Technology: the level of technology is the industry creates an opportunity for a marketer to
develop new products. The consumer also tends to benefit from these developments. Technological developments have led to shortening of PLC and creation of new sets of customer expectations. E.g.: electronics **tech dev are greatly influenced by govt policies and industries response to investments in R & D

4. Government policies: A government intervention in any industry is a reality. Regulation
in advertisements-like a ban on ads of specific product like a cigarette or pan masala. Other agencies like IRDA, Competition Commission etc also make various rules and regulations.

5. Suppliers: the suppliers to a firm can alter its competition position and marketing
capabilities. These refer to raw material suppliers, energy suppliers, suppliers of labour and capital. According to Michael S Porter, the relation between suppliers and the firm epitomizes a power equation.

This started as the barter system where one product was exchanged for another product. The major difference between barter system and marketing transaction is that marketing emphasizes on the mutual satisfaction of both the parties. If the buyer is not satisfied then the transaction is selling transaction. If the seller doesn¶t make a profit, then it is a dumping transaction. The essence of this is ± y Marketing is an exchange process-both the buyer and seller must have something to offer each other. y y Both the buyer and seller must gain It should result in a long term satisfying relationship between both.

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y Development of control mechanisms Marketing concept requires an understanding of the market and doesn¶t suggest that products be designed just to satisfy market demand. planning the marketing activities. In other words. marketing as a process involves(a) Understanding the customers¶ interests. Though satisfying the market demand is important to yield profits. Page | 2 . (b) Serving them in such a way that helps the selling organization to fulfill its objective ± profit maximization. Environment scanning & marketing opportunities analysis Development of a competitive marketing plan and strategy such that an organization is able to satisfy not only the customer¶s needs but also achieve its own objectives y Implementing of the marketing plan and development tactical plans to overcome problems at the market place. marketing isy y y Understanding customer needs.Therefore. implementing marketing plans and setting control mechanisms in such a way that organizational objectives are accomplished at minimum cost. any organization has to examine the costs and volume of market responses before deciding to develop any new product. MARKETING AS A MANAGERIAL FUNCTION: Marketing as a managerial activity involves analyzing the market opportunities.

ROLE OF MARKETING IN A MODERN ORGANISATION Marketing in modern organization is that of integrating the needs and wants of the customers with the organizational functions. It is evident that marketing performs the role of integration. Rather all are important. Marketing Customer Page | 3 . Today¶s company shows that neither marketing nor any other function holds the key to success.

CHAPTER 2 Product is a bundle of satisfaction that a customer buys. Example: hotels need rooms. brand name. styling. packaging. brand name. quality. it remains a raw material or at best an intermediate. delivery and installation etc. WHAT CONSTITUTES A PRODUCT FUTURE AUGMENTED FORMAL CORE 1. Formal: the additional features that a firm adds up to its product to give it a distinct approach. but also involves factors like after sales service. Page | 4 . plastic. It represents a solution to a customer¶s problems. According to Peter Drucker . color. number of doors. Airlines company needs aircraft etc 2. For example: a refrigerator is not just merely steel. The product is almost always a combination of tangible and intangible benefits. It includes attributes.so long as a product is not bought or consumed. Core: the basic product. instruction manual.

Slow skimming Rapid skimming Slow penetration Rapid penetration Page | 5 . It includes after sales service. PRODUCT LINE: it refers to a group of products clubbed together by a virtue of satisfying a particular class of needs. guarantee and warranties. PRODUCT MIX: the number of products carried by a firm at a given point of time. PLC STRATEGIES: y Introduction phase: product is launched here and it involves high operational costs. Future: it is the upgradation in the product or additional features in a product that a customer expects.3. Augmented: it is a condition of a market maturity or a relatively experienced or sophisticated customer. installation etc. Marketing tasks: to stimulate demand for the new product and to reduce the break even time. replacement or returns policy. 4. customer complaint management.

