Professional Documents
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New Product Development Report PDF
New Product Development Report PDF
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BAF-07-60
BAF-07-14
Umer Farooq
--Muhammad Waqas - - -
BAF-07-39
BAF-07-34
Javeria Zia
Ayesha Siddiqui
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BAF-07-17
BAF-07-18
Instructor:
Mr. Khurram Javed Paracha
MARKETING PROJECT
Executive Summary
Report is the practical part of the theoretical subject marketing of our BS
Accounting & Finance (Hons) Program. The sole objective is to familiarize the
students with the practical manipulation of business organization. This report
has been written to know about the causes that lead to the launching new
Product.
In the first phase of the report there is the general introduction about the New
Product Development.
In the next part; we took into account the objectives that are behind this. We
illustrate the objective one by one according to their priority. To understand
and specify the objectives is necessary to understand the variable, which affect
this issue. We define only the key variable. After this we collect the data from
different sources and analyze it, interpret it, and show the diagrammatical
representation for easy understanding. More over this we make some
conclusion and offer our suggestions for improvements with some limitations
that we face. In the next phase the feasibility report of A.G Detergent with the
SWOT analysis, target market, market segmentation and the detail of 7ps of
marketing mix etc.
Authors
MARKETING PROJECT
Acknowledgment
We are very thankful to Almighty Allah who has all the powers in the world
and who also give us power to perform the assigned task, which otherwise we
can't perform.
We are also very thankful to our parents. We are very thankful to our honorable
instructor Mr. Khurram Javed Paracha for providing us with such an
opportunity to explore the practical aspects of the Marketing that refined our
theoretical concepts and would help us in the practical field.
We are also thankful to all of our respondents especially Mr. Allah Ditta who
co-operated with us in conducting the research and sorting out the cause of the
problem. We are especially thankful to our class fellows who help us from
every aspect.
MARKETING PROJECT
Table of Contents
Introduction
Major Stages in New-Product Development
Idea generation ...
Idea screening .....
Concept Development and Testing
Product Idea ....
Product Concept .....
Product Image..
Marketing strategy development
Business analysis.
Test marketing.
Commercialization...
Key success factors in New Product Development
Operating Philosophy..
Organization Structure.
The Experience Effect..
Management Style ...
Product development .
Introduction ...
Growth ...
Maturity..
Decline ...
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New-Product Failures
1.
2.
3.
4.
5.
PRICING
Pricing Objective
Profit oriented goal ..
Sale oriented goal .
Maintain & increase market share ...
Status Quo goals
Pricing Decision
Cost-orientated ..
Demand-orientated
Competitor-orientated
Influences on Pricing Decisions
Company Objective ..
New Competitors ..
Suppliers / Distributers .
Cost
Existing Competitor ..
Customer
Management Culture ..
Company Market Stance
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Pricing Strategies
Market Skimming
Penetration Pricing ..
Value Pricing ...
Going Rate (Price Leadership) .....
Captive Product Pricing ...
Product-bundle pricing
Promotional pricing .
Geographical Pricing
Contribution Pricing .
Pricing Variations...
Premium Pricing
Ten ways to increase prices without increasing price
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Introduction
What is a new product?
Innovative products
Cost reduction new product that provide similar performance at lower cost
New to the world high definition TV, iPod, flat screen TV, Probiotic Ice Cream
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To defeat rivals
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OR
Development of original products
Product improvements
Product modifications
New brands through the firms own R & D efforts
OR
New product development is a process which is designed to develop,
test and consider the viability of products which are new to the market in
order to ensure the Growth or survival of the organization.
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IDEA GENERATION
Idea Generation is the Systematic Search for New Product Ideas Obtained
Internally From Employees and Also From:
Ideas for new products can be obtained from basic research using a
SWOT analysis (OPPORTUNITY ANALYSIS), Market and consumer
trends, company's R&D department, competitors, focus groups, employees,
salespeople, corporate spies.
IDEA SCREENING
Many companies have systems for rating and screening ideas which estimate:
Market Size
Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return
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OR
The screeners must ask these questions:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment/target market?
What is the current or expected competitive pressure for the product idea?
What are the industry sales and market trends the product idea is based on?
Is it technically feasible to manufacture the product?
Will the product be profitable when manufactured and delivered to the
customer at the target price?
Then, the idea is evaluated against a set of general company criteria.
Product Idea: idea for a possible product that the company can see itself
offering.
