SBBAMARKETI

NG MANAGEMENTUNI
T-I
II

Quest
ionNo:
1)Whati
spr
oduct?Expl
aint
hef
eat
uresandi
mpor
tanceofpr
oduct
.Di
scussv
ari
ousl
evel
sofpr
oduct
.

Ans:Pr oductisanythi
ngthatcanbeof
feredt
oamar kett
hatmi
ghtsat
isf
yawantorneed.Aproducti
sabundleofphysicalor
chemicalpropert
ieswhichhassomeuti
l
ity
.Aproductmeansanobj
ectwhi
chsat
isf
iest
heneedofthecust
omer.Thusfan,tabl
e,
pen,cooler
,chai
retc.ar
eproducts.

Apr oducti
stheitem off
eredf orsal
e.Apr oductcanbeaser vi
ceorani t
em.Itcanbephy sicalorinv i
rt
ualorcyberform.Every
productismadeatacostandeachi ssol datapr ice.Thepr
icethatcanbechar geddependsont hemar ket
,thequalit
y,t
he
mar ket
ingandthesegmentt hatistar
geted.Eachproducthasausefulli
feaft
erwhichitneedsr epl
acement,andal i
fecycl
eafter
whichithastobere-i
nvented.I
nFMCGpar lance,abrandcanberevamped,r
e-l
aunchedorextendedtomakei tmor erel
evanttot
he
segmentandt i
mes,oft
enkeepi ngtheproductalmostthesame.

Feat
uresofPr
oduct
Her
ehasdescr ibedsomef eatur
esofpr oduct s.
a)TANGI BILITY:Itshouldbeper cept iblebyt het ouch.Ani t
em t obecal l
edapr oductshoul dhav eat angibil
i
tychar
acter–t ouch,
seenorf eeling.Fori
nstance,car, shirt,book, etc.
b)I NTANGI BLEATTRI BUTES:Thepr oductmaybei ntangible,int hef orm ofser v i
ces,forinstance,bankinginsur
anceser v i
ces,
repai
ri
ng,et c.I
tisanassociatedf eat ure.Fori nstance,scoot erisat angibleproduct,andwhenf reeser v
ici
ngisoffer
edbyt he
sell
er,
thent heproducti
snotonl yat angibleitem butal soani ntangi bleone.
c)ASSOCI ATEDATTRI BUTES:Suchat tri
butesmaybebr an,package,war r
anty,etc.Forinstance,HindustanLever
’s“vanaspat hi
ghee”hasabr andnameDAALDAandwi t
hi t
spackagei tcanbei dentifiedbytheconsumer s.Ithasdevelopedanimaget hatall
kindsofv anaspathigheesoldar ebei ngr efer
r edtoasDALDAghee.
d)EXCHANGEVALUE:Whet hert hepr oductist angi bleorintangi ble,itshoul dhaveexchangev alueandmustbecapabl eofbei ng
exchangedbet weensell
erandbuy erf ormut ual l
yagr eedpr ice.
e)CONSUMERSATI SFACTION:Pr oduct sshoul dhav etheabi li
tytoof f
erv al
uesatisfact
iontot heconsumer .Thesati
sfacti
onmay
bebothr eal andpsychologi
cal.Fori nstance, whenwebuySNOW weal sobuybeaut y–apr oductwur habundleofutil
it
ies.

I
mpor
tanceofPr
oduct
Theknowledgeofpr
oducti
simpor
tanti
nmar
ket
ingi
nthesenset
hatt
her
ecanbenomar
ket
ingf
unct
ionswi
thoutt
heexi
stenceofa
product
.

Apr
oductassumesi tsimpor t
ancei nconsi derationoff oll
owi ngf acts:
a) Thekeyel ementi nasuccessf ulmar ket i
ngpol icyandst rategyi sf i
ndingandmeet ingtheneedsoft heconsumer s.A
productthroughi tstangibleattri
but eslikequal i
ty,services,andameni ti
escanmeett heconsumer s’needsandwant s.
b) Fortheper formanceofmar keti
ngf unct ionslikesel li
ng, purchasing, distr
ibuti
on, et
c.t heexistenceofapr oductismust.
c) Thesuccessofacompanyofi t
smar ket i
ngef forts,inmostcases, dependsont hepr oductpol i
cy.
d) Thepoliciesr el
atingtopr icing,distri
but ion,salespr omot i
on,andcust omersat i
sfactionareal ldependentont heproduct
poli
cy.
e) Thestudyofmar ketsize,salesv olume, profi
tsandpr ofi
tabili
ty,andt heirgrowthordecl i
newhichser veaseffecti
veguides
tothemar ket i
ngmanagement–ar eall doneal way sinconsi derationoft hepr oduct.
f) Tistheknowl edgeoft hepr oduct, whet herconsumercat egoryori ndust r
ialcategory, thathasledtot heconceptofproduct
andmar ketinggui dedor ganisati
onst ruct ure.

Pr
oductl
evel
s
Apr oductmeetst heneedsofaconsumerandi naddi
ti
ontoat angiblevaluet hisproductalsohasanabstractval
ue.Asperthe
customers’expectat
iononpr oduct,producthasdi
vi
dedinfivel
ev el
s.Thesel ev el
sindicatetheval
uethatconsumersatt
achtoa
product.Thecustomerwillonlybesatisfi
edwhenthespeci
fi
edvalueisidenticalorhigherthantheexpect
edvalue.Thesel
evel
sare
coreproductorbenefit
,basicproduct,
expectedpr
oduct,
augmentedpr oductandpot entialpr
oduct.

Quest
ionNo:
2)St
ateandexpl
aint
hedef
ini
ti
onandmeani
ngofpr
oduct
.Di
scusst
hev
ari
ouscl
assi
fi
cat
ionsofpr
oduct
.

Ans:Pr oductisanythi
ngthatcanbeof
feredt
oamar kett
hatmi
ghtsat
isf
yawantorneed.Aproducti
sabundleofphysicalor
chemicalpropert
ieswhichhassomeuti
l
ity
.Aproductmeansanobj
ectwhi
chsat
isf
iest
heneedofthecust
omer.Thusfan,tabl
e,
pen,cooler
,chai
retc.ar
eproducts.

Aproducti
stheitem off
eredf orsal
e.Aproductcanbeaser v
iceorani t
em.Itcanbephy sicalorinv i
rt
ualorcyberform.Every
pr
oductismadeatacostandeachi ssoldatapr i
ce.Thepricethatcanbechar geddependsont hemar ket
,thequalit
y,t
he
market
ingandthesegmentt hatistar
get
ed.Eachproducthasausefulli
feaft
erwhichitneedsr epl
acement,andal i
fecycl
eafter
whi
chithastobere-i
nvented.I
nFMCGpar lance,
abrandcanber evamped,r
e-l
aunchedorextendedtomakei tmor erel
evanttot
he

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segmentandt
imes,
oft
enkeepi
ngt
hepr
oductal
mostt
hesame.
 

Def
ini
ti
ons:
Accor
dingt
oPhil
i
pKot l
er,“
Apr
oducti
sbundl
eofphy
sicalser
vicesandsy
mbol
i
cpar
ti
cul
arsexpect
edt
oyi
eldsat
isf
act
ionsor
benef
it
stot
hebuyer
.”

Accordi
ngtoRustom S.Dav
ar,
“Apr
oductmayber
egar
dedf
rom t
hemar
ket
ingpoi
ntofv
iewasabundl
eofbenef
it
swhi
char
ebei
ng
off
eredtoconsumers.
”

Pr
oductcl
assi
fi
cat
ion
Ther
ear
edi
ff
erentappr
oachesandpar
amet
erst
odi
ff
erent
iat
epr
oduct
s.Thesear
e:
1) Basedonthenat
ure
2) Basedonconsumersi
ntent
ions
3) Basedonsoci
albenef
it
s

Her
ehasdi
scussedt
hev
ari
oust
ypesorcl
assi
fi
cat
ionsofpr
oduct
s.

