Marketing management MB0046

4(a). Selection of a Salesman

The Selection of a Salesman in most companies is a "hit-or-miss' affair normally attempted without any job analysis or serious thought as to exactly what kind of man is desired .Friends and relations or people who or are available may be utilised because most people feel that all a salesman needs is to be friendly and presentable .This approach has contributed to low sales and high personal turnover for many companies. Procedures of Selection Progressive companies have attempted to use scientific procedures, including the use of application blanks, single or multiple interviews with various executives, letters of recommendations and psychological tests. The personally and characteristics of an applicant may be compared with successful. salesman in the job. Unfortunately none of these techniques can guarantee success selection. But experiments by companies hiring many salesman have shown these procedures to be considerably more effective than using no selection at all . Psychological tests particularly have caused a great deal of controversy .like motivation research many proponents have oversold the idea. But used with care such test can be. Considerably reduce turnover and improve the quality of the sales force. This is a highly specialised area in larger companies or others without such progress . independent consultants have developed. One of the major stumbling in the effective selection of salesmen may be that the effectiveness of salesmen depends upon the kinds and personalities of the company's customers. b. Consumer passes through five different stages while purchasing the product.

1. Need recognition: customer posses two type of stimuli at this juncture. One is driven by the internal stimuli and another is external stimuli. The examples of internal stimuli are customer¶s desire, attitude or perception and external stimuli are advertising etc. From both stimuli customers understand the need for the product. Here marketer should understand what customers needs have that drew customers towards the product and should highlight those in the communication strategy. 2. Information search: In this stage customer wants to find out the information about the product, place, price and point of purchase. Customer collects the information from different sources like

a. Personal sources: Family, friends and neighbors b. Commercial sources: Advertising, sales people, dealers, packaging and displays. c. Public sources: mass media and consumer rating agencies. d. Experiential sources: Demonstration, examining the product. In this stage marketer should give detailed information about the product. The communication should highlight the attributes and advantages of the product in this stage so that he created the positive image about the product. 3. Evaluation of alternatives: After collecting the information, consumers arrive at some conclusion about the product. In this stage he will compare different brands on set parameters which he or she thinks

If the performance of the product is not as he expected then he develops dissatisfactions. Introduction stage: Company introduces the product into the market. The following graph represents the PLC curve and the 5 stages that it has to undergo. Product development stage: In this stage company identifies the viable idea and develops it. The product which is introduced into the market will undergo some modifications over the period. Features c. For example. Price b. TATA Docomo has entered into cellular services initially through the Billboards. Here company adopts heavy sales promotion and product awareness programs. As the product is new to the market. In India affordability plays an important role at this stage. We can obtain style. Durability At this stage marketer should provide comparative advertisements to evaluate the different brands. 4. A product life cycle can be graphed by plotting aggregate sales volume for a product category over time. Therefore a marketer will be interested in finding out how sales changes over a period and what strategies are best suited at that point. . fashion or fad style of product life cycles also. For example. Marketer should keep an eye on how consumer uses and disposes the product. In some durable goods Indian consumer want resale value also. Customer would like to see the performance of the product as he perceived before purchase. The consumer will also engage in post purchase actions and product uses of interest to the marketer. The evaluation process varies from person to person.required in the product. The marketer¶s job does not end when the product is bought but continues into the post purchase period. Therefore company incurs losses at this stage. Many automobile brands that were not able to get resale value lost their market positions. Post purchase behavior After purchasing the product the consumer will experience some level of satisfaction and dissatisfaction. The cost of product is very high and sales are very low. Its sales also fluctuate. Availability d. Purchase decision In this stage consumer buys the most preferred brand. 2. 5. Product life cycle (bell shaped curve) Five stages of PLC: 1. 3 (a) Meaning of Product Life Cycle: It means a product has to go through the various stages since its inception and till it completely fades out from the market. Organizations bring many varieties of the products to cater to the needs of customers. The advertisement should be different for different segments and highlight the attribute according to the segment. TATA Docomo before entering the cellular services market had done research and found that calls were charged for minutes rather than seconds. In general Indian consumer evaluate on the following parameters a. Quality e. Generally the curve resembles a bell shaped curve. At this juncture the company charges high price to the customers. Even if sales in this stage are nil it requires huge research and development budget. consumer awareness is usually very low.