Product Concept: detailed version of the idea stated in meaningful
consumer terms.
Product Image: the way consumers perceive an actual or potential product.
Purposes of Concept Testing
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Describes Overall
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Business Analysis
Estimate likely selling price based upon competition and customer feedback
This is used to help focus activities into areas of strength and where
the greatest opportunities lie. This is used to identify the dangers that take
the form of weaknesses and both internal and external threats.
The four attributes of SWOT
Strengths - What are the advantages? What is currently done well?
Weaknesses - What could be improved? What is done badly?
Opportunities - What good opportunities face the organization?
Threats - What obstacles does the organization face?
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Test Marketing
Involves placing a product for sale in one or more selected areas
In this we also
Produce a physical prototype or mock-up
Test the product (and its packaging) in typical usage situations
Conduct focus group customer interviews or introduce at trade show
Make adjustments where necessary
Produce an initial run of the product and sell it in a test market area to
determine customer acceptance
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Commercialization
Considered post-New Product Development
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Operating Philosophy
Organization Structure
The Experience Effect
Management Style
Operating Philosophy
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Management Style
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Introduction
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The product often fail because faulty of product idea. A good idea can
revolutionize the market but a bad idea may prove bitter to the firm or it
may backfire
Eg: Polar industries in 1991 launched "COOL CATS" fan -decorated
with cartoon characters meant primarily for children. The fan was priced at
premium; the idea was that children's were increasingly becoming
influencers in purchase decisions and to attract the kids with the cartoon
creatures and to position the product exclusively for kids. The product failed
miserably in spite of its huge advertising budget because when the fan was
put on it didn't have any color effect and the customer did not justify its
premium price.
Distribution related problems
The new product fails if the product is unable to meet the channel
requirements. While developing the product the channel requirements must
be given adequate consideration.
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Eg: when NESTLE launched its new chocolates the product and
promotion was ok but the product failed in the distribution side because the
company stipulated the product to be stored in refrigerators.
The product faced two problems in the distribution side because it
meant excluding a number of retail outlets as they didn't have this facility
and secondly the chocolate was not picked by the customers as it was not
seen upfront in the retail shops. Finally Nestle had to reformulate the product
according to channel requirements.
Poor timing of launch
Too early or late entry into the market is a common cause of failure.
Kinetic Merlin was launched in pune in 1991.It was a 3 in 1 set consisting of
a color television, a stereo with detachable speakers and a home computer.
The product was targeted at the Indian consumers who are fond of
sophisticated gadgets to immediately adopt such an innovative idea but in
reality the idea was too advanced for the customers to digest at that time
because they were not exposed to such type of products before.
Improper Positioning
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Pricing
Pricing objectives should flow from and be consistent with corporate
and marketing objectives and the overall company mission these objectives
should be started explicitly because they directly affect pricing polices and
the methods used to be set)
Objectives
Profit Oriented profit goals may be set for the short or long term
.Accompany may select one of two profit oriented goals for its pricing
policy
To achieve a target returns
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Sale Oriented
In some companies managements pricing is focused on sales volume.
The pricing goal may be to increase sales volume or to maintain or increase
the firm's market share
To Increase Sale Volume
This pricing goal of increasing sales volume .The pricing goal may be
to increase volume or to maintain or increase the firm's market share.
To maintain or increase
Most industries today are not growing much if t all and have excess
production capacity. Many firms need added and to utilize their production
capacity more fully and, in turn, gain economics of scale and better profits
Market share
Many organization seek to gain same specific share % of a market
.The advantage of a market-share price object is that its force a managers to
pay attention to the performance of the competitions. It is usually easier to
measure an argumentation market share than to determine if profit are
buying maximized since market share is a relation measure it is often the
preferred measurement of an argument competitive
E.g.
McDonald,
Coca-Cola
Pepsi
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Marketing Objectives
Survival
Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business
Current Profit Maximization
Choose the Price that Produces the Maximum Current Profit, Cash Flow or ROI
Market Share Leadership
Low as Possible Prices to Become the Market Share Leader
Product Quality Leadership
High Prices to Cover Higher Performance Quality
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Total Costs
Sum of the Fixed and Variable Costs for a Given Level of Production
Fixed Costs (Overhead)
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Competition-Based Pricing
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Pricing Strategies
Setting the price steps between various products in a product line, based on cost
differences between the products, customer evaluations of the different
features and the competitors pricing
Importance of Setting Prices
Setting the proper price point is instrumental in attracting your target
customer.