1) Basedont
heNat
ure

Basedonnat
ure,
productcanbecl
assi
fi
edintotent
ypes.Thesear
e:
a) GOODS:Phy sicalgoodsar
ethetangibl
eandphy sicalmat
eri
als.I
thast
hequal
i
tyofpr
ocessi
onandowner
shi
p.For
exampl
e:Ri
ce,
Clot
hinget
c.
b) SERVI
CES :Thesear
eint
angi
bleper
for
manceswher
etheconsumpt
ionandpr
oduct
ionpoi
nti
sthesame.Onecanuset
he
ser
vicebypay
ingf
ori
tbutcannotcl
aim owner
shi
p.Forexampl
e:hospi
tal
,banki
ng,
trav
ell
i
nget
c.
c) I
DEAS:Ev
erymar
ketof
fer
ingi
ncl
udest
hebasi
cideaati
tscor
e.Forexampl
e:consul
tancyf
ir
m,adagency
.
d) EXPERI
ENCE:Byor
chest
rat
ingsev
eralser
vicesandgoods,onecancr
eat
est
ageandmar
ketexper
iences.Forexampl
e:
sci
enceci
ty,
aquat
ict
hemepar
k,wat
erwor
ld.
e) EVENTS:
Mar
ket
erspr
omot
eti
me-
basedev
ent
ssuchasOl
ympi
csorMov
ieAwar
ds.
f
) PERSONS:Cel
ebr
it
ymar
ket
inghasbecomeamaj
orbusi
ness.Di
ff
erentf
il
m st
arsandspor
tsper
sonshav
ethei
rown
publ
i
cit
yandendor
sementagent
.
g) PLACES:
Placescanbemar
ket
edt
oat
tractt
our
ist
sindust
ri
eset
c.Forexampl
e:Odi
shat
our
ism,
Ker
alat
our
ism.
h) PROPERTI
ES :
Proper
ti
esar
eint
angi
bler
ight
sofowner
shi
pofei
therr
ealpr
oper
ty(
realest
ate)orf
inanci
alpr
oper
ty(
stocks
andbonds)
,suchasHULorTCSI
POcampai
gn.
i
) ORGANI
SATI
ONS:Or
gani
sat
ionsact
ivel
ywor
ktobui
l
dast
rongf
avour
abl
eimagei
nthemi
ndoft
hei
rcust
omer
s.For
exampl
e:Phi
l
li
psusesat
agl
i
ne“
Let
’sMaket
hingsBet
ter
”.
j
) I
NFORMATI
ON :
Inf
ormat
ioncanbepr
oducedandmar
ket
edasapr
oduct
.Forexampl
e:Di
cti
onar
ies,
Ency
clopedi
as.

2) Ba sedonconsumer s’i
ntenti
ons:Pr
oduct
scanbecl
assi
fi
edi
ntot
wobr
oadcat
egor
iesbasedonwhowi
l
luset
hem andhow
theywi l
lbeused.Theseare:
A) ConsumerPr oducts
B) I ndust
ri
alorBusinessProduct
s

A) CONSUMER PRODUCTS:
Consumerpr oductsarethoseboughtbythefi
nalconsumersforper
sonalconsumpt
ion.Mar
ketersusuall
yclassi
fythesegoods
fur
therbasedonhow consumer sgoaboutbuy i
ngt hem,consumerproductsi
ncl
udeconvenience,shopping,speci
ali
tyand
unsoughtproducts.Thesearediscussedasbel
ow:

(
a) CONVENI ENCEPRODUCTS:
Thosepr oductsyourcustomer sbuyof t
enandwi t
houtmucht houghtorplanni
ngar eclassi
fiedasconv eniencegoods.Soap,
condimentsandt oothpastear ecommonexampl esofconv eni encegoods.Consumer stypi
call
ymakeachoi ceonceont hei
r
brandpreferencefortheseproductsandrepeatthatchoiceov ermanypur chases.Maki ngyourconveniencegoodsav ai
labl
efor
i
mpul seoremer gencypur chasescanbepar t
icular
lyeffect
ive.You’ l
lseethismar ket
ingtacti
cinthepl acementofcandynear
thecashr egist
erofyourgr ocerystor
eforimpulsebuy s.Anot herversi
onist oplaceumbr el
las,bootsorsnowshov el
sneara

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st
oreexi
twhensuddenweat
herchangescal
lfort
hem.

Exampl
esofconveni
enceproductsar
e:
•Bread •Gasol
ine
•Newspaper
s •Chewi ngGum •Sof
tDr
inks

(
b)SHOPPING PRODUCTS:
Buyingdecisi
onsar edetail
edconsiderat
ionsofprice,qual
i
tyandv al
uef orproduct
sclassi
fiedasshoppi nggoods.Thinkabout
theamountoft i
mey ouputi ntopicki
ngoutacl othingpurchase,acarorappl i
ances.Successf ulmar
keti
ngofy ourshopping
goodscancomef rom positi
oningasabet terbuyt hanyourcompet i
tors--forexample,pr esenti
ngbetterval
uewi thhigher
quali
tyforthepr i
ceorv iceversa.Productsintheshoppinggoodscl assifi
cati
ontendt or elyonheavyadv ert
isingandev en
trai
nedsalespeopletoi
nf l
uenceconsumerchoi ces.

Exampl
esofshoppi
ngpr
oductsare:
•Appl
iances •Furnit
ure
•Men’
sSui t
es •Bicycl
es •Cel
l
ularPhones

(
c) SPECI ALTY PRODUCTS:
Goodsi nt hespecial
typr oductsclassi
fi
cati
ontendtopromot everystrongbrandident
it
ies,of
tenresul
ti
nginst r
ongbrand
l
oyaltyamongconsumer s.Exampl esincl
udester
eos,computers,
camer asandthemosthigh-endbrandsofcarsandclot
hing.
Whileusedcar sar eclassif
iedasshoppi nggoods,abrand-
new Mer cedesisclassi
fi
edasaspeci al
tygood.Buyersf
ory our
specialt
ygoodsgener all
yspendmor eti
meseekingtheproducttheywantthanoncompar i
ngbrandsorproductstomakea
val
uedeci sion.Yourmar ketingofspecialt
ygoodscanbesuccessf ulbypromot i
ngwhaty ouhaveonhandandwher ey our
costumer scanfindit
.

Exampl
esofspeci
alt
yproduct
sare:
•UniqueSpor
tsCars •Rareimport
edwine
•Specif
ict
ypeofanti
quechi
na •Speci
alhandcr
aft
edf
urni
tur
e

(
d)UNSOUGHT PRODUCTS:
Theproductscl
assif
iedasunsoughtgoodsarethoset haty
ourconsumer sdon’tputmuchthoughtintoandgeneral
l
ydon’thave
compell
ingimpulsetobuy.Examplesincl
udebatter
iesorli
fei
nsurance.Yourconsumer sessenti
all
ybuyunsoughtgoodswhen
theyhaveto,al
mostasani nconveni
encerat
herthanthenewest,l
atest,gr
eatestproductt
heycan’twaitt
opurchase.Market
ing
yourunsoughtgoodswi l
lli
kelybemostef f
ecti
vewi thlot
sofadv er
ti
singandsal espeopl
epr omotingthei
deaofunr esol
ved
needforyourunsoughtpr
oducts.

B) I
NDUSTRI ALPRODUCTS:
Aproductboughtf
orusei
nthepr
oduct
ionofotherpr
oduct
sorinanorgani
sati
onaloperat
ioni
sanindust
rialpr
oduct.Busi
ness
pr
oductsareint
endedf
orr
esal
e,f
orfur
therpr
ocessi
nginpr
oduci
ngotherproduct
s,orforusei
nconducti
ngbusiness.

Accor
dingtoAmericanMar ket
ingAssociat
ionhasdefinedtheindust
ri
alproductas,“
product
swhi char
edesti
nedtobesold
pr
imari
lyforusei
npr oduci
ngot hergoodsorrender
ingserv
icesascontrast
edwi t
hgoodsdestinedtobesol
dprimar
il
ytothe
ul
ti
mateconsumers”.

I
ndustri
al productscanbecl assifiedbasedont heirusebybusi ness:
(
a) RAW MATERI ALS:Ar awmat eri
ali
sabasi cgoodt hatactuallybecomespar tofaphy sicalpr oduct.Mat eri
alsandpartsare
directlyusedint hepr oduct i
onoff i
nal productsbyt hef i
rm.Twot ypesofr awmat eri
alsincludeagr icul
turalproduct
s( gr
ain,
fruit
s, andliv
est ock)andnat uralpr
oduct s(miner als,landandpr oductsofthepr oductsandseas) .
(
b)CAPI TALEQUI PMENT:Capi talequipmentr efer st othel arget oolsandmachi nesusedi napr oducti
onpr ocessand
oper ationoft hef i
rm.Capi t
alequipmenti snor mal lyexpensi veandi sint
endedt obeusedf oral ongper i
odoft i
me.For
exampl e:machi ner i
es, l
athe,cranesetc.
(
c) ACCESSORYEQUI PMENT :Accessor yequi pmenti susedi npr oductionoroffi
ceact ivi
ti
esbutdoesnotbecomepar tofthe
fi
nal phy si
calproductbei ngmanuf actured.Forexampl e:mot ors,handt ool
s,met ersetc.
(
d)COMPONENTPARTS:Acomponentpar tisaf i
ni shedi t
em orani tem thatneedsl i
ttl
epr ocessingbef orebecomi ngpartof
the phy si
calpr oduct .Al though componentpar t
s ar e used i nt he manuf acture ofl argerpr oducts,t heyare easily
disti
ngui shablef rom thosepr oducts.
(
e) PROCESSMATERI ALS:Li keacomponentpar t,apr ocessmat eri
alisuseddi r
ectlyinthepr oductionofanot herproduct;
howev er,iti
snotr eadilydist i
ngui
shabl efrom f inishedpr oduct .Forexampl e:acompanyt hatmanuf acturescosmet i
cs

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SBBAMARKETI
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mightpur
chaseal cohol;
foruseinmake- uporperfume.
(
f) SUPPLIES:Suppl i
esareshort-l
i
ved,low-pr
icedeverydaynecessityit
emst hataidandexpeditethef i
rm’soperat
ionsbutdo
notbecomeapar tofthefini
shedproducts.Forexampl e:pai
nts,fuses,officestat
ioneri
es,maintenanceit
ems,paper,pen
andpencil
set c.
(
g)I NDUSTRIALSERVI CES:Ani ndustri
alservi
ceisani ntangi
bleproductt hatmanyor ganisat
ionsrequireinthei
roperat
ions.
Theseservicesmaynotbeadi r
ectpartofproduct i
onbutwi thoutt heseser vi
cest heproductioncannotcar r
yon.For
example:
financial
,l
egal,marketi
ngservi
ces.

