Product Planning and

Development
VARUN BABU
Assistant Professor (Sr.Gr)
SRIT-CBE
 Product Planning and
Development
• Introduction to a product
• Tangibility continuum of a product
• Product Classification
• Branding
• Packaging
• Product life Cycle
• Introduction to new product planning
•
 Definition of a product

• Product could be defined as

• Anyhting that can be offered to a
market for attention, acquisition, use
or consumption that might satisfy a
want or a need- Phillip Kotler.
 Product could be of any
of the following
• A physical product – Table, Car, Pen
• Person- Bathiya and Santhus, Sanga, ranil,
Mahinda, Anarkali, Anjalina Jollie, Mervin S
• Place- Anuradhapura, Rathnapura, London,
Jerusalem
• Organisation- SLIM, CIM, UN, UNP, JVP,
UNI LEVER, DIALOG
• Idea- Freedom, democracy, Anti Corruption,
Social Justice, Anti Drugs, MADD, Family
Planning
• Services – education, lawyers service, bank
service
 Product Scope- Three
Aspects
• 1. Physical Aspect- is the physical aspect
of the product. What it is ? E.g. It is a
herbal tooth paste
• 2. Functional Aspect – is what is does?
• E.g. It cleans tooth/ prevents tooth decay
• Symbolic Aspect- is what it means to the
users emotion?
• E.g. The satisfaction of a person “free
from tooth decay”
 The Product Attributes

The Product

Tangible Atrributes
Design, Features, Intangibel Attributes
performances, Branding Image, Value, Perception
Packaging
• Product Sub category- Further
categorization of a product category
eg. Toilet Soap category may be sub
categorized as beauty soap and
herbal soap
• Product Brand- There could be one or
many brands in sub categories of the
product line such as Lux and Dove
• Product Mix Consistency- how closely
related the various product lines are
in terms of channel distribution,
promotion or in other
ways
Product width

Product
Lines

Product
category

Product sub
category

Product
Brands
 Tangibility Continuum of
a products
• Tangibility continuum discuss about to a
what degree a product is tangible or
intangible.
• It is practically difficult to find a totally
tangible product or a totally intangible
product in the modern world of marketing
• In many products there are physical goods
as well as service components.
 Tangibility Continuum

Major
service Pure
Pure Tangible Hybrid with intangible
tangible goods with - Equal goods
service

Pencil Car restaurant Air Lecture

line
 Product Classification Products

Consumer Industrial

Convenience Materials and parts

Staple Raw Materials

Impulse Manufactured Materials

Emergency Capital Items

shopping Installations

Speciality accessories

Unsought Supplies & services

Supplies

Business services
Side talk
 Product Life Cycle
Theory ( PLC)
• It is assumed that a product will have a
life cycle from development to decline.
• It is measured in relation to time and
sales.
• However every product may not go through
the same life cycle or some products will
stay for along without getting on to the
declining stage.
 Stage of Life cycle
• 1. Development stage
• 2. Introductory stage
• 3. Growth stage
• 4. Maturity stage
• 5. Declining stage
 PLC
• Dev Intro Growth Maturity Decline

Sales
S
a
l
e Profit
s

losses

Time
Introductory Growth Maturity Declining
Relatively Relatively Longer Longer or
short short period short

Sales are Sales increase Sales growth Drop in the

usually slow and profits become slow sales
and profits ar will be high but volume big
low
Competitors New More Competitors
will watch competitors competition do not enter
enter and over due to low
capacity margings
Distribution More Many Distributors
has just distributors distributors reduce or give
begun take up the and up
product undercutting
Introduct Growth Maturity decline
ory
Positioning Brand image is Many brands Brand image is
and brand established fight each low
awareness other

Promotion Promo budget Promo budget Not much

budget very may be may be promotions
high increased standard or done
low

Only one or Few Many Abundoning

two manufacturers manufactuers manufacturing
manufacturers
High Product Improve Many changes May have to
failure rate product in the take a
quality and Marketing mix decision to
features to be done stay on or not
 Importance of P L C to Marketers