To remain competitive. However the firm may see a rise in profit largely coming from people willing to pay a higher price to possess it for its antique value. prices etc. Also when market size for product is high and threat from competition is imminent. Example: nirma and t series entered the market using low prices and high promotion strategies. Example: electronics Slow skimming: based on the assumption that a firm has sufficient time to recover pre-launch expenses. The firm derives benefit from economies of scale in production and distribution. Marketing task is to divert and gradual withdraw of the product. This phase is characterized by slowing of growth rates of sales and profits. market size is large. CTC narrows down to a price and promotion war. The numbers of competiting firms reduce and the industry also had limited product version available to the consumer. packaging. petrochemicals etc Rapid penetration: same as rapid skimming except long term objectives. This leads to offering of more choices to customer in the form of different product types. Slow penetration: when threat from competition is minimal. the firm now operates at economic levels. and market familiarity with product. The product modification program is at a higher level and the firm introduces the modified product.Rapid skimming: works effectively only when customer awareness for the product is not very high or for those who are willing to buy at any price. the firm initiates a product improvement/modification program. predominantly price sensitive. DECLINE: sales decline since customer preference has changed in favor of more efficient and better products. And the market is characterized by intensive competition or other entry barriers. Page | 6 . Market size is limited and those who are aware are willing to pay any price to acquire it. When the technology used by the firm is highly sophisticated and competition will have to invest substantial resources to acquire this technology. Lesser production bottlenecks and hence costs are low now. the rest 5% meet more strengthened and increased competition. Example: laser technology. Example: maruti udyog¶s maruti 800 GROWTH: 95% of the products fail at this stage. MATURITY: products that survive the heat of competition and gain customer¶s approval enter the maturity phase.

the one which will get maximum sales. It comes to represent the essence of a business. Product benefits can be offered through branding because the brand owner is able to earn an easy recognition and image compared to owners of unbranded products. he needs to measure the perceptions. The measurement of perceptions in mathematical psychologists¶ way is known as ³perceptual mapping´. This is usually represented on 2-dimensional scales so that marketing manager can readily see where his own brand is positioned in the mind of the prospect and in relation to other brands. Perceptual mapping: when a marketer intends to display his interest in the perceptions of the target consumer segments. perceptual mapping product categories product positining product benefits segmentation 1. origin. It is considered so central and critical that it should be considered at the level of a mission statement. out of a number of unique selling propositions. They encapsulate its identity. 3. It includes the following components. specificity. Product benefits: it facilitates consumers in their decision making and reduces the uncertainty in their minds.Product positioning: It is the art of selecting. Page | 7 . Segmentation: in market segmentation consumers are grouped in terms of market dimensions and then the firm attempts to match the needs of different consumer groups. 2. guarantee and how it differs from others.

promotion and place. ³Head and Shoulders´ was clearly better known as foreign brand in India. technologies and competition. The product life cycle faces two major challenges(1) All products eventually decline. and eventually dies as newer product comes along that better serve consumer needs. Each product seems to go through a life cycle it is born. Example of positioning: P&G had two major brands in its portfolio. which was positioned on the nourishment platform. The company must manage their new products in the face of changing tastes. the firm must find new products to replace aging ones (the problem of new product development). Therefore.. NEW PRODUCT DEVELOPMENT PROCESS Introduction: A company has to be good at developing and managing new product.price. While some companies may not follow a deliberate step-by-step approach. The process also shows the importance market research plays in developing products.Heads and Shoulders. medicines) while less scientific companies may pull together resources for product development on a less structured timetable. We should note that while the 7-step process works for most industries. In this section we present a 7-step process comprising the key elements of new product development.g. it can be used for product positioning also.through compatible marketing inputs encompassing product. the steps are useful in showing the information input and decision making that must be done in order to successfully develop new products. it is less effective in developing radically new products. goes through several phases. (2) The firm must understand how its products age and adapt its marketing strategies as products pass through life cycle stage. The main reason lies in the Page | 8 . marketers in charge of product decisions often follow set procedures for bringing products to market. In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e. New Product Development Process: Because introducing new products on a consistent basis is important to the future success of many organizations. and anti-dandruff shampoo and Pantene.

(2)Only about 40% of new products are around after five years. (6)Sometimes competitors fight back harder than expected. priced too high or advertised poorly. A firm can obtain new products in two ways: (1) One way is by acquisition where the firms buy a whole company. Among the reasons that so many new product fail are: (1)Market size may have been overestimated. (4)A new product may have been pushed though in spite of poor marketing research finding. a patent. and new brands through the firms own R&D effort. Success factors are thought to be: (1)Unique superior product (2)A well defined product concept Page | 9 . (3)The product may have been incorrectly positioned in the market. technology and competition must develop a steady stream of new product and service. or license to product someone else¶s product. One way to overcome these difficulties and pitfalls is to identify successful new products and find out why and how they succeeded. product improvements. the marketer should exercise caution when interpreting the results.inability of the target market to provide sufficient feedback on advanced product concepts since they often find it difficult to understand radically different ideas. product modifications. (2) The other way is through new product development which is the development of original products. (1)One study estimated that as many as 80% of new product failed. (5)The cost of producing the product may have been higher than expected. (2)The actual product may have not been designed as well as it should have been. So while many of these steps are used to research breakthrough ideas. New product Development Strategy: Given the rapid change in consumer tastes. Innovation can be very risky.