3) Basedonsoci albenefit
s:From t
hesoci
alaspects,wecandiffer
enti
atetheproductsdependi
ngonlong-
ter
m andshor t
-t
erm
advantages.
(a) PLEASING PRODUCTS:Thesegi vehighimmedi at
esatisf
acti
on,butdohar mtoconsumer si
nthelongrun.Forexample:
panmasal a,ci
garett
e,al
cohol
setc.
(b)DEFI CIENTPRODUCTS:Thesehav eneitherimmediateappealnorl ongrunbenef i
ts.Fi
rmsarenotinter
estedinsuch
productsasthereisnochancetomakeanypr ofi
tatal
l.Forexample:t
y pewr
it
er,pager
.

Quest
ionNo:
3)Whati
spr
oductpl
anni
ng?St
atet
heobj
ect
ivesofpr
oductpl
anni
ng,
descr
ibet
hepr
oductpl
anni
ngcomponent
sand
st
eps.

Ans: ProductPl anningist heongoingprocessofi dent

ify
ingandar ti
culati
ng marketrequir
ements t
hatdefineaproduct’
sfeatur
e
set.Productplanningservesasthebasisf ordeci
sionsaboutpr i
ce,dist
ributi
onandpr omot i
on.Productpl
anningistheprocessof
creati
ngapr oductideaandf oll
owingthroughoni tunti
ltheproductisintroducedtothemar ket.Addi
ti
onally
,asmal lcompanymust
haveanexi tstrat
egyforitsproductincaset hepr
oductdoesnotsel l.Productplanningentail
smanagi ngt
hepr oductthr
oughoutit
s
l
ifeusingvariousmar ket
ingstrategi
es,i
ncludingproductextensi
onsori mpr ovements,incr
easeddistr
ibut
ion,pri
cechangesand
promot i
ons.

Def
ini
ti
on
The process ofcomingupwitha 
busi
ness i
deaforamanuf acturedgood,prepari
ngthegoodfor
 pr
oduct
ion 
andt
henint
roduci
ngi
t
tothe market.Productpl
anni
nginvol
vesmanagi ng 
the 
product'
s manufact
ure and 
devel
opment
 bysel
ecti
ngmar
keti
ngand
dist
ributi
on approaches,
 
maki
ng modi
ficat
ions,
setti
ngandchangi ng 
pri
ces,andof f
eri
ng 
promot
ions.

“
Productpl
anni
ngi
stheactofmaki
ngout&super
visi
ngt
hesear
ch,
scr
eeni
ng,
dev
elopment&commer
cial
i
zat
ionofnewpr
oduct
s,
t
hemodi
fi
cat
ionsofexi
sti
ngl
i
nes&di
scont
inuanceoft
hemar
ginal
ort
heunpr
ofi
tabl
eit
ems”
.

Obj
ect
ivesofpr
oductpl
anni
ng

1. Tomeett
hecust
omerneeds

Productpl
anni
ngident
if
iescust
omerneeds,r
equi
rement
s,aspi
rat
ions,
li
ki
ngsandr
efer
encesandal
sogui
dest
hef
ir
m’s
resour
cesandeff
ortst
owardstheaccompli
shmentoft
hem.

2. Tospot
li
ghtf
ir
m’sst
rengt
handweaknesses

Eachfir
m hasownstr
engthandweaknesses.Thef ut
ureplan,bl
uepr
int
sofactioni
sfoundedinpr
oductpl
anni
ngonsetof
givenst
rengt
hsandweaknesses.Bypinpoint
ingt
hestrengthsandweaknessesthepr
oductcanbedevi
sedsoastomini
mize
theweaknessesandmaxi
mizethestrengths.

3. Tof
ort
if
ybet
terr
esour
ceut
il
izat
ion

Themini
mum costlevelofpr
oduct
ioni
spossi
blewhent hecompanyr esourcesaregear
edtoit
sproduct
ionpl
an.Aspr
oduct
pl
anni
ngisrel
atedwit
hdev el
opmentofnewproducts,modi f
icat
ionofexist
ingonestochangi
ngconsumerneeds,t
hel
imi
ted
andcost
lyr
esourcesaresoemployedastot
hegr eatest
, bet
terandcheaperproducti
on.

PRESI
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SBBAMARKETI
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4. Toguar
ant
eef
ir
mssur
viv
al

Product
sarehopef orthefirm’
ssurvi
val
.Theproduct
sthatmeet
stheev
erchangi
ngneedofconsumermakesthefi
rmt
o
survi
val
successf
ully.Producti
nnovat
ionandrenovat
ionar
ethet
wokeywordsthatar
etobegivenduewei
ghtagebyaf
ir
mthat
wantstosurv
iveformanyy ear
stocome.

5. Toi
ncr
easef
ir
mssal
e

Sal
esar
eli
kemil
k,capabl
eofgi
vingmuchwantedcream.Ev
eryf
ir
mrest
sonsalesastheonlysour
ceofi
ncomet
omeett
he
out
goi
ngsandr
etai
ndecentmargint
ojust
if
yit
shardworkofput
ti
ngr
esour
cesandtaki
ngrisks.

Component
sofPr
oductPl
anni
ng

1) PRODUCT I
NNOVATI
ON:

Producti
nnovat
ion i
sthecr
eati
onandsubsequentintr
oducti
onofa 
good 
orservi
cet hati
sei
thernew,orimprov
edonpr evi
ous
goodsorservi
ces.Thisi
sbroadert
hanthenor
mal lyaccept
eddef
ini
ti
onof 
innov
ation toi
ncl
udeinvent
ionofnewproducts,
whichint
hiscontext,
arest
il
lconsi
der
edinnovat
ive.

Theproductinnovati
oni sthe 
development 
and 
market i
ntroduct
ionofanew, r
edesignedorsubstanti
allyimpr
ovedgood
or 
servi
ce. 
Examples ofproductinnovati
onbya 
business mightincludeanewpr oduct'
sinv
enti
on; technical
speci
fi
cation 
and quali
tyimprovement s 
madetoaproduct; ort
hei nclusi
onofnew components,
 materials 
or
desi
rable 
funct
ions i
ntoanexisti
ngpr oduct
.

2) PRODUCT DI VERSIFICATI ON :
Productdiv er
sif
icat
ionist he 
process 
ofexpanding 
busi
nessopportuni
ties t
hroughadditi
onalmar ketpotent
ial
 ofan
exist
ing product
.Diversifi
cati
onmaybeachi evedbyenteri
ngintoaddit
ional market
s and/or
 pr
icingstrat
egies.Oftenthe
productmaybei mpr oved,alt
eredorchanged,ornew market
ingacti
vit
ies aredevel
oped.Thepl anningprocess i
ncludes 
mar
ket
research, 
productadapt at
ionanalysi
sandlegalr
ev i
ew.

Theproductdiv
ersi
ficat
ionst
rat
egyi
nvol
vescr
eati
nganewcustomerbase,whichbydefi
niti
onexpandst
hemarketpotent
ial
of
theor
igi
nalproduct.Thi
sisal
mostal
waysdonethroughbr
andext
ensi
onsornewbr ands,butinsomecasest
heproduct
modif
icat
ionmay" creat
e"anewmarketbycr
eati
ngnewusesfort
heproduct.

3) PRODUCT STANDARDI ZATION:

Standardizat
ion 
istheprocessofdevel
opi
ngandi mplementi
ng t
echni
calstandards.Productstandar
dizati
onisamet hodused
toreducecost sandincr
easequalit
ybyminimizi
ngthediff
erencesi
ny ourproducts.Iti
samar keti
ngandsal esst
rat
egyusedin
businessandeconomi cs.Thismethodenabl
esonet oincr
easeproducti
on,streamlinedist
ri
buti
on,decreaserawmaterial
cost
s
andr ei
nforceproductbr
anding.