• Important tool for forecasting and

strategic planning
• It shows that product have a limited
life span
• It graphically shows the trend in sales
and profitability
• It shows the need to adopt different
strategies in various stages

•
PRODUCTS THAT COME
AND GO ( FAD)
 Limitation of the PLC
• Many products may not have a life cycle as
depicted by PLC
• Stages of PLC are difficult to distinguish
• Identifying where one stage ends and the
other begins is very difficult
• Traditional shape may not occur. Eg. Fad
items
• Ignores the application of marketing mix
activities
• Strategic decisions can change the PLC eg.
repositioning
Side talk
 Services
• Service is is any act or performance that
one party can offer another that is
essentially intangible. It does not result in
ownership of anything- Kotler.
• Services have unique features that
differentaite from physical goods
• Intangibility
• Variability
• Inseparability
• Perishability
• Ownership
• V I²PO
 Planning for New
Products
• Long term survival of many firms in the
competitive world depends on launching
new products successfully.
• Planning for new products is an essential
and demanding strategic activity.
• There could be many types of new
products
 Types of new
products

Innovative Replacement Imitative

Products products Products
• Innovative Products
– These products are new to the world and new to the
company.
– They are truly new to the customers and they provide
completely different alternatives to existing products
– Eg.
. Vaccine for AIDS
• Products based on Nano Technology
• Heat seeking missile
• Computers
• Replacement products
– Although these products are new to customers
or even to the company, they are essentially
improvements or redesigns of existing
products
– Digital phones replaced the analogues
– Disposable racers replaced the old blade base
racers
– Shaving foam and gels have replaced the
shaving soaps
• Imitative Products
– These products are new to the company and not new
to the market
– Many products come in this form to the market
– One or few companies may come out with an
innovative or replacemnet products but many will
copy the technology and come out with simillar
products. They are called mee- too products
– Eg. After celltel> mobitel> dialog> Hutch
– After Signal > clogard> supirivicki> sudnatha
– After Bata slipper > DSI> Ceypa> ranpa
– After Mercedes Benze> Ford> GM> Toyota>
Nissan
–
 Reasons for introducing
new products
• To suit the changes in customers
needs
• To adopt new technological advances
and avoid obsolence
• To match competition
• Product Life Cycle Concept
• To bring down the cost
 Customer need analysis
• . Information is required as to the expectation
of the customer and to what extent the
existing products meet that expectation. Then
the gap between the two could be observed
Expectation

• GAP

Level met by the product

Side talk
 If the gap is understood
well, one could find
opportunities to
• Introduce new products
• Make improvements in existing
products
• Make improvements in production
process
• Make improvements in supporting
services.
 Stages of new product
development
• 1. Idea Generation
• 2. Idea Screening
• 3. Concept Development & testing
• 4. Marketing Strategy
• 5. Business Analysis
• 6. Product Development
• 7. Test Marketing
• 8. Commercialisation ( Launch)
 Idea Generation
• Finding promising new ideas is the starting
point in the new-product development
process.
• Idea generation ranges from incremental
improvements to existing products to new
to the world products.
• ( produce a drug to reduce cholesterol
with less side effects = improvement
• produce a drug that cures AIDS = new to
the world product)
 Sources of new ideas