win- . d. product sales and profit decline. 4. Jackson defines CRM as ³marketing oriented toward strong. Lynch Thus. ³Customer Relationship Management is about acquiring.´ In Industrial Marketing. resulting in lesser cost and better profit. Berry and Parasuraman define CRM as ³attracting. customization of relationship. it could be concluded that Customer Relationship Management refers to all marketing activities directed towards establishing. augmenting core services with extra benefits.000 indicating that it has entered into a mature stage. achieving profitable growth. Airtel in its advertising is clearly stating its subscriber base as 1. Improving supply chain efficiency. Low cost per customer. For example. f. It seeks to personalize and appeal to the hearts. trusting. c. and enhancing customer loyalty and fine-tuning internal marketing to promote external marketing success. These are the characteristics of this stage ± a. developing and retaining customer relationships. Company should phase out weak items from their product mix and may even lower the prices of the existing products. For example. Sales will grow rapidly.´ From the above definitions. minds and purses of the mass consumers. Industry experiences consolidation.´ Relationship marketing is in essence ³selling by using psychological rather than economic inducements to attract and retain customers. Defend the market share h. maintaining and ± in multi-service organizations ± enhancing customer relationships.´ The sequence of activities for performing relationship marketing would include developing core services to build customer relationship. Therefore company needs less sales promotion. It focuses on building better distribution network and pushes the product through it. Company reduces the price of the product and offers varieties and values in it. 10. The advertisement budget of the company also comes down and the company may struggle to meet its costs. TATA Docomo has entered into the growth stage by aggressively advertising on Television and other mediums and at the same time giving competition to the existing players.´ Doyle and Roth define CRMS as ³the goal of relationship selling is to earn the position of preferred supplier by developing trust in key accounts over a period of time. There will be increase in Competition and the company is forced to keep a tab on its competitors. Christopher considers relationship marketing as ³a tool to turn current and new customers into regularly purchasing clients and then progressively moving them through being strong supporters of the company and its products to finally being active and vocal advocates for the company. 5. b. b. Competition based pricing e. Peak sales. Maturity stage: In this stage.´. Definitions of Customer Relationship Management Berry defines CRM as attracting. High profits. developing.James J. VCR¶s have been replaced with DVD players and so VCR entered into the decline stage and is almost out of the market.3. Communicating the product differentiation (or USP) to consumers. Decline stage: In this stage. developing and retaining satisfied loyal customers. lasting relationships with individual accounts. For example. the product has already established itself in the market. g. Growth stage: Company gets experience over the period and now tries to get the maximum market share (takes µfirst mover¶ advantage). and creating economic value in company¶s brand. and sustaining long lasting.

which offers customers the convenience of one-stop shopping. attract. market growth. Contract manufacturing d. Licensing c. Joint ownership f. CRM helps companies understand. CRM today is a discipline as well as a set of discrete software and technology which focuses on automating and improving the business process associated with managing customer relationships in the area of sales. clients and sales prospects. selling. which is on the rise because of the benefits it offers. They are a. The three phases in which CRM support the relationship between a business and its customers are to: y y Acquire: CRM can help a business acquire new customers through contact management. Companies can enter the international market by adoptingany one of the following strategies. Enhance: web-enabled CRM combined with customer service tools offers customers service from a team of sales and service specialists. customer service and support. So. It involves using technology to organize. The overall goals are to find. Once the market is found to be attractive. Direct investment Exporting is the technique of selling the goods produced in the domestic country in a foreign country with . What are the types of countries it plans to enter? That¶s why companies evaluate each country against the market size. and technical support. but also those for marketing. entice former clients back into the fold. competitive advantage and risk level. and win new clients. y 2.[3] Retain: CRM software and databases enable a business to identify and reward its loyal customers and further develop its targeted marketing and relationship marketing initiatives. companies should decide how to enter this market. Management contract e. In how many countries would the company like to operate? b. especially in the present marketing scenario. International Market Entry Strategies Organizations that plan to go for international marketing should know the answers for some basic questions like ± a. and synchronize business processes²principally sales activities.[1] Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments. establish and nurture long-term relationships with clients as well as in retaining current customers. Exporting b. and cost of doing business. beneficial and successful relational exchanges between the focal firm and all its supporting key stakeholders. [3] and fulfillment. and reduce the costs of marketing and client service. nurture and retain those the company already has. customer service. CRM is not a new concept but an age-old practice. The most important step that an organization has to take in the direction of CRM is to create an interdisciplinary team to review how the organization interacts with each customer and determine how to improve and extend the relationship. 3 (b) Customer relationship management (CRM) is a widely-implemented strategy for managing a company¶s interactions with customers. marketing.