4) PRODUCT ELI MI
NATI ON:
Itistheprocessofwi t
hdrawi
ngaproductf
rom themar
ket.Thedeci
siontodropaproduct(forexample,i
nthedecl
i
nest
ageof
i
t sli
fecycl
e)inordertousethecost
sassociat
edwithi
ttoenhanceprofi
tsortor
eleaseresourcesthatcoul
dbemore
effecti
vel
yusedinot herways.

5) PRODUCT CUSTOMI
ZATI
ON :

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Whenaproducti
spostedforsale,
theSel
lerhastheopti
ontoall
owbuy er
stocustomizetheproductornot.Thi
sparameter
mustbesetatt
het i
meofpostingandcannotbechangedafter
ward.Leavi
ngtheproductopentocustomizati
onwil
lall
ow
cust
omerstochangethedesi
gncontentoftheit
em (f
orthei
rownpurchase).

‘
STEPSOFPRODUCTPLANNI
NG'

DEVELOPI NGTHEPRODUCTCONCEPT 
Thef i
rstphaseofproductpl
anningi sdevel
opingtheproductconcept.Marketi
ngmanager susual
lycreateideasf
ornewpr oduct
s
byidentif
yingcer
tai
nproblemst hatconsumersmustsol veorv ar
iouscust
omerneeds.Forexampl e,asmal lcomputerret
ail
ermay
seetheneedt ocreateacomput errepai
rdivi
sionfortheproductsitsel
l
s.Aftert
hepr oducti
deaisconceived,managerswill
star
t
planni
ngt hedimensi
onsandf eaturesoftheproduct.Somesmal lcompanieswillev
endev el
opapr oductmock-upormodel .

STUDYI NGTHEMARKET 
Thenextst epintheproductplanni
ngprocessi sst
udy i
ngthecompet i
tion.Mostsmal lcompanieswillordersecondaryresear
ch
i
nformat i
onf r
om vendorssuchast heNPDGr oupandFor r
esterResear ch.Secondaryresear
chusual l
yprovidesdetail
sonkey
compet i
torsandtheirmarketshare,whichisthepercentoftotalsalesthattheyholdinthemarketplace.Somecompani esmayalso
doaSWOTanal y
sis(str
engths,weaknesses,opport
uniti
esandt hreat
s),accordi
ngtoNet MBA.com, whichwi l
lhelpthem compar
e
thei
rstrengthsandweaknessesagai nstthoseofkeycompet itors.Thebusinesscant hendeter
mi neplacesinwhi chithasan
advantageov ert
hecompet it
iontoidenti
fyareasofopportunit
y .Forexampl e,
asmal lcompanywi thahigh-quali
tyimagemaybe
abletofindaddit
ionalmarketsforit
sproducts.

MARKETI
NGRESEARCH:
Asmal lcompanyshouldconsi derdoingbothqualit
ati
veandquantit
ativ
emar ket
ingresear
chf orit
snewpr oduct.Focusgr oupsare
anexampl eofquali
tat
ivei
nfor mati
on.Focusgr oupsall
owcompani estoasktheirconsumersaboutt hei
rli
kesanddi sli
keofa
productinsmallgr
oups.Af ocusgr oupallowsthecompanyt otweaktheproductconceptbeforetesti
ngitthr
oughphonesur vey
s--
a
mor equanti
tati
vemarketi
ngr esearchfuncti
on.Phonesur v
eysenablesacompanyt otesti
tspr oductconceptonal argerscal
e,t
he
result
sofwhi char
emor epredictableacrossthegeneralpopul
ati
on.

PRODUCTI NTRODUCTI ON
Ifthesurveyresult
sprov efav or
able,thecompanymaydecidetosellthenewpr oductonasmallscaleorregi
onalbasi
s.Dur
ingt his
time, t
hecompanywi lldistr
ibutethepr oductsi
noneormorecit
ies.Thecompanywi llr
unadver
ti
sementsandsalespromoti
onsf or
thepr oduct
,tr
ackingsalesr esult
st odeterminethepr
oduct
spotenti
al success.Ifsalesfi
gur
esarefavor
able,t
hecompanywi l
lthen
ex panddist
ri
butionevenf urther
.Ev entual
ly,
thecompanymaybeabl et osellt
hepr oductonanati
onalbasis.

PRODUCTLI FECYCLE 
Productplanningmustalsoincl
udemanagi ngthepr oductthroughv ari
ousst agesofi tsproductli
fecycle.Thesestagesi ncl
udethe
i
nt r
oducti
on, gr
owth,maturi
tyanddecl i
nestages.Sal esareusuallystrongdur ingthegr owthphase,whi l
ecompetiti
oni slow.
Howev er,conti
nuedsuccessofthepr oductwillpiquetheinterestofcompet itors,whichwi l
ldevel
opproduct softheirown.The
i
nt r
oducti
onoft hesecompetit
iveproductsmayf orceasmal lcompanyt oloweri tspri
ce.Thislowpricingstrat
egymayhel pprev
ent
thesmal lcompanyfrom l
osingmar ketshare.Thecompanymayal sodecidet obet t
erdi f
fer
entiat
eit
spr oducttokeepi tspri
ces
steady.Forexample,asmallcellphonecompanymaydev el
opnew, usefulfeaturesoni tscell
phonest hatcompet i
torsdonothav e.

Quest
ionNo.4)Def
inepr
oductl
i
fecy
cle(
PLC)
.Expl
aint
hev
ari
ousst
agesofpr
oductl
i
fecy
cle(
PLC)
.

Pr
oductl
i
fecy
clei
sabusi
nessanal
ysi
sthatat
tempt
stoi
dent
if
yasetofcommonst
agesi
nthel
i
feofcommer
cialpr
oduct
s,i
n
otherwordst he'Pr
oductLi
fecy
cle'PLCi
susedt
omapt
hel
i
fespanoft
hepr
oduct
,i.
e.t
hest
agest
hroughwhi
chapr
oductgoes
duri
ngit
sl i
fespan.

Anewpr oductpassesthroughsetofst
agesknownaspr oductli
fecycl
e.Productl
if
ecy cl
e appl
iest
obot hbr
andandcategor
yof
pr
oducts.Itst
imeperi
odv aryf
rom pr
oductt
oproduct.Modernproductl
if
ecy cl
esarebecomi ngshor
terandshor
teraspr
oduct
sin
matur
est agesar
ebeingrenewedbymarketsegmentati
onand pr
oductdi
ffer
enti
ati
on.

Thepr oductli
fecycl
eisamar ket
ingtheorycycl
eorsuccessi
onofstr
ategiesexper
iencedbyever
yproductwhi
chbeginswi
tha
product’
sintr
oducti
on,someti
mesr ef
erencedasresear
chanddev
elopment,fol
l
owedbyi tssal
esgrowt
h,thenmat
uri
tyandfi
nal
l
y
mar ketsat
urat
ionanddecli
ne.

Thepr
oductl
i
fecy
clepar
all
elsandi
sanal
ogouswi
tht
hatofhumanbei
ngsandani
mal
s,i
.e.f
rom bi
rt
htogr
owt
htomat
uri
tyt
o

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decl
ineandeventual
l
ytodeat
h.Forproductsthi
sinv
olv
esmanydi sci
pli
nes,ski
ll
s,t
oolsandprocessesasthepr
oductgoest
hrough
marketfor
cesinv
olvi
ngrawmateri
als,
parts,v
ari
ousbusinesspr
ocesses,cost
s,di
str
ibut
iont
omar ketsandsal
es

St
agesofPr
oductLi
feCy
cle

Pr
oductl
i
f ecy clecompr i
sesf
ourst
ages:
1. Introductionstage
2. Gr owt hstage
3. Mat ur i
tystage
4. Decl i
nest age

Pr
oductLi
feCy
cle(
PLC)

1.INTRODUCTI ONSTAGE
Productisint
roducedint hemar ketwi
thintenti
ontobui l
daclearidenti
tyandheav ypromot ionisdoneformaximum awar eness.
Beforeactualoff
eringoft heproductt
ocust omers,productpassesthroughproductdevelopment ,i
nvol
vesprototy
peandmar ket
tests.Companiesincurmor ecostsinthi
sphaseandal sobearadditi
onalcostfordist
ri
bution.Ont heotherhand,thereareaf ew
customersatthisstage,meansl owsal
esv olume.So,duri
ngintr
oductorystagecompany ’
spr ofi
tsshowsanegat i
vef i
gurebecause
ofhugecostbutl owsalesv ol
ume.