Some customers are willing to pay more for a product as long as they feel
they are getting value for their Money.
Most customers however are price-sensitive and are always seeking the
lowest possible price.
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The objective with skimming is to skim off customers who are willing to
pay more to have the product sooner; prices are lowered later when demand
from the early adopters falls
The success of a price-skimming strategy is largely dependent on the
inelasticity of demand for the product either by the market as a whole, or by
certain market segments
Penetration Pricing
Price set to penetrate the market
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Value Pricing
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Product-bundle pricing
Promotional pricing
BOGOF e.g. toothpaste, soups, etc
Geographical pricing
Different prices for customers in different parts of the world
Pricing variations
off-peak pricing, early booking discounts, etc
Premium pricing
Uses a high price, but gives a good product/service exchange
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A.G - Detergent
Idea Generation
New product that we are going to launch is an Anti Germ detergent. The idea
behind this product is that people are very much health conscious and are aware of the
importance of germ prevention. Recently we were conducting a research on brand
preferences in soaps. Our survey based research showed that most people prefer antibacterial soap over other soaps for health reasons. Many people think that Germ Killing
ability is one of the core benefits of soaps.
Market Research
This research triggered the idea that if most people prefer to keep skin germ free,
than it is their latent demand to have a product that keeps there towels, clothes, bedsheets etc. germ free. Than we conducted another survey asking people that if we
introduce an anti-germ detergent whether they would purchase it. 80% people said that
they will surely purchase it. Most of them were enthusiastic about the idea of this new
product. This argument convinced them that anti-bacterial soap cannot help to achieve
the goal of germ-free, healthy living. To be truly germ-free you have to keep your
immediate surroundings hygienically clean.
Most of the germs that our body catches come from our contact with clothes, bed
sheets, curtains, pillows and most importantly towels. Towels are made of materials that
are especially receptive to germs. Towels provide suitable place for germs and their
reproduction.Anti-bacterial soaps can kill germs from our body but when we use towels
to dry our body, millions of germs living on it transfers to our body and hands making us
again Germy.
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Geographically
We are dividing the market into major and small cities. Initially, we are targeting
only the big cities like
Karachi
Lahore
Islamabad
Multan
Faisalabad
Demographic Segmentation
We are dividing consumers into 3 classes on the basis of their Income.
Upper Class
Middle Class
Lower Class
But we are targeting the only the upper and middle class
Psychographic Segmentation
We are dividing consumers into these groups:
Innovators
Thinkers
Achievers
These all will buy our product.
Marketing Mix
Now we discuss in terms of marketing mix ----- the set of controllable marketing
tools i.e. product, price, place and promotion, which are blended to produce the desired
response in the target market.
Product
Brand Name
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Features
Price
We are the 1st ones to introduce an anti-bacterial detergent. So we are in a position to
charge relatively high price than ordinary detergents. If we charge very high price as
compared to other detergents than chances are that most people especially middle class
detergent users, though convinced about the importance of its Germ Killing feature, will
not purchase it. If we charge low price as compared to ordinary detergents than people
may consider that it is an inferior product. So we are introducing it at prices which are
slightly higher than Arial and Surf Excel.
The prices are as follows:
80gmRs. 20
200gm..Rs. 40
500gm..Rs. 85
! Kg ....Rs. 150
Place
Initially, we will make this product available at all departmental stores and
superstores. Once the product gets off to a good start availability will be increased to
other cities and small shops.
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Promotion
There will be extensive promotion for the product. All our promotion efforts will
be to persuade people to buy anti-bacterial detergent powder.
We will not have to spend money on creating awareness of the importance of
germ prevention, because the general awareness has been created by anti-bacterial soap
industry.
We will mainly use 3 media type.
1. Electronic Media
2. Print Media
3. Outdoor media
Electronic Media
We will make persuasive commercials and infomercials about our product in
Doctors will be shown explaining importance of Germ-free towels and clothing and
hence the importance of Anti Germ as an anti-bacterial detergent. These Ads will be
presented on TV, RADIO and INTERNET.
Print Media
Ads would be placed especially on women digests and weekly magazines in
which details of the benefits of the product for consumers will be discussed persuasively.
Out-door Media
The portraits from the TV ad will be placed on bill boards on centralized
locations.
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