India s leading car manufacturer exports its cars on its own. For example. The above example shows that the company¶s marketing plan should be supported by the other functional departments also. Licensee may violate the agreement and can use the technology of the parent company. For example. licensing is a method of entering a foreign market in which the company enters into an agreement with a license in the foreign market. To meet the targets of the marketing plan. Many manufacturing firms invested directly in the Chinese market to get its low cost advantage. For example. The capital. In case of indirect exporting. Barbara. The Company is coming out with logistics parks in different cities. Direct exporting is the technique in which organization exports the goods on its own by taking all the risks. a lingerie manufacturer has joint venture with Gokaldas Images in India. as it produces the jobs to the local people. Exporting may be indirect or direct. Gokaldas textiles export the cloth to different countries from India. trademark. Gigabyte Technology has contract manufacturing agreement with D. Contract manufacturing: Company enters the international market with a tie up between manufacturer to produce the product or the service. This is cost effective and less risky too. Management contracting: In this case. This mode also depends on the country attractiveness. Licensing may cause some problems to the parent company. Another significant manufacturer is TVS Electronics. Maruti Udyog Limited. Direct Investment: In this method of international market entry. Licensing: According to Philip Kotler. another leading exporter from India has international office in Singapore. offering the right to use a manufacturing process. Company invests in manufacturing or assembling. Joint ownership: A form of joint venture in which an international company invests equally with a domestic manufacturer. patent. Some governments provide incentives and tax benefits to the company which manufactures the product in their country. plans to hold seven million square feet of warehousing capacity in the next three years and invest Rs 10 billion in three years to meet those targets. Intermediaries Marketing intermediaries: These are firms which distribute and sell the goods of the company to the consumer. The company may enjoy the low cost advantages of that country. Therefore it also has equal right in the controlling operations. a leader in the supply chain management solution wants to hold its number one position in the US $ 90 billion Indian logistics market. it produces key boards in its own name as well as for other companies too. 1 (a) a. The company plans to expand its service areas in the coming months. or other item of value for a fee or royalty. There is government restriction in some countries to opt only for direct investment. hence it is less risky too. Adani Exports. For example. Company can also set up overseas branches to sell their products.some modifications. Micro Environment Forces: The Company : A company Safe Express. Torrent Pharmaceuticals has license to sell the cardiovascular drugs of Chinese manufacturer Tasly. other departments of safe express also expanding their horizon. It may become risky if the market matures or unstable government exists. a company enters the international market by providing the know how of the product to the domestic manufacturer. marketing and other activities are carried out by the local manufacturer. . company works with independent international marketing India to produce and sell their mother boards.

Retailers.g. Suppliers are a source of competition to firms today.Marketing intermediaries play an important role in the distribution. Financial publics influence the company¶s ability to obtain funds. people for ethical treatment of animals (PETA) or Greenpeace. b. For example. Their role in the marketing of product is increasing every day. a simple step could be that the product should be positioned differently and the company should be able to provide better services. Competitors. Generally we can divide the markets into five different categories. A company should monitor its immediate competitors as its sale will be affected by the nature and intensity of the competitors. the potential competitors should also be anticipated. jobbers and carry forward agents are few of the intermediaries. which help a company to generate the financial resources. In addition to existing competitors. the author of Competitive Advantage of Nations suggested that. wholesalers. Internal publics: Employees who help in creating proper image for the company through word of mouth. Media publics carry news and features about the company e. in addition to direct competition. Retailers are final link between the company and the customers. Banks. We can identify six types of publics : 1. Firms which expand in the same vertical for e. Citizen action groups: Formed by the consumer or environmental groups. bulk breaking. How do companies or enterprises survive and grow under the above circumstances. Small firms with low overheads producing duplicates. Pepsi entered the snacks sector competing with pure snack producers like Haldiram. For a large retail store like Reliance Retail or Big Bazaar the suppliers play the most significant role in both cost and time. Deccan Herald 3. India is a manufacturing hub. Timely supplies reduce stocking of goods and blocking of space. and insurance regulation agency(IRDA) of the government 4. 5. Advertisement regulation agencies.g. General publics: a company should be concerned towards general publics¶ attitude towards its products and services. Competition may arise from a. Suppliers are the first link in the entire supply chain of the company. Godrej which manufactured office furniture and steel cupboards went on to the entire range of home furniture thereby giving competition to pure home furniture makers. Suppliers There are many kinds of suppliers to an enterprise or an institution. 2. Firms which diversify into certain products by merely being in the particular industry for e. Many companies adopted supplier relation management system to manage them well. For example. Stocking and delivering. companies should also consider competition from substitutes. Michael Porter. telecom regulation agency( TRAI). Publics These are microenvironment groups. . creating the image. Customers A company may sell their products directly to the customer or use marketing intermediaries to reach them. at the same time meet customer requirements. and selling the goods and services to customer are some of the major functions carried out by the middlemen. raw material suppliers. There are typically. office item suppliers and so on. labour suppliers.g. While we shall study this in detail later. 6. brokers. The sale of Coca cola will be affected by Pepsi cola. or Britannia cheese by Amul cheese. For Volvo. agents. investment houses and stockholders are the major financial publics. energy and fuel suppliers. examining the companies¶ policy and developing the attitude towards the product. Direct or indirect marketing depends on what type of markets Company serves. selling and promoting the goods and services. c. Hence any problems or cost escalation in this stage will have direct effect on the company. In a globalised scenario suppliers are even more important as competition goes up manifold! The Tamil Nadu State Electricity Board imports coal from New Zealand despite huge coal reserves in India.

Government market and e. MRF also sells TYREs to BMTC and KSRTC. Reseller market d. pleasure. MRF. If MRF buys the old tyres. Many consumers are emotionally motivated or driven to make certain purchases. Social Appeal Social factors cause people to make purchases and include such aspects as recognition. Here are just some of the various different kinds of advertising appeals seen in the media today: Emotional Appeal An emotional appeal is related to an individual¶s psychological and social needs for purchasing certain products and services. Humor can be used effectively when it is related to some benefit that the customer can derive without which the joke might overpower the message. involvement. If MRF sells tyres in African or American countries then it is operating in the international market. It operates in business markets by selling tyres to companies like Maruti Udyog limited. happiness. rejection. operates in consumer market. respect. acceptance. a tyre company sells its product directly to consumer (in case of urgency. Advertising experts indicate that using moderate levels of fear in advertising can prove to be effective. joy. .They are a. status and approval. transport organizations of Karnataka government. Keep on reading to know the various different types of advertising appeals that can be seen in the media today. stimulation. Humor can be an excellent tool to catch the viewer¶s attention and help in achieving instant recall which can work well for the sale of the product. humor. pride. customer purchases directly from showroom) i. Fear Appeal Fear is also an important factor that can have incredible influence on individuals. International market The following example illustrates different markets. Advertisers aim to cash in on the emotional appeal and this works particularly well where there is not much difference between multiple product brands and its offerings. Consumer market. Fear is often used to good effect in advertising and marketing campaigns of beauty and health products including insurance. retreads it and sells it to the consumer at a profit then company is operating in the reseller market 1 (b) Advertising appeals aim to influence the way consumers view themselves and how buying certain products can prove to be beneficial for them. Emotional appeal includes personal and social aspects. Business market c. The message conveyed through advertising appeals influences the purchasing decisions of consumers. self esteem. affiliation. Humor Appeal Humor is an element that is used in around 30% of the advertisements. love. b. Personal Appeal Some personal emotions that can drive individuals to purchase products include safety. nostalgia etc. fear. ambition.e. sentiment. comfort.

Less than Perfect Appeal Advertisements often try to influence people to make certain purchases by pointing out their inadequacies or making them feel less perfect and more dissatisfied with their present condition. Adventure Appeal This appeal is directed towards giving the impression that purchasing a product will change the individual¶s life radically and fill it with fun. Emotional Words/Sensitivity Appeal . It is also suited for business to business advertisers and for products that are complex and that need high degree of attention and involvement. The appeal is used to signify that buying certain products will have a positive impact on the opposite sex and improve your romantic or love life. adventure and action. utilitarian or practical needs for particular products and services. Snob Appeal This appeal is directed towards creating feeling of desire or envy for products that are termed top of the line or that have considerable qualities of luxury.Music Appeal Music can be used as types of advertising appeals as it has a certain intrinsic value and can help in increasing the persuasiveness of the advertisement. Such appeals emphasize the characteristics and features of the product and the service and how it would be beneficial to own or use the particular brand. Scarcity Appeal Scarcity appeals are based on limited supplies or limited time period for purchase of products and are often used while employing promotional tools including sweepstakes. It can also help capture attention and increase customer recall. contests etc. The message is that the product will infuse the perfection or the stated qualities in you. automobiles and other products use these types of advertising appeals. Brand Appeal This appeal is directed towards people who are brand conscious and wish to choose particular products to make a brand statement. These types of advertising appeals are used in cosmetic and health industries. Rational Appeal Rational appeals as the name suggests aims to focus on the individual¶s functional. Frangrances. Romance Appeal These advertisements display the attraction between the sexes. Print media is particularly well suited for rational appeals and is often used with good success. This type of appeal aims at creating the impression of the perfect person. elegance associated with them. Masculine Feminine Appeal Used in cosmetic or beauty products and also clothing.

. Plain Appeal These advertisements use every day aspects of life and appeal to ordinary people regarding the use of a product or service. business and retailers. They buy products for business use. The characteristics of business market are: I) Focus: The focus of the market is organizations. Internet is extensively used. Play on Words Advertisements also make effective use of catch phrases to convey the message. III) Demand: The demand for products is generally inelastic. It is not much affected by price. It appeals towards the popularity aspect or coolness aspect of a person using a particular product or service 5 (a) Definition of Business Market and its Features Categories: Business market consists of profit making organizations. reselling or making other products. IV) Professionalism: The buying is done by trained and skilled professionals. It is business to business marketing.These advertisements are used to drive at and influence the sensitivities of consumers. Such appeals help in brand recognition and recall and can be quite popular with the youth in particular. The product is backed by company's reputation. sales force and competitive price. Bandwagon Appeal This type of advertising appeal is meant to signify that since everybody is doing something you should be a part of the crowd as well. They can be industries. II) Profit: The customers buy products for business use. Buying is dine by professional people. reselling or making other products. They are geographically concentrated. Their aim is to make profit. Statistics Advertisements also use statistics and figures to display aspects of the product and its popularity in particular. Cosmetic products in particular make use of these appeals. Quotations and tenders are used as buying instruments. Endorsement Celebrities and well known personalities often endorse certain products and their pitching can help drive the sales. Buyers buy in large volume. Youth Appeal Advertisements that reflect youth giving aspects or ingredients of products use these types of appeals.

The image of the company provides credibility to product 3 (a) Assignment 2 A market is any one of a variety of different systems. There is no emotional buying. and yet another for contracts for the future delivery of a commodity. as a commodity wholesale market. another for chewing gum in a playground. and as an informal discussion between two individuals. types and variety of human communities. location. procedures. in which buyers and sellers do not physically interact during negotiation. institutions.V) Rationality: The buying is rational based on adequate information. as a private electronic market. A market can be organized as an auction. VII) Relationship: There is close relationship between the buyer and the seller. as a shopping center. VIII) Promotion: Sales force is used for promotion. Hence there can be a market for cigarettes in correctional facilities. shopping centers and shopping malls. and illegal markets such as the market for illicit drugs. VI) Channel: Buying is generally done directly from manufacturers or authorized dealers. It is an arrangement that allows buyers and sellers to exchange things. as well as the types of goods and services traded. international currency and commodity markets. Markets vary in size. Relationship marketing is important. legally created markets such as for pollution permits. social relations and infrastructures whereby persons trade. geographic scale. Current market size Projected market growth rate Number of competitors. where a good is exchanged illegally and virtual markets. such as eBay. level of fragmentation Intensity of competition Technological skills required Production/operations skills required Capital requirements Other barriers to entry Seasonal and cyclical factors . Markets of varying types can spontaneously arise whenever a party has interest in a good or service that some other party can provide. range. There can be black markets. The list below presents some of the more significant market characteristics that should be considered. Some examples include local farmers¶ markets held in town squares or parking lots. There can also be markets for goods under a command economy despite pressure to repress them. and goods and services are exchanged. An industry or market can be analyzed for its attractiveness to a particular company or organization on a number of different characteristics. as a complex institution such as a stock market. forming part of the economy.

Accessible: The segment should be accessible through existing network of people at an affordable cost. For consumer markets. 6.Industry profitability and returns Social. profile and other relevant characteristics of the segment must be measurable and obtainable in terms of data. Actionable: The segments which a company wishes to pursue must be actionable in the sense that there should be sufficient finance. All marketers choose target segments and base their marketing plans. market segments must exhibit five characteristics: 1. such as price. Measurable and Obtainable: The size. political. which boost competition. Businesses also have the resources to buy from global markets. If the information is not obtainable. no segmentation can be carried out. buyers and the likely long term relationships. 4. and capability to take them all. type of marketing and distribution on those target segments. Consumer marketing is targeted at large groups with the help of mass media and retailers. the small segment might disproportionately increase the cost and hence products are priced too high. 5 (b) To be maximally useful. the negotiation procedure among the purchaser and retailer is more personal in business marketing. Differentiable: The segments should be different from each other and may require different 4Ps and programs. Businesses usually emphasis more on a product's functionality as compare to anything else. Lots of products that skilled buyers buy will be utilized at the workplace so it is difficult to make any kind of emotional tie to the goods. personnel. But the nature of business purchasing is influenced by many decision makers. 3. New product development The process . regulatory and environmental factors Strategic fits with other businesses already owned What Is The Difference Between Consumer Market Vs Business Market? The basics of both kinds of marketing are basically similar but the problems faced can vary. 5. this type of marketing is more logical rather than emotional. Also. Substantial: The segment should be large enough to be profitable. 2.

4. focus groups.1. company's R&D department. service. and rapid prototyping  What will it cost to produce it? o Testing the Concept by asking a sample of prospective customers what they think of the idea. Concept Development and Testing o Develop the marketing and engineering details  Investigate intellectual property issues and search patent data bases  Who is the target market and who is the decision maker in the purchasing process?  What product features must the product incorporate?  What benefits will the product provide?  How will consumers react to the product?  How will the product be produced most cost effectively?  Prove feasibility through virtual computer aided rendering. or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. or store concepts . 2. salespeople. Beta Testing and Market Testing o Produce a physical prototype or mock-up o Test the product (and its packaging) in typical usage situations o Conduct focus group customer interviews or introduce at trade show o Make adjustments where necessary o Produce an initial run of the product and sell it in a test market area to determine customer acceptance 6. Idea Generation is often called the "fuzzy front end" of the NPD process o Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths. corporate spies. Opportunities & Threats). Business Analysis o Estimate likely selling price based upon competition and customer feedback o Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation o Estimate profitability and break-even point 5. Weaknesses.idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step). employees. Usually via Choice Modelling. o The screeners should ask several 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? 3. Technical Implementation o New program initiation o Finalize Quality management system o Resource estimation o Requirement publication o Publish technical communications such as data sheets o Engineering operations planning o Department scheduling o Supplier collaboration o Logistics plan . trade shows. Idea Screening o The object is to eliminate unsound concepts prior to devoting resources to them. competitors. Market and consumer trends. o Idea Generation or Brainstorming of new product.

The team is responsible for all aspects of the project. great amounts of uncertainty and change may exist. provide access to a wider skill set. see the Ulrich and Eppinger. and speeds the overall process. For the more innovative products indicated on the diagram above. many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). The adoption of a new technology can be analyzed using a variety of diffusion theories such as the Diffusion of innovations theory. which makes it difficult or impossible to plan the complete project before starting it. and product life cycles are relatively short. Because the NPD process typically requires both engineering and marketing expertise. choosing an appropriate blend of the two is important. Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities. Ullman references below. Also. Most industry leaders 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 (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation). In those industries where products are technically complex. by looking at the See also or References sections below) that this article is slanted more toward the marketing side.[1][2] People respond to new products in different ways. and they usually report to senior management (often to a vice president or Program Manager). and need) o Product Costs (fixed & variable) o Forecast of unit volumes.o Resource plan publication o Program review and monitoring o Contingencies . New Product Pricing o Impact of new product on the entire product portfolio o Value Analysis (internal & external) o Competition and alternative competitive technologies o Differing value segments (price. strategic alliances among several organizations helps to spread the costs. In this case. cross-functional teams are a common way of organizing projects.what-if planning 7. a more flexible approach may be advisable. Bernstein and Macias describe an integrated process that breaks down [3] the complex task of new product pricing into manageable elements. value. A new product pricing process is important to reduce risk and increase confidence in the pricing and marketing decisions to be made. and profit These steps may be iterated as needed. development research is typically expensive. To reduce the time that the NPD process takes. For more of an engineering slant. Commercialization (often considered post-NPD) o Launch the product o Produce and place advertisements and other promotions o Fill the distribution pipeline with product o Critical path analysis is most useful at this stage 8. Some steps may be eliminated. revenue. Observe (for example. . notice that because engineering and marketing expertise are usually both critical to the process. from initial idea generation to final commercialization.

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