A smoothly functioning new product development process. seminars. Idea Generation: The first step in the new product development process is Idea Generation which is the systematic search for new product ideas. consultants. Suppliers. Other sources can be trade magazines. Among the most significant are: (1) Internal source where formal research and development company scientists and engineer. Relentless innovation c. (4) Distributors. company executives and company sales people can contribute ideas based on their formal and informal research and experience. (a)The search for new product ideas should be systematic rather than haphazard. competitors and develop products that deliver superior customer. techniques and materials that can be used to develop new products. (3) Competitors are another source of new product ideas. The search for these ideas should be systematic not haphazard. For every one hundred new product ideas. (4)In all to create successful new product a company must understand its consumer. Senior management commitment b. In additions the organizations can buy competing products. (2)Customer can also produce good new product ideas. Customers often create new product and uses on their own. There are many sources for new product ideas. market. analyze the business processes used to sell the product. only a very few ever make it to commercialization. (5)The solution lies in strong new product planning and it setting up a systematic new product development process for finding growing new product. take them apart. trade shows. Suppliers can tell about new concepts. and then decide whether to make a similar product themselves. Resellers are close to the market and can pass along information about consumer problems and new product possibilities. government agencies. Page | 10 . It is a good idea to watch competitor¶s ads and other communications to get clues about new products. and others in the distribution chain can be source of information.(3)Others factors include a. university and commercial laboratories etc.

Idea Screening: The second step in the new product development process is idea screening which involves screening new product ideas in order to spot good ideas and drop poor ones as soon possible. (a) Concept development involves developing product ideas into some alternative product concept finding out how attractive each concept is to consumer and choosing the best one.(b) Top management can avoid many problems by adopting an idea management system that directs the flow of new ideas to a central point where they can be collected. Since product development costs rise dramatically in later stages. and the profits goal for the first few year. reviewed. The statement also outline the products planned Page | 11 . This is the statement of the planned strategy for a new product that outlines the intended target market the planned product positioning and the sales. A well designed system for rating and evaluating new product ideas prevents problems at latter stages. (3)A product image is the way consumer perceives an actual and potential product. market share. (2)A product concept is a detailed version of the new product idea stated in meaningful consumer terms. Marketing Strategy Development: The fourth step is Marketing Strategy Development which involves designing an initial marketing strategy fir a new product based on the product concept. Concepts may take on several forms: (1)A product idea is an idea for a possible product that the company can see itself on the market. Concept Development and Testing: The third stage in the process is concept development and tasting. companies must proceed only with product ideas that will turn into profitable product. (b)Concept tasting involves testing the concepts with a group of target consumer to find new ways to make product concepts more real to concepts test subjects . A marketing strategy statement should be produced. and evaluated by the idea manager. One way to keep information organized is to have executives write up new product ideas on a standard from that can be reviewed by a new product committee.

The amount of test marketing varies with each new product. Page | 12 . The prototype must have the required functional features and convey the intended psychological characteristics. Lastly the marketing strategy statement describes the planed long run sales. and other measures to gauge product performance. The basic purpose is to test the product itself in real markets. Product Development: The sixth step is product development which involves developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable product. consumer products companies usually choose one of three approaches: (1) Standard test market ±the company finds a small number of representative test cities. and use store audits. cost and profits projection for a product to find out whether these factors satisfy the company¶s objective. and marketing budget for the first year. (2) Simple line extensions and copies of competitor products are often not test market. (b) Most widely used method of test marketing. When using test marketing.price. distribution. Test marketing lets the marketer get experience with marketing the product. To estimate sales the company should look at the sales history of similar products and should survey the market opinion. Business Analysis: The next step is Business Analysis which is the review of the sales. This step calls for a large jump in investment. When ready these prototypes must be tasted. The R&D department will develop one or more physical version of the product concept and theses prototypes can take varying lengths of time of develop. (1) Not all products are test marketed. conducts a full marketing campaign in these cities. consumer and distributor surveys. (a) Drawbacks include costs and length of time conduct. Test Marketing: The seventh step is test marketing which is the stage at which the product and marketing program are introduced into more realistic marketing settings. profit goals and marketing mix strategy.

Commercialization: The eighth and final step is the new product development process is Commercialization. (a) Usually cost less time. (b) However. a region. Sometimes a market rollout works best where introduction is phased is . The company bringing out a new product must make the following decision: (1) When? When is the time right to introduce the new product? (2) Where? The company must decide whether to lunch the new product in a single location. several regions. Retesting is advised. (3) Simulated test markets-testing a new product in a simulated shopping environment.(2) Controlled test market ±research firm uses controlled panels of stores that have agreed to carry new products for a fee. This step is introducing a new product in to the market. and the national market. Page | 13 . (b) Security is often no very tight and representative is questioned. (a) Are generally less expensive and can be done in shorter periods of time. small samples and the simulation itself can be problems.

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