• Internal
• Customers
• Competitors
• Outside inventors
• Channel members
• Consultants
Side talk
Methods of generating new
ideas
• Search
• Searching new product idea publications, research
publications, the internet, exhibitions,
conventions
• Marketing Research
• Meet product end users and find out what kind of
products that can be used to satisfy their needs.
Meet focus groups of consumers- retailers to
discuss new products.
• Technical research
• Firm’s internal research laboratories and other
external laboratories could generate new idea for
you.
 Screening Evaluating and
business analysis.
• Screening
• There should be a very clear cut screening
policy that would reject the unpromising
product ideas and further the promising
ideas.
• Two basic questions need to be answered
at the screening stage.
• Is the idea could be practically developed
into a product with development,
production,marketing and financial
capabilities of the company?
• Is the venture commercially feasible?
( market attractiveness,profitability,
social and environmental concerns)
• Evaluation
• After the initial screening more comprehensive
evaluation is required. It is better to have a
buyers reaction also into the evaluation process.
• A response from a sample of buyers potential
buyers could be a very good criteria to find out
the ultimate demand for the product.( This is also
called proposed product concept testing)
However, the actual product is not in existence
and it could not be able to get results as in a test
marketing process.
 Concept development & testing

• Idea has to be developed into a concept

• A concept is a detailed version of the idea
stated in a meaningful consumer terms.
• The developed concept will be tested among a
sample of consumers.
• This will be presented to the target market in
words or pictures.
• Few questions will be asked to check whether
the target market will buy the product.
Concept Cars year 2008
 Marketing Strategy
Development
Product
• Brand name selection and registration
• Government regulations as to pricing,
packaging and labeling etc
• Determine packaging, sizes, shapes,
colours, other properties
• Guarantee period
 Pricing
• Finalise pricing strategy- Premium/
skimming, penetrative, mark up etc
• Dealer/distributor margings
• Bulk selling discounts
• Credit periods
 Distribution
• Select channels of distribution
• Transportation
• Point of Sales Materials ( POSM)
• Display racks, stand etc.
 Promotion
• Selection and briefing an advertising
agency
• Finalise segmentation and target
markets
• Finalise the positioning strategy
• Have a theme
• Communication budgets
• Finalise advertising plan/promotion
plan
 Business Analysis

• Business analysis estimates the commercial

performance of the proposed product.
• Revenue forecast
• Cost Estimation
• Profit Projections-
• Acceptable level of profit for a given
product development-
• Assess the amount of risk involve
 Product Development and
testing

• Prototype
• User Tests
• Manufacturing development
• Component developments and
collaborative product developments
various specialised manufacturers
get involved.
 Test Market the
product
• During the test marketing, the marketers offer
the product for sale in a limited area where they
can measure the response.

• Ideally the test market should reflect the target

market for the product. The marketers evaluate
not only the customers reaction but all the
elements of the marketing mix.

• Based on the results of test marketing, marketers

determines how the marketing mix should be
adjusted before a full scale launch.
• Depending on the nature of the product
and the sample size, cost and time of test
marketing may vary. E.g. test marketing a
car could be more expensive than test
marketing a new cell phone.

• If test marketing welcomes competition

and gives ideas for competitors and the
product could be copied easily one can
avoid the test marketing.
 Launch product
• First let the company wide employees
know about the product and its features
and marketing objectives of the firm
• Determine method of launch
• Selection of venue for launch
• Selection of media for launch
• Brief distributors about the product
• Press conference
• Distribute promotional material
• Execution of advertising strategy
•
• …
 STAGES IN ADOPTION PROCESS

• AWARENESS – the consumer become aware

of the innovation but lack information about
the product
• INTEREST – the consumer is induced to seek
information about the innovation
• EVALUATION – the consumer consider
whether to try the innovation
• TRIAL– the consumer tries the innovation to
improve his or her estimate of its value
• ADOPTION – the consumer decide to make
full and regular use of the innovation
 Diffusion of innovation

• Innovators 2.5% -- willing to try new idea at a

risk

• Early adopters 13.5%-- opinion leaders , adopt

new ideas early but carefully

• Early majority 34% -- deliberate they adopt new

ideas before the average person

• Late majority 34% they adopt only after a

majority of people have tried it.

• Laggards 16% -- suspicious of changes and only

adopt when all options are exhausted
Questions and Answers
and Exam Technique