Ati
ntr
oducti
onst age,thecompanycor efocusisonest abl
ishingamar ketandar i
singdemandf orthepr oduct.So,t
hei mpacton
mar
keti
ngmi xisasf ol
lows:
a) PRODUCT:
Branding,Qualit
ylevelandintell
ectualproper tyandpr otectionsar eobtainedt osti
mul at
econsumer sfortheenti
reproduct
category.Productisundermor econsideration,asfirstimpr essi
oni sthel astimpression.
b) PRICE:
High(skim)prici
ngi susedformaki nghighpr ofi
tswi thintenti
ont ocov eriniti
alcostinashortper i
odandl owpr i
cingi
s
usedt openetrateandgaint hemar ketshar e.companychoi ceofpr i
cingst rategydependsont heirgoals.
c) PLACE:
Distr
ibuti
onatt hisstageisusuallysel
ectiveandscat tered.
d) PROMOTI ON
Atintroductor
yst age,pr
omot ionisdonewi thintenti
ont obuildbrandawar eness.Sampl es/
tri
alsareprov i
dedthatisfr
uit
ful
inattr
actingearlyadoptersandpot enti
al customer s.Pr omot i
onal pr
ogr amsar emoreessent i
alinthisphase.I
tisasmuch
importantast oproducethepr oductbecausei tpositionst heproduct.

2.GROWTHSTAGE:
Inthisst age,company’
ssalesandprof
itsstar
tsi ncr
easingandcompet i
ti
onal sobegi ntoincr
ease.Theproductbecomeswel l
recognizedatt hi
sstageandsomeofthebuy er
sr epeatthepurchasepatterns.Duringthisst
age,fi
rmsfocusonbrandpr ef
erence
andgai ningmar ketshar
e.Itismarketacceptancest age.Butduet ocompet it
ion,companyi nvestmoreinadvert
isementt o
convincecust omerssoprof
it
smaydecli
neneartheendofgr owt
hst age.

Af
fecton4P’
sofmar
ket
ingi
sasunder
:
a) Product

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SBBAMARKETI
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Alongwi
thmai
ntai
ningt
heexi
sti
ngqual i
ty,
newf
eat
uresandi
mpr
ovement
sinpr
oductqual
i
tymaybedone.Al
lthi
sisdone
tocompet
eandmaintai
nthemarketshare.
b) Price
Priceismai ntainedormayi ncreaseascompanyget shi
ghdemandatlowcompet i
ti
onori tmayber educedtograspmor e
customer s.
c) Distribution
Distri
butionbecomesmor esignifi
cantwit
htheincr
easedemandandacceptabil
it
yofpr oduct.Morechannelsar
eaddedf or
i
ntensi v
edi st
ributioninordertomeeti ncr
easi
ngdemand.Ontheotherhandresell
ersstartgett
ingint
erest
edintheproduct,
sot r
adedi scount sarealsomi nimal.
d) Promot i
on
Atgr owt hstage,pr omoti
oni si ncr
eased.Whenacceptabi
li
tyofproductincreases,mor eef f
ortsaremadef orbrand
preferenceandl oyal
ty.

3.
Mat
uri
tyst
age
Atmaturi
tystage,brandawarenessisstr
ongsosal econti
nuest ogrowbutatadeclini
ngrat
eascompar edtopast.Atthi
sst age,
ther
earemor ecompet i
torswi
ththesamepr oduct
s.So,companiesdefendthemarketshar
eandextendi
ngproductli
fecycl
e,rather
thanmakingt heprofi
ts,Byoff
eri
ngsalespr omot
ionstoencour ageret
ail
ertogi
vemor eshelfspacet
ot heproductthanthatof
competi
tors.Atthi
sstageusuall
yloy
alcustomersmakepur chases.

Mar
ket
ingmixdeci
sionsi
ncl
ude:
a) Product
Atmatur
it
ystage,companiesaddfeat
uresandmodifyt
heproductinordert
ocompeteinmar
ketanddi
ff
erent
iat
ethe
pr
oductf
rom competi
ti
on.Atthi
sst
age,i
tisbestwayt
ogetdominanceov
ercompet
it
orsandi
ncr
easemar
ketshar
e.
b) Price
Becauseofi nt
ensecompetiti
on,atmat ur
it
ystage,pri
ceisreducedinordertocompet e.I
tattr
actsthepriceconsci
ous
segmentandr et
ainthecust
omer s.
c) DISTRIBUTI ON :
Newchannel sareaddedtofaceint
ensecompetit
ionandincent
ivesar
eof f
eredtoretai
lerstogetshel
fprefer
enceover
compet i
tors.
d) PROMOTI ON:
Promotioni sdoneinordert
ocreateproductdi
ff
erenti
ati
onandloyal
ty.I
ncenti
vesare alsooff
eredtoattr
actmore
customers.

Decl
i
nest
age
Decl
ineinsal
es,changeintrendsandunfav
orableeconomicconditi
onsexplai
nsdecl
inest
age.Atthi
sstagemar
ketbecomes
sat
urat
edsosalesdecl
ines.I
tmayalsobeduetechni
calobsol
escenceorcust
omertast
ehasbeenchanged.

Atdecl
i
nestagecompanyhast hreeopti
ons:
 Mai ntai
nt heproduct,Reducecostandfindi
ngnewusesofpr oduct.
 Har vesttheproductbyr educi
ngmar ket
ingcostandcont
inueoffer
ingtheproductt
oloy
alni
cheunti
lzer
opr
ofi
t.
 Di scontinuethepr oductwhent her
e’snoprofi
torasuccessori
sav ai
labl
e.Sell
i
ngouttocompet
it
orswhowanttokeept
he
pr
oduct .

Atdecli
ningst
age,
marketi
ngmixdecisi
onsdependsoncompany’
sstr
ategy.Forexample,i
fcompanywant
stohar
vest
,thepr
oduct
wil
lremainsameandpri
cewil
lbereduced.I
ncaseofli
qui
dat
ion,
suppl
ywi l
lbereduceddramati
cal
ly
.

Li
mit
ati
onsofpr
oductl
i
fecy
cle(
PLC)
1. Allpr oductsf oll
ow PLC.ButPLCv ari
esal ot,butmanyr esear chersappl yitwi thoutanydi st
inction.I
ti sdi
ffer
entfor
dif
ferentt ypesofpr oducts.I
tmaybepossi bl
et hatproductmaynotgobey ondi ntr
oduct ionst ageandi nthatcasePLC
Curvei sl i
kelyt obeadr eamercur ve.Ifthepr oducti sinstant l
ysuccessf ul,thent hecur vemaybecont agioncurve.The
mov iesl i
keDabang, Ra-one,Agnipathcapt uredthemar ketint hisstyle.Whenapr oductrisesf astanddecl i
neatthesame
speed, thecur vewi l
lbecalledFadcur ve.
2. Itappear st hatlif
ecomest oanendwi t
hdecl ine,butt herear eexampl eswhenaf terdeclinet hepr oductmayhav efound
newpopul arityandrejuvenati
on.Yoga, naturefood, andhoneycomei ntot hiscat egory.
3. Historicaldatadoesn’ thelptoidentifywhenapr oductmov esf rom onest aget oanot her.Itmakest hetaskofforecasti
ng
dif
fi
cul t.
4. Themodel wor kedwel lwhentheenv ir
onmentwasr elativ
elyst able,notsubj ecttouncer taintyasi tist oday
.
5. Realityseldom conf ormst otheory.Mar ketingexecut i
vesbel i
evei nthePLCconcept–butst reetwisemar keter
spointout
unusual ci
rcumst ancesmi ghti
nterferewithexpect edl i
fecy clebehav iour.Itmayr esulti
ndi fferentshapeofPLC.
6. Thel ifecycleofapr oductisdependentonsal est oconsumer s.Allconsumer sdonotbuyi nt heintroductoryst
age.Some
peopl ebuyear ly
,othersbuyaf t
ert heirfr
iendshav ebought .Foranypr oductt obesuccessf ulitmustbeboughtbyear l
y

PRESI
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SBBAMARKETI
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adopters.
7. PLCisamet aphor.Pr
oductsar
enotorganic,andassuchdon’
thav
etodie.
8. Thelengthofapr oduct-
cat
egoryl
i
fecyclestendtobelongert
hant
heindi
vi
dual
brandl
i
fecy
cles.Amov
iemaybenotl
i
vea
l
onglife,butmov i
ecategor
yismorethanacent ur
yold.

Quest
ionNo:
5)a)Whati
sPr
oductMi
x?Expl
aini
tdet
ail
s.

Pr
oductMi
x

Productmi x,
alsoknownaspr oductassort
ment,refer
stothet ot
alnumberofpr oductli
nesthatacompanyof f
erstoit
s
customers.Forexample,asmal l
companymaysel lmult
ipl
elinesofproducts.Sometimes,theseproductli
nesarefai
rlysi
milar
,
suchasdi shwashingli
quidandbarsoap, whi
char eusedforcleani
ngandusesi mi
lartechnol
ogies.Otherti
mes,theproduct
l
inesarevastlydif
fer
ent,suchasdiapersandrazors.Thefourdimensi
onst oacompany '
sproductmi xincl
udewidth,
length,
depthandconsi st
ency.

Wi
dth

Thewidthofacompany '
spr oductmixpertai
nstothenumberofproductlinesthatacompanysell
s.Forexampl
e,i
facompany
hastwoproductli
nes,i
tsproductmixwi dt
histwo.Smallandupstar
tbusinesseswi l
lusual
l
ynothaveawi depr
oductmix
.Iti
s
morepract
icalt
ostartwit
hsomebasi cproduct
sandbuil
dmar ketshare.Lateron,acompany'
stechnol
ogymayallowthe
companytodiver
sifyi
ntootherindust
riesandbuil
dthewidthoftheproductmi x.

Lengt
h

Productmixlengthpert
ainstothenumberoft otal
productsorit
emsi nacompany '
sproductmi
x,accor
dingtoPhil
ipKot
ler
's
text
book" Market
ingManagement :Analy
sis,
Planning,I
mplementationandContr
ol.
"Forexampl
e,ABCcompanymayhav etwo
productl
ines,andfi
vebrandswi t
hineachproductli
ne.Thus,ABC'sproductmixl
engthwouldbe10.Companiesthathav
e
multi
pleproductli
neswillsometi
meskeept rackofthei
raveragelengthperpr
oductli
ne.I
ntheabovecase,t
heaveragel
ength
ofanABCCompany '
sproductl
ineisfi
ve.

Dept
h:

Depthofaproductmixper t
ainstot hetotal
numberofv ari
ati
onsforeachproduct
.Vari
ati
onscanincludesi
ze,fl
avorandany
otherdi
sti
ngui
shi
ngchar acteri
sti
c.Forexampl e,
ifacompanysel l
sthr
eesizesandtwoflavorsoft
oothpast
e,thatpart
icul
ar
brandoftoot
hpastehasadept hofsi x.Justli
kelengt
h,companiessometi
mesr epor
ttheav er
agedepthofthei
rproductli
nes;
orthedepthofaspecif
icproductline.

Consi
stency

Productmixconsi
stencypertai
nstohowclosel
yrel
atedpr
oductlinesaretooneanother-
-i
ntermsofuse,product
ionand
di
stri
buti
on.Acompany '
sproductmi xmaybeconsi
stenti
ndistr
ibutionbutv
astl
ydif
ferenti
nuse.Forexample,asmall
companymaysel li
tsheal
thbar sandheal
thmagazi
neinretai
lstores.However
,oneproductisedi
bleandtheotheri
snot.The
product
ionconsi
stencyoftheseproduct
swouldvar
yaswel l
.

PRESI
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Quest
ionNo:
5.)b) Sat
ethedef
ini
ti
onofNewPr
oductDev
elopment
.Expl
aint
hepr
ocessofNewPr
oductDev
elopment(
NPD)
.

New pr
oductdev
elopment(
NPD)i
sthecompl
etepr
ocessofbr
ingi
nganew pr
oductt
omar
ket
.Apr
oducti
sasetofbenef
it
s
off
eredf orexchangeandcanbet angi
ble(thatis,somethi
ngphy sicalyoucantouch)orint
angi
ble(li
keaservi
ce,exper
ience,or
bel
ief).Therearet woparal
lelpat
hsinvol
vedi ntheNPD pr ocess:onei nv
olv
est heideagener
ation,pr
oductdesi
gnanddet ai
l
engineeri
ng;t
heot heri
nvol
vesmarketr
esearchandmar keti
nganalysis.

Def
ini
ti
on
Processofdev el
opinganew pr oductorservi
cef ort
hemar ket.Thisty
peofdev el
opmentisconsider
edt heprel
i
mi nar
yst
epi n
productorserv
icedevelopmentandi nv
olvesanumberofstepsthatmustbecompletedbef
oretheproductcanbeintr
oducedt
ot he
mar ket.Newproductdevel
opmentmaybedonet odevelopanitem tocompetewit
haparti
cul
arproduct/ser
viceormaybedonet o
i
mpr ov
eanal r
eadyest abl
i
shedpr oduct.New pr
oductdevel
opmenti sessent
ialt
oanybusinessthatmustkeepupwi t
hmarket
tr
endsandchanges.

NewPr
oductDev
elopmentPr
ocess
TheNewpr
oductDev
elopmentpr
ocesshav
eei
ghtst
ages,
whi
chdescr
ibeshowanewpr
oducti
ntr
oducedi
nthemar
ket
.

Theei
ghtstagesare:
1. IdeaGener at
ion
2. IdeaScreening
3. ConceptTest ing
4. BusinessAnal ysis
5. ProductDev elopment
6. TestMar keti
ng
7. Commer ciali
zation
8. NewPr oductpr ici
ng

Theei
ghtst
ages

1.I DEAGENERATI ON
Thef i
rstst epinnew-pr
oductdevelopmenti sideagenerat
ion.
Ideasf ornew pr oduct
scanbeobt ainedf r
om basicresear
chusingaSWOTanal ysi
s( St
rengths,Weaknesses,Oppor tuni
ti
es&
Threats).Mar ketandconsumert r
ends,company '
sR&Ddepar tment
,competi
tor
s,focusgroups,employees,salespeopl
e,corpor
ate
spies,tradeshows, orethnogr
aphicdi scoverymethods(sear
chingf
oruserpatt
ernsandhabits)mayalsobeusedt ogetaninsi
ght
i
nt onewpr oductl
inesorproductf
eat ures.
Lotsofi deasaregeneratedaboutthenew pr oduct
.Outoftheseideasmanyar eimplemented.Theideasar egeneratedinmany
forms.Manyr easonsareresponsi
blef orgenerati
onofanidea.

Newideascanbegeneratedby :
 Conduct i
ngmar keti
ngresear
cht ofi
ndoutt heconsumers'needsandwants.
 I nvi
ti
ngsuggesti
onsf r
om consumers.
 I nvi
ti
ngsuggesti
onsf r
om employees.
 Br ai
nstor
mi ngsuggesti
onsfornew-productideas.
 Sear chi
ngindiff
erentmarketsvi
z.,
nationalandint
ernati
onalmarket
sfornew-pr
oducti
deas.
 Get ti
ngfeedbackfrom agent
sordealersaboutservicesoff
eredbycompeti
tor
s.
 St udyi
ngthenewpr oductsofthecompet i
tors.

2.IDEA SCREENI NG
Mostcompani eshavea"IdeaCommitt
ee.
"Thiscommi t
teestudi
esallthei
deasverycar
eful
l
y.Theysel
ectt
hegoodi
deasandr
eject
thebadi
deas.
Befor
eselect
ingorreject
ingani
dea,
thefol
lowingquest
ionsareconsider
edorasked:

1. I
sitnecessaryt
oint
roduceanewpr oduct?
2. Cantheexist
ingpl
antandmachi ner
yproducet
henewproduct
?
3. Cantheexist
ingmarket
ingnetworksel
lthenewpr
oduct
?
4. Whencant henewproductbreakeven?

I
ftheanswerst
othesequesti
onsar eposi
tiv
e,t
henthei
deaofanew-pr
oductdevel
opmenti
sselect
edelsei
tisrej
ect
ed.Thi
sst
epi
s
necessar
ytoav
oidproductf
ail
ure.Theobjecti
stoel
imi
nat
eunsoundconceptspri
ort
odevot
ingresour
cest
ot hem.

Thescr
eener
sshoul
dasksev
eral
quest
ions:

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 Wil
lthecustomerint hetargetmar ketbenefi
tf r
om theproduct?
 Whatisthesizeandgr owthf orecastsofthemar ketsegment/t argetmarket
?
 Whatisthecurrentorexpect edcompet i
tivepressurefortheproductidea?
 Whataretheindustrysalesandmar kettr
endst heproductideaisbasedon?
 I
sittechni
call
yfeasibletomanuf act
urethepr oduct
?
 Wil
ltheproductbepr ofi
tablewhenmanuf acturedanddeliver
edt othecustomeratt
het
argetpr
ice?

3.CONCEPT TESTING:
Conceptt
est
ingi
sdoneaf
teri
deascr
eeni
ng.I
tisdi
ff
erentf
rom t
estmar
ket
ing.

I
nthi
sstageofconcepttest
ing,
thecompanyfindsout :
1. Whethertheconsumersunderst
andthepr oducti
deaornot
?
2. Whethertheconsumersneedthenewpr oductornot?
3. Whethertheconsumerswil
lacceptt
hepr oductornot
?

Here,asmal lgr
oupofconsumersisselect
ed.Theyaregiv
enful
linf
or mat
ionaboutthenewpr oduct
.Thentheyareaskedwhat
theyfeelaboutthenewproduct.Theyareaskedwhethertheyl
i
ket henewpr oductornot.So,conceptt
esti
ngi sdonetofi
nd
outtheconsumer s'r
eact
ionstowardsthenew product
.Ifmostoft heconsumersliket
hepr oduct
,thenbusinessanal
ysi
sis
done.

Dev
elopt
hemar ket i
ngandengi neer i
ngdet ails
 Inv est
igat eintell
ectual propertyissuesandsear chpatentdat
abases
 Whoi st het argetmar ketandwhoi st hedecisi
onmakeri nthepurchasingprocess?
 Whatpr oductf eaturesmustt hepr oductincorporate?
 Whatbenef itswi l
lthepr oductpr ovide?
 Howwi llconsumer sreactt othepr oduct?
 Howwi llthepr oductbepr oducedmostcostef f
ect i
vel
y?
 Pr ovefeasi bil
itythroughv i
rt
ual comput eraidedr ender
ingandrapi
dpr otot
yping
 Whatwi l
l i
tcostt opr oducei t
?

4.BUSINESSANALYSI S
Busi
nessanal
ysi
sisav eryi
mportantst
epi
nnew-pr
oductdev
elopment
.Her
e,adet
ail
edbusi
nessanal
ysi
sisdone.Thecompany
fi
ndsoutwhet
herthenewproducti
scommerci
all
ypr
ofi
tabl
eornot.

Underbusinessanalysis,
thecompanyf i
ndsout .
..
 Whet herthenewpr oducti
scommer ci
all
yprofit
ableornot?
 Whatwi llbethecostofthenewpr oduct?
 I sthereanydemandf ort
henewpr oduct?
 Whet herthi
sdemandi sr
egul
arorseasonal?
 Ar et her
eanycompet i
tor
softhenewpr oduct ?
 Howt hetot
alsalesofthenewpr oductbe?
 Whatwi llbetheexpensesonadv ert
isi
ng,salespromotion,
etc.
?
 Howmuchpr ofi
tthenewproductwi l
learn?

So,t
hecompanyst
udi
est
henewpr
oductf
rom t
hebusi
nesspoi
ntofv
iew.I
fthenewpr
oducti
spr
ofi
tabl
e,i
twi
l
lbeaccept
edel
sei
t
wil
lber
eject
ed.

5.TEST MARKETI NG:

Testmar keti
ngmeanst ointr
oducethenewproductonaver ysmallscalei
nav er
ysmallmar
ket.I
fthenewproducti
ssuccessf
ulin
thi
smar ket,theni
tisint
roducedonal ar
gescale.However,ift
hepr oductf
ail
sinthet
estmarket,t
henthecompanyfindsoutthe
reasonsforitsfai
l
ure.I
tmakesnecessarychangesinthenewpr oductandintr
oducesi
tagai
ninasmal lmar
ket.I
fthenewproduct
fai
lsagainthecompanywi ll
rejecti
t.

Testmarket
ingreducest
her
iskofl
arge-
scal
emar
ket
ing.I
tisasaf
etydev
ice.I
tisv
eryt
ime-
consumi
ng.I
tmustbedoneespeci
all
y
forcost
lypr
oducts.

 Produceaphy si
cal pr
otot
y peormock- up
 Testtheproduct(anditspackaging)intypi
calusagesit
uat
ions
 Conductfocusgroupcust omerintervi
ewsorintroduceatt
radeshow
 Makeadjustment swherenecessar y
 Produceaniniti
alrunoftheproductandsel li
tinatestmarketar
eatodet
ermi
necust
omeraccept
ance

PRESI
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6.PRODUCT DEVELOPMENT:
Atthi
sst age,thecompanyhasdeci dedtointr
oducethenewpr oducti
nthemar ket.I
twillt
akeal lnecessarystepstoproduceand
di
stri
butethenewpr oduct.Theproducti
ondepart
mentwillmakeplanstoproducetheproduct.Themar ketingdepart
mentwi l
lmake
pl
anst odistri
butetheproduct.Thefinancedepart
mentwillprovi
dethefinanceforint
roducingt henew product.Theadverti
si
ng
depart
mentwi llpl
antheadv er
ti
sementsforthenewproduct.However,
all
thisisdoneasasmal l
scaleforTestMar keti
ng.

Techni
cal
Impl ement ation
 Newpr ogram i ni
ti
ation
 Final
izeQual it
ymanagementsy st
em
 Resour ceest i
mat i
on
 Requi rementpubl icati
on
 Publisht echni calcommuni cationssuchasdat
asheet
s
 Engineer ingoper at i
onspl anni ng
 Depar tmentschedul i
ng
 Suppl i
ercol laboration
 Logist i
cspl an
 Resour ceplanpubl i
cat i
on
 Program r evi
ewandmoni toring
 Contingenci es-what -
ifplanning

7.COMMERCI ALIZATION
Ifthet
estmar ket
ingissuccessf
ul,t
henthecompanyint
roducesthenew pr
oductonal ar
gescale,sayal
lov
erthecount
ry.The
companymakesal argei
nvestmenti
nthenewproduct
.Itproducesanddi
str
ibut
esthenewproductonahugescale.I
tadv
erti
ses
thenewproductont hemassmediali
keTV,Radi
o,NewspapersandMagazi
nes,et
c.

 Launchtheproduct
 Produceandplaceadvert
isement
sandot herpromot
ions
 Fi
llthedi
str
ibut
ionpipel
i
newi t
hproduct
 Cri
ti
calpathanaly
sisismostusef
ulatthi
sst age

8.NEW PRODUCT PRICING

 Impactofnewpr oductont heenti
repr oductpor
tfol
io
 ValueAnalysi
s(i
nternal&external)
 Compet i
ti
onandal t
ernati
vecompet i
ti
vetechnol
ogies
 Diff
eri
ngv al
uesegment s(pri
ce,valueandneed)
 ProductCosts(f
ixed&v ari
able)
 Forecastofuni
tvolumes,revenue,andpr ofi
t

Thesestepsmaybei t
eratedasneeded.Somest epsmaybeel iminated.Tor educet het imet hattheNPDpr ocesst akes,many
companiesarecompleti
ngsev eralstepsatthesamet ime( referr
edt oasconcur rentengineeringort i
metomar ket).Mostindustr
y
l
eadersseenewpr oductdevelopmentasapr oacti
vepr ocesswher er esourcesareallocatedtoi dentif
ymarketchangesandsei ze
uponnewpr oductopport
unit
iesbef oretheyoccur(incontrasttoar eactivestr
ategyinwhi chnot hi
ngisdoneuntilproblemsoccur
orthecompetit
orint
roducesani nnov at
ion)
.Manyi ndustryleadersseenewpr oductdev elopmentasanongoi ngprocess( ref
err
ed
toasconti
nuousdevelopment)inwhi chtheenti
reorganizati
oni salway slooki
ngforoppor tunit
ies.

Fort
hemoreinnov
ativ
eproduct
sindi
cat
edont
hedi agr
am above,gr
eatamount
sofuncert
aint
yandchangemayexi
stwhichmakes
i
tdif
fi
cul
tori
mpossibl
etoplant
hecomplet
epr
ojectbefor
estar
tingi
t.I
nthi
scase,
amor efl
exi
bleappr
oachmaybeadvi
sable.

Becauset heNPDpr ocesst ypi

call
yrequir
esbot hengineeri
ngandmar ket
ingex per
ti
se, cr
oss-f
uncti
onal t
eamsar eacommonwayof
organizi
ngprojects.Thet eam i
sr esponsibl
ef oral
laspectsofthepr oj
ect,fr
om init
ialideagenerati
ont ofi
nalcommer ci
ali
zati
on,
andt heyusuall
yrepor ttoseni
ormanagement( of
tent oavicepr
esidentorPr ogr
am Manager ).I
nt hoseindust
rieswherepr oducts
aretechnical
lycompl ex,devel
opmentr esearchistypical
l
yexpensiveandpr oductli
fecy cl
esarerelati
vel
yshort,str
ategi
cal l
iances
amongsev er
alorganizati
onshelpstospr eadthecosts,provi
deaccesstoawi derskil
lsetandspeedsupt heoveral
lprocess.

Quest
ionNo:
6)Wr
it
eshor
tnot
esonPr
oductl
i
ne(
b)Pr
oductAddi
ti
on&Pr
oductDel
eti
on

PRODUCTLINE:Apr
oductl
i
nei
sagr
oupofpr
oduct
sthatar
ecl
osel
yrel
atedt
oeachot
herbyf
unct
ion,
cust
omergr
oup,
mar
ket
,or
pr
icer
ange

PRESI
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Example Let '

stakeal ookatasimpleexampl e.We'
ll
uset heideaofanationalcoff
eechain.Thev ari
oustypesofcoff
eeservedat
thecoffeechainareoneofi tspr
oductli
nes.Forexampl e,
theproductli
nesmayconsi stofespresso,cappucci
nos,r
egularaut
o-dr
ip
coff
ee,andv ari
oussignaturecoff
eedri
nkst hatwerecreatedbythecompany .Thecoffeeshopmayal sohaveaproductli
neof
pastr
iesandmuf finsthatareser
vedinthemor ni
ngandsandwi chesandsoupst hatar
eservedint heaft
ernoonandevenings.

Rel
atedTer
msandConcept
s:Apr
oductl
i
nei
sty
pical
l
ymanagedbyapr
oductl
i
nemanager
,whomaysuper
visesev
eral
productmanagerswhoar eresponsibl
efori
ndivi
dualpr
oduct
sint heli
ne.Productl
inemanager
susuallyhavetheresponsi
bil
i
tyof
deter
mi ni
ngwhethertheproductli
neshouldexpandandwhetherproductsshouldberemovedfrom t
heline.Theywil
lal
soanalyze
theeffect
softheproductexpansionorcontr
acti
onontheprofi
tabil
it
yofotherproduct
sinthel
ine.

Pr
oductAddi
ti
on:
Thedeci
si
onast
owhet
heragi
venpr
oductl
i
neshoul
dbeext
endedi
sast
rat
egi
cissue.Ther
ear
esev
eral
reasonswhyf ir
mswoul dconsi deraddingtothenumberofpr oductlines(breadth)and/ortot henumberofvariants(depth)wi
thina
productmix.Byext endingt herangeofproductsof f
ered,acompanymi ghtgainent r
ytoasnewsegmentoft hemar ket.I
tmaybe
necessarytoattractdistr
ibutorswhoar eint
erestedinofferi
ngaf ul
l productli
ne, orthebusinessmayhav espar eproducti
ve
capacit
yandwi sht oincreaset hecontri
buti
ont ofi
xedcost sbyincreasingthel evelofcapacityuti
li
sat
ion.Al
ternati
vely,t
heymay
needtobr i
nginpr oductst osupportotherproductli
nes,oraspar toft hei
rcompet i
ti
vestrat
egyt heywanttofil
lgapsi nthemarket
whichotherwisemi ghtgiveot hersafoothol
di nthei
rmar ket.

Whatev erthemot i
vati
onf orextendingtheproductl
ineormi x,i
thastober ecognisedthatsupply
ingmor eproduct
s(orproduct
vari
ations)carri
escostsaswel l asoppor t
uni
ti
es.Theorganisati
on'sinv
entori
es,andthoseofitsdist
ribut
ors,wil
li
ncr
ease;thereis
addedcompl exi
tyinproducti
onschedul ingandthecostsofpr oducti
on/manufacturi
ng,withl
argerst
ocksofr awmaterial
sand
work-in-
progress.Ratherthanexpandi ngitsmarket
s,theproductadditi
onsmer el
ycannabili
sethesalesofitsownexisti
ngpr oduct
l
ines.Mor eover,r
atherthanofferingtheconsumergr eat
erchoice,aplethor
aofsimi l
arproductscoul
dhav ethenegati
veeffectof
causingcustomerconf usion.

Clear
ly,t
heproductmixmustbemanagedcar ef
ull
y.Atanypoi
nt,
theproductormar ket
ingmanagermustknowt hesales(i
nv ol
ume
andvalueter
ms)andpr ofi
tforeachproductl
ineanditem.He/
shemustal sobeawar eofthepercent
ageofbothsal esandprofi
ts
whicheachproductcontr
ibutes.Usi
ngtechni
quessuchasLorenzcurv
es( seeappendix7A),of
tenreveal
sthatar el
ati
vel
ysmal l
numberofproducts,wi
thi
nt hetotal
productr
ange,account
sfort
helargerpropor
ti
onofbot hsalesandprofi
ts.

Managementmustbeawar eofhoweachpr oductwithintheportfoli

oisposi
ti
onedagainstthoseofcompet i
tor
s.Thisisessenti
al
forthedev el
opmentofanef fect
ivemarketi
ngstrategy.Asimple, butusef
ul,
approachistodrawat wodimensionalgri
d,li
kethat
i
llustr
atedinfigure7.
3,andlabeltheaxi
saccordingtowhatmar ketresear
chhasshownar ekeyproductatt
ri
butes.Thecompany '
s
product(s)wit
hinagivencategory,cant
henbe‘ mapped’ agai
nstt hoseofcompetit
ors.Theproductmapal l
owsmanagementt o
visual
isetheintensi
tyofcompetit
ionineachsegmentoft hemar ketandperhapsalsotoidenti
fynewmar ketopport
unit
iesin
segment swher ether
eisli
tt
le,orevennocompet it
ion.

Pr
oductDel
eti
on.

Pr
oductdelet
ion,
eit
hert
hroughpr
oductr
epl
acementorpr
oductel
i
minat
ion,
resul
tswhenpr
oduct
sfai
ltomeetcompany
ex
pectat
ions.

 Compani
esar
eincr
easi
ngl
yunderpr
essur
etoev
aluat
ethei
rexi
sti
ngpr
oductl
i
neandmakecont
inuousdeci
sionsabout
addi
ngnewpr
oduct
sordel
eti
ngexi
sti
ngones.

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 I
naddi
ti
ont
oweaksal
esandpr
ofi
t,br
andsdel
etepr
oduct
sthatf
ail
toal
i
gnwi
thmar
ket
ingst
rat
egi
esort
hatdemonst
rat
e
anunf
avor
abl
emar
ketout
look.
 Pr
oductf
ail
urer
atesv
arybyi
ndust
ry,
buti
tisest
imat
edt
hatf
ail
urer
atesf
ornewpackagedgoodsr
angeany
wher
efr
om
75%t
o90%

Thet wenty-f
ir
stcent urymarketpl
acei sdynami c,f
ast -changing,andincreasi
nglyfi
ckl
e.Mor eandmor ebusinessesreal izethatno
productlastsforever,andthatsaleslevelscanf l
uctuat edramaticall
yov erti
me.Asar esult
,companiesar eunderpr essur eto
evaluatethei
rexisti
ngpr oductli
neandt omakecont inuousdeci si
onsaboutaddi ngnewpr oductsordel et
ingexist
ingones.Br ands
mustt asktheirengineeri
nganddesi gnt eamst opr oducesuccessf ul pr
oductsthatgenerat
eaconsi stentstream ofsal esforboth
short-
term profi
tandl ong-
term survi
val.Anor gani
zat ionmustest ablishaseriesofsuccessfulpr
oduct s,i
fthatorganizat i
onwant s
tomai ntai
naconsi stentstr
eam ofsal esorelsegr owsal esovertime.Oner easonforthi
spat t
ernisthepr oductli
fecy cle.No
productlastsforever,andsaleslevel
scanf luctuatedr amat i
call
yov erti
me.

Fact
orsi
nPr
oductDel
eti
on:Del
eti
oni
sthepr
ocessofr
emov
ingpr
oduct
sthatper
for
m bel
owmar
ketexpect
ati
onsorf
ail
to
meetcompanyobj ect
ives.Delet
ionresul
tsi
neit
herpr
oductr
eplacementorproducteli
minat
ion.Productdelet
ionr
equi
rest
he
companyt oeval
uatei
tsent i
reproductmixandpi
npoi
ntwhereorgani
zat
ional
r esour
cescanbeal l
ocatedelsewher
etogener
ate
consi
stentrev
enuestreams.

Inaddit
iontoweaksalesandpr ofit
,br andsdeleteproductsthatf
ail
toali
gnwi t
hmar ket
ingst r
ategi
es,orthatdemonst r
atean
unfavor
ablemarketoutlook.Mar kettrendsandconsumert ast
esoft
endictat
ewhetherpr oductsperf
orm wellinthelong-
ter
m or
taperof
fasapassingf ad.Howev er,factorsi
ncludingacompany '
sbusinessmodel,cult
ur e(orl
ocaltast
es),governmentpoli
ti
cs
and/orregul
ati
ons,andpr oductmal functioncanall cont
ri
butetotheremovalofaproduct .

Fai
lureratesofproduct
sv arybyindustr
y.Despi
tesi
gnifi
canti
nvestmentinproductdevelopmentandmarketresearch,i
tis
esti
mat edthatf
ail
ureratesfornewpackagedgoodsr angeanywherefrom 75%tor at
esashi ghas90%(source:
catal
inamarketi
ng.com).Whenconsi der
ing"i
nnovat
ive"newproducts,
HarvardProfessorJohnT.Gour
vil
leesti
mat esthat
approximatel
yhalfofallsuchproductsfai
l.

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DENCYCOLLEGEPage14