and conditions of sale
• Risk Taking: warranty, insurance, repair, damage,
• Ordering: order-processing cost
• Payment: collection, bad debt cost
Traditional Distribution Model:
Disadvantages
• Distribution Costs High As % of Cost Price
• Distributor margins do not Represent The
Activity Cost
• No Visibility of Stock in The Supply Chain
• End Customer Knowledge Limited
• No Control Over End User Pricing
• Concerns Over Product ‘Diversion’ & Cross
Border Trade
Channel Management Decision
areas
1.
2.
3.
4.
5.
6.
Channel tasks
Channel Structure
Channel Goals
Channel Design
Channel Configuration
Channel Conflicts
Channel Design Process
1. Recognize the need for
channel design decision
7. Select
channel members
6. Choose the “best”
channel structure
5. Evaluate
relevant variables
2. Set & coordinate
distribution objectives
3. Specify
distribution tasks
4. Develop alternative
channel structures
Retailing
• Formats and Types of Retailing
• Emerging Retail Scenario in India; Size,
Growth Rate etc..
• Complexity of The Indian Retail Market
The Evolution of retail in India
Traditional
Formats
Itinerant Salesman
Haats
Melas
Mandis
Established
formats
Kirana shops
Convenience/
department stores
PDS/
fair price shops
Pan/ Beedi shops
Emerging
Formats
Exclusive retail outlets
Hypermarket
Discount Stores
Seconds Stores
Malls / Specialty Malls
Multiplexes
Shop-in-shops
Service galleries
What are CSFs for Retail?
•
•
•
•
•
•
•
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Merchandising
Financing and other services
Branding and Private Labels
SCM – Inventory Turnover
Data Analytics and Decisions
REAL ESTATE MANAGEMENT
STORE DESIGN
STORE OPERATIONS
Services Marketing
• How are Services different from Products?
• The Marketing Challenges Posed by Services
• The Expanded Marketing Mix Required for
Services
Value Added by Physical, Intangible Elements Helps
Distinguish Goods and Services
Physical Elements
High
Salt
Detergents
CD Player
Wine
Golf Clubs
New Car
Tailored clothing
Fast-Food Restaurant
Low
Plumbing Repair
Health Club
Airline Flight
Landscape Maintenance
Consulting
Life Insurance
Internet Banking
Intangible Elements
High
The Four I’s of Service
Intangibility
Services cannot be held, touched, or
seen before the purchase decision.
Inconsistency
Service quality varies with the
capabilities of the people who
provide the service.
Inseparability
The consumer cannot separate the
deliverer of the service from the
service itself.
Inventory
The inventory cost of a service is
the cost of paying the person used
to provide the service along with the
cost of any needed equipment.
Services are Different
Goods
Services
Resulting Implications
Tangible
Intangible
Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized
Heterogeneous Service delivery and customer satisfaction depend on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production
separate from
consumption
Simultaneous
production and
consumption
Nonperishable Perishable
Customers participate in and affect the transaction.
Customers affect each other.
Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
It is difficult to synchronize supply and demand with
services.
Services cannot be returned or resold.
Services Pose Distinctive Marketing
Challenges
•
Marketing management tasks in the service sector differ from those in the
manufacturing sector
•
The eight common differences are:
•
1. Most service products cannot be inventoried
2. Intangible elements usually dominate value creation
3. Services are often difficult to visualize and understand
4. Customers may be involved in co-production
5. People may be part of the service experience
6. Operational inputs and outputs tend to vary more widely
7. The time factor often assumes great importance
8. Distribution may take place through nonphysical channels
What are marketing implications?
Key Concept
A Service is delivered (not made),
experienced (not used), availed (not
owned) and highly personal. (not
replicable)
The 8Ps of Services Marketing
• Product Elements
• Place and Time
• Price and Other User Outlays
• Promotion and Education
• Process
• Physical Environment
• People
• Productivity and Quality
Marketing of causes (ideas),
persons, events and places
• A distinction between causes (ideas),
persons, events and places marketing and
marketing of products/services
1. Person Marketing
– to cultivate attention, interest, & preference of a
target market toward a person
2. Place Marketing
– attract visitors to a particular area
3.Event Marketing
– mkt of sporting, cultural, & charitable activities to
selected target markets
4. Organization Marketing
– seek to influence others to accept the goods of,
receive the services of, or contribute in some way to
an organization
Cause marketing or Idea marketing
• “A strategic positioning and marketing tool that
links a company or brand to a relevant social
cause or issue, for mutual benefit.”
• “A commercial activity by which businesses and
charities or causes form a partnership with each
other to market an image, product or service for
mutual benefit.”
Issues and target audience
• Funds and volunteers raising
• Identifying three target audiences
– The first target audience – decision makers
– The second – people: social marketing
– The third – firms
Who is the target audience?
Target
Example
Communications
People
Stop smoking
All
Legal system
No smoking in
public places
Voters
Firms
Do not close a
factory
Boycott
Social marketing
Affecting people
• What is the difference between Cause marketing and
Social Marketing?
• Social marketing is the use of marketing principles
and techniques to influence a target audience to
voluntarily accept, reject, modify or abandon a
behavior for the benefit of individuals, groups, or
society as a whole
Health:
Birth Defects
Safety:
Drowning
Environment:
water supply and
quality
Community
involvement:
voting
Target audience
Pregnant women
Parents of toddlers
Homeowners who
live in the suburbs
College students
living out of state
Accept a new
behavior
Take a
multivitamin…
Put a life vest on
your toddler at the
beach
Replace your lawn
with native plants
and ground cover
Apply for an
absentee ballot
Reject a potential
behavior
Do not drink
alcohol
Never leave your
toddler alone in
the bathtub
Do not use
fertilizers that
contain toxic
chemicals
Do not submit an
application if you
have a permanent
absentee ballot
Modify current
behavior
Drink at least
eight glasses of
water a day
To model the
behavior, parent
should always
wear life vests
when boating
Water deeply but
slowly, so it
penetrates and
reaches roots
Read details about
candidates and
issue
Abandon an old
behavior
If you smoke, quit
Do not use “water
wings” as a
substitute for a life
vest
Do not water your
lawn if it’s going
to rain
Mail your ballot
before deadline
4Ps
Promotion:
messages on
coasters at bars
Product: retail
displays of coastguard-approved
life vest
Price: $50 rebate
on electric
mulching movers
Place: absentee
ballots online
Benefit
Healthier babies
Safer toddlers
Water availability
for the community
and lower rates
Youths experience
having a voice
Source: Kotler, Roberto, Lee 2002
Social arena:
Social issue