MCM 605-eL7

IDOL Institute of