NAME-MIRAL PATEL

ROLL NO-119060
SUBJECT-MARKETING MANAGEMENT
Q1. Discuss the new product adoption and diffusion process in detail.

ANS) A new product adoption can be defined as: “A good, service or idea that is
“perceived” by some potential customers as new. It may have been available for
some time, but many potential customers have not yet adopted the product nor
decided to become a regular user of the product. Thus if they buy this product, it
is new product adoption.”

Research suggests that customers go through five stages in the process of new
product adoption or service: these are summarized below:

(1) Awareness – the customer becomes aware of the new product, but lacks
information about it.

(2) Interest – the customer seeks information about the new product.

(3) Evaluation – the customer considers whether trying the new product makes
sense.

(4) Trial – the customer tries the new product on a limited or small scale to
assess the value of the product.

(5) Product Adoption – the customer decides to make full and/or regular use
of the new product.

Thus if a customer goes through all the above stages he is assumed to have
adopted the product. There are various stages post adoption as well which
decide whether or not the customer will be retained with the product. One of
such things is post sale service which is extremely important to retain the
customer.
The market diffusion process describes how an innovation spreads through a
market. In addition, it provides information that enables management to identify
target markets. For these reasons, it is crucial to understand the facets of the
market diffusion process and its importance for the new product development
process (NPD).

The market diffusion process is strongly linked to the adoption process, which
describes the way in which an individual customer learns about an innovation.
During the market diffusion process, the marketer must recognize that people
differ greatly in their readiness to adopt new products.

Types of Customers in the Market Diffusion Process

1. Innovators

2. Early adopters

3. Early Majority

4. Late majority

5. Laggards
Innovators-Innovators are the “early-bird” customers, that is, the first ones to
adopt the new product. They do normally not represent more than 2.5% of the
population. They are venturesome in nature and are prepared to run the risk of
buying a product that ultimately proves not to live up to their expectations,
rather than missing the chance to try something new. For the marketer,
innovators are important since they represent the initial target and influence
later adopters. A new product that fails to win the esteem of this group is not
very likely to ever reach and penetrate the mass market.

Early adopters- Early adopters represent the next 13.5% of the population to
adopt the new product. As respected members of the community, they are likely
to be opinion leaders for others who will only buy the product when it has been
“approved” by the early adopters.

Early Majority- The early majority accounts for about 34% of the population.
This type of customer is more cautious of new products than the early adopters.
If they are exposed to sufficient information, they will follow the example of the
early adopters. The early majority is an important target for firms who aim for
taking their products from the introduction to the growth stage of the PLC

Late majority-The late majority are the 34% of the population who are more
skeptical about new products and harder to persuade. They place greater
importance on word of mouth recommendations than the media for to obtain
information about new products

Laggards-Laggards are the last 16% of the population. They are the most
reluctant to try new products. Often, they adopt new products only when their
favoured items have been discontinued. Members of this group are often older
and/or from lower socio-economic groups.
Q-2) Discuss the new product development process with example
ANS) Eight major steps in the new product development process.
Idea generation – The New Product Development Process-The new product
development process starts with idea generation. Idea generation refers to the
systematic search for new-product ideas. Typically, a company generates
hundreds of ideas, maybe even thousands, to find a handful of good ones in the
end.
Two sources of new ideas can be identified: Internal idea sources: the company
finds new ideas internally. That means R&D, but also contributions from
employees.
External idea sources: the company finds new ideas externally. This refers to all
kinds of external sources, e.g. distributors and suppliers, but also competitors.
The most important external source are customers, because the new product
development process should focus on creating customer value.
Example- Interacting with Employees Employees can be a source of ideas for
improving production,
products, and services.55 Consider what these three firms have done:
• Toyota reports its employees submit 2 million ideas annually (about 35
suggestions per employee), more than
85 percent of which are implemented.56
• LinkedIn launched an in-house incubator that allows any employee to organize
a team and pitch a project to a
group of executives. The company has also created “hackdays”—one Friday a
month when employees work on
creative projects.57
Idea screening – The New Product Development ProcessThe next step in the
new product development process is idea screening. Idea screening means
nothing else than filtering the ideas to pick out good ones. In other words, all
ideas generated are screened to spot good ones and drop poor ones as soon as
possible. While the purpose of idea generation was to create a large number of
ideas, the purpose of the succeeding stages is to reduce that number. The reason
is that product development costs rise greatly in later stages. Therefore, the
company would like to go ahead only with those product ideas that will turn
into profitable products. Dropping the poor ideas as soon as possible is,
consequently, of crucial importance.
Example- Friends The NBC situation comedy Friends enjoyed a 10-year run
from 1994 to 2004 as a perennial ratings powerhouse. But the show almost
didn’t see the light of the day. According to an internal NBC research report, the
pilot episode was described as “not very entertaining, clever, or original” and
was given a failing grade, scoring 41 of a possible 100. Ironically, the pilot for
an earlier hit sitcom, Seinfeld, was also rated “weak,” though the pilot for the
medical drama ER scored a healthy 91. Courteney Cox’s Monica was the
Friends character who scored best with test audiences, while characters
portrayed by Lisa Kudrow and Matthew Perry were deemed to have marginal
appeal, and the Rachel, Ross, and Joey characters scored even lower. Adults 35
and older in the sample found the characters as a whole “smug, superficial, and
self-absorbed.”
Concept development and Testing – The New Product Development Process.
To go on in the new product development process, attractive ideas must be
developed into a product concept. A product concept is a detailed version of the
new-product idea stated in meaningful consumer terms. You should distinguish
  A product idea a an idea for a possible product
 A product concept à a detailed version of the idea stated in meaningful
consumer terms
 A product image à the way consumers perceive an actual or potential
product.
Let’s investigate the two parts of this stage in more detail.
Concept development-Imagine a car manufacturer that has developed an all-
electric car. The idea has passed the idea screening and must now be developed
into a concept. The marketer’s task is to develop this new product into
alternative product concepts. Then, the company can find out how attractive
each concept is to customers and choose the best one. Possible product concepts
for this electric car could be
 Concept 1: an affordably priced mid-size car designed as a second family
car to be used around town for visiting friends and doing shopping.
 Concept 2: a mid-priced sporty compact car appealing to young singles
and couples.
 Concept 3: a high-end midsize utility vehicle appealing to those who like
the space SUVs provide but also want an economical car.

Concept testing-New product concepts, such as those given above, need to be

tested with groups of target consumers. The concepts can be presented to
consumers either symbolically or physically. The question is always: does the
particular concept have strong consumer appeal? For some concept tests, a word
or picture description might be sufficient. However, to increase the reliability of
the test, a more concrete and physical presentation of the product concept may
be needed. After exposing the concept to the group of target consumers, they
will be asked to answer questions in order to find out the consumer appeal and
customer value of each concept.
Under some conditions, researchers will collect the data by presenting not a
full-profile description of each offer, but two factors at a time.
Example, Respondents may see a table with three price levels and three
package types and indicate which of the nine combinations they would like best,
second-best, and so on. Another table consists of trade-offs between two other
variables. This trade-off approach may be easier to use when there are many
variables and possible offers. However, it is less realistic in that respondents are
focusing on only two variables at a time. Adaptive conjoint analysis (ACA) is a
“hybrid” data collection technique that combines self-stated or explicated
importance ratings of attributes with pair-wise trade-off tasks comparing two
options.
Marketing strategy development – The New Product Development
ProcessThe next step in the new product development process is the marketing
strategy development. When a promising concept has been developed and
tested, it is time to design an initial marketing strategy for the new product
based on the product concept for introducing this new product to the market.The
marketing strategy statement consists of three parts and should be formulated
carefully
 A description of the target market, the planned value proposition, and the
sales, market share and profit goals for the first few years
 An outline of the product’s planned price, distribution and marketing
budget for the first year
 The planned long-term sales, profit goals and the marketing mix strategy.
Example The target market for the instant breakfast drink is families with
children who are receptive to a new,convenient, nutritious, and inexpensive
form of breakfast. The company’s brand will be positioned at the higher-
price, higher-quality end of the instant-breakfast-drink category. The
company will aim initially to sell 500,000 cases or 10 percent of the market,
with a loss in the first year not exceeding $1.3 million. The second year it
will aim for 700,000 cases or 14 percent of the market, with a planned profit
of $2.2 million
Business analysis – Once decided upon a product concept and marketing
strategy, management can evaluate the business attractiveness of the
proposed new product. The fifth step in the new product development
process involves a review of the sales, costs and profit projections for the
new product to find out whether these factors satisfy the company’s
objectives. If they do, the product can be moved on to the product
development stage.In order to estimate sales, the company could look at the
sales history of similar products and conduct market surveys. Then, it should
be able to estimate minimum and maximum sales to assess the range of risk.
When the sales forecast is prepared, the firm can estimate the expected costs
and profits for a product, including marketing, R&D, operations etc.
 Product development – The new product development process goes on with
the actual product development. Up to this point, for many new product
concepts, there may exist only a word description, a drawing or perhaps a rough
prototype. But if the product concept passes the business test, it must be
developed into a physical product to ensure that the product idea can be turned
into a workable market offering. The problem is, though, that at this stage, R&D
and engineering costs cause a huge jump in investment.The R&D department
will develop and test one or more physical versions of the product concept.
Developing a successful prototype, however, can take days, weeks, months or
even years, depending on the product and prototype methods.Also, products
often undergo tests to make sure they perform safely and effectively. This can
be done by the firm itself or outsourced.In many cases, marketers involve actual
customers in product testing. Consumers can evaluate prototypes and work with
pre-release products. Their experiences may be very useful in the product
development stage.
Example-Firms rigorously test product prototypes internally. Vibram, which
makes its own FiveFingers line as well as soles for all types of shoes—such as
for skateboarding, cycling, rock climbing, and fly fishing—employs a team of
product testers. The company puts its products into the most extreme conditions
by executing tests directly in the field and employing a series of procedures:93
If our chemist creates a new compound targeted towards road running
applications, first we perform a battery of lab tests to understand the
compound’s physical properties. Next, we bring natural environments and
surfaces into the laboratory and calculate information. Then lastly shoes are
distributed to our tester team who will document things like weather/temp,
distance, location, and running surfaces, etc. They’ll comment on the
differences in the grip of the soles. We then compile the results and make a
decision on validation.
Test marketing – The last stage before commercialisation in the new product
development process is test marketing. In this stage of the new product
development process, the product and its proposed marketing programme are
tested in realistic market settings. Therefore, test marketing gives the marketer
experience with marketing the product before going to the great expense of full
introduction. In fact, it allows the company to test the product and its entire
marketing programme, including targeting and positioning strategy, advertising,
distributions, packaging etc. before the full investment is made.The amount of
test marketing necessary varies with each new product. Especially when
introducing a new product requiring a large investment, when the risks are high,
or when the firm is not sure of the product or its marketing programme, a lot of
test marketing may be carried out.
Commercialisation-Test marketing has given management the information
needed to make the final decision: launch or do not launch the new product. The
final stage in the new product development process is commercialisation.
Commercialisation means nothing else than introducing a new product into the
market. At this point, the highest costs are incurred: the company may need to
build or rent a manufacturing facility. Large amounts may be spent on
advertising, sales promotion and other marketing Some factors should be
considered before the product is commercialized:
 Introduction timing. For instance, if the economy is down, it might be
wise to wait until the following year to launch the product. However, if
competitors are ready to introduce their own products, the company
should push to introduce the new product sooner.
 Introduction place. Where to launch the new product? Should it be
launched in a single location, a region, the national market, or the
international market? Normally, companies don’t have the confidence,
capital and capacity to launch new products into full national or
international distribution from the start. Instead, they usually develop a
planned market rollout over time.
Q-3) Discuss the product life cycle with example
Definition: The product life-cycle (PLC) refers to the different stages a product
goes through from introduction to withdrawal.The product life-cycle refers to a
likely pathway a product may take. It has implications for the marketing
strategy of a firm as it seeks to introduce, grow and maintain market share.
In this case, the product has four stages
Introduction phase
 Raising product awareness through advertising / word of mouth.
 Offering the product at discount – penetration pricing to tempt customers
to try the product.
 Target early adopters and influential market leaders. For example, firms
may offer free product reviews to influential bloggers in the market.
 Firms need to find willing suppliers who are willing to stock.
 This phase will not be profitable because costs are high, but revenue
relatively low.
Growth
 Firms need to capitalise on growth to extend product sales from small
retailers to big supermarkets.
 Firms can change marketing from niche areas to a more mass market.
 The firm can adapt to consumer feedback and offer new features/better
consumer support.
Maturity
 With peak market penetration, the firm may seek to increase prices to
increase profitability. However, if the market is very competitive the firm
may feel the need to keep prices low to defend market share.
 The firm may concentrate on seeking to improve the product to gain
market differentiation and extend the period of maturity.
Decline
 In the decline phase, the firm may feel it is best to let the product go –
e.g. diesel cars cannot solve issues of pollution and damage to its brand
reputation. However, with an iPhone, Apple let old models go, to be
replaced by the next model. Decline and discontinuing the product can be
a way to force customers to buy an upgrade – next time their contract
expires.
 Managed decline by targeting on a niche market. For example, vinyl
records have declined, but now they have become a very profitable niche
for record labels. Total sale revenues from vinyl are close to sale
revenues from digital downloads because record companies can charge a
premium price for the good.
Example of product-life cycle
Electric Vehicles
The rise of electric vehicles shows more of a growth stage of the product life
cycle. Companies like Tesla (TSLA) - Get Report have been capitalizing on the
growing product for years, although recent challenges may signal changes for
the particular company.Still, while the electric car isn't necessarily new, the
innovations that companies like Tesla have made in recent years are
consistently adapting to new changes in the electric car market, signaling its
growth phase.
Typewriter
A classic example of the scope of the product life cycle is the typewriter.When
first introduced in the late 19th century, typewriters grew in popularity as a
technology that improved the ease and efficiency of writing. However, new
electronic technology like computers, laptops and even smartphones have
quickly replaced typewriters - causing their revenues and demand to drop off.
Overtaken by the likes of companies like Microsoft (MSFT) - Get Report ,
typewriters could be considered at the very tail end of their decline phase - with
minimal (if existent) sales and drastically decreased demand. Now, the modern
world almost exclusively uses desktop computers, laptops or smartphones to
type - which in turn are experiencing a growth or maturity phase of the product
life cycle.
Q-4)What is retailing? Discuss types of retailers in detail.
ANS) Retail, by definition, is the sale of goods or service from a business to a
consumer for their own use. A retail transaction handles small quantities of
goods whereas wholesale deals with the purchasing of goods on a large scale.
Retail transactions are not to be confused with online transactions; goods must
be sold from a single point directly to a consumer for their end users.A retailer
is a person or business that you purchase goods from. Retailers typically don’t
manufacture their own items. They purchase goods from a manufacturer or a
wholesaler and sell these goods to consumers in small quantities.
Retailing is the distribution process of a retailer obtaining goods or services and
selling them to customers for use. This process is explained through the supply
chain.
Types of retailers in detail.
Department Stores-Department stores are characterized by their very wide
product mixes. That is, they carry many different types of merchandise, which
may include hardware, clothing, and appliances. Each type of merchandise is
typically displayed in a different section or department within the store. The
depth of the product mix depends on the store, but department stores’ primary
distinction is the ability to provide a wide range of products within a single
store. For example, people shopping at Macy’s can buy clothing for a woman, a
man, and children, as well as house wares such as dishes and luggage
Chain Stores-The 1920s saw the evolution of the chain store movement.
Because chains were so large, they were able to buy a wide variety of
merchandise in large quantity discounts. The discounts substantially lowered
their cost compared to costs of single unit retailers. As a result, they could set
retail prices that were lower than those of their small competitors and thereby
increase their share of the market. Furthermore, chains were able to attract many
customers because of their convenient locations, made possible by their
financial resources and expertise in selecting locations.
Supermarkets-Supermarkets evolved in the 192os and 1930s. For example,
Piggly Wiggly Food Stores, founded by Clarence Saunders around 1920,
introduced self-service and customer checkout counters. Supermarkets are large,
self-service stores with central checkout facilities. They carry an extensive line
of food items and often nonfood products. There are 37,459 supermarkets
operating in the United States, and the average store now carries nearly 44,000
products in roughly 46,500 square feet of space. The average customer visits a
store just under twice a week, spending just over $30 per trip. Supermarkets’
entire approach to the distribution of food and household cleaning and
maintenance products is to offer large assortments these goods at each store at a
minimal price.
Discount Retailers-Discount retailers, like Ross Dress for Less and Grocery
Outlet, are characterized by a focus on price as their main sales appeal.
Merchandise assortments are generally broad and include both hard and soft
goods, but assortments are typically limited to the most popular items, colors,
and sizes. Traditional stores are usually large, self-service operations with long
hours, free parking, and relatively simple fixtures. Online retailers such as
Overstock.com have aggregated products and offered them at deep discounts.
Generally, customers sacrifice having a reliable assortment of products to
receive deep discounts on the available products.
Warehouse Retailers-Warehouse retailers provide a bare-bones shopping
experience at very low prices. Costco is the dominant warehouse retailer, with
$79.7 billion in sales in 2014. Warehouse retailers streamline all operational
aspects of their business and pass on the efficiency savings to customers. Costco
generally uses a cost-plus pricing structure and provides goods in wholesale
quantities.

Franchises-A strip mall with many stores side by side.The franchise approach
brings together national chains and local ownership. An owner purchases a
franchise which gives her the right to use the firm’s business model and brand
for a set period of time. Often, the franchise agreement includes well-defined
guidance for the owner, training, and on-going support. The owner, or
franchisee, builds and manages the local business. Entrepreneur magazine posts
a list each year of the 500 top franchises according to an evaluation of financial
strength and stability, growth rate, and size. The 2016 list is led by Jimmy
John’s gourmet sandwiches, Hampton by Hilton midprice hotels, Supercuts hair
salon, Servpro insurance/disaster restoration and cleaning, and Subway
restaurants.
Malls and Shopping Centers-Malls and shopping centers are successful
because they provide customers with a wide assortment of products across
many stores. If you want to buy a suit or a dress, a mall provides many
alternatives in one location. Malls are larger centers that typically have one or
more department stores as major tenants. Strip malls are a common string of
stores along major traffic routes, while isolated locations are freestanding sites
not necessarily in heavy traffic areas. Stores in isolated locations must use
promotion or some other aspect of their marketing mix to attract shoppers.
Online Retailing-Online retailing is unquestionably a dominant force in the
retail industry, but today it accounts for only a small percentage of total retail
sales. Companies like Amazon and Geico complete all or most of their sales
online. Many other online sales result from online sales from traditional
retailers, such as purchases made at Nordstrom.com. Online marketing plays a
significant role in preparing the buyers who shop in stores. In a similar
integrated approach, catalogs that are mailed to customers’ homes drive online
orders. In a survey on its Web site, Land’s End found that 75 percent of
customers who were making purchases had reviewed the catalog first.
Catalog Retailing-Catalogs have long been used as a marketing device to drive
phone and in-store sales. As online retailing began to grow, it had a significant
impact on catalog sales. Many retailers who depended on catalog sales—Sears,
Land’s End, and J.C. Penney, to name a few—suffered as online retailers and
online sales from traditional retailers pulled convenience shoppers away from
catalog sales. Catalog mailings peaked in 2009 and saw a significant decrease
through 2012. In 2013, there was a small increase in catalog mailings. Industry
experts note that catalogs are changing, as is their role in the retail marketing
process. Despite significant declines, U.S. households still receive 11.9 billion
catalogs each year.
Nonstore Retailing-Benefit vending machine. It is pink and shaped like an ice
cream truck. Inside is a wide selection of makeup and beauty products. Beyond
those mentioned in the categories above, there’s a wide range of traditional and
innovative retailing approaches. Although the Avon lady largely disappeared at
the end of the last century, there are still in-home sales from Arbonne facial
products, cabi women’s clothing, Wine Shop at Home, and others. Many of
these models are based on the idea of a woman using her personal network to
sell products to her friends and their friends, often in a party setting. Vending
machines and point-of-sale kiosks have long been a popular retail device. Today
they are becoming more targeted, such as companies selling easily forgotten
items such as small electronics devices and makeup items—to travelers in
airports. Each of these retailing approaches can be customized to meet the needs
of the target buyer or combined to span a range of needs.

REFERENCE
Marketing Management philip kotler
https://courses.lumenlearning.com/clinton-marketing/chapter/reading-types-of-retailers/

https://www.marketing91.com/
https://marketing-insider.eu/market-diffusion-process/

https://www.thestreet.com/markets/commodities/product-life-cycle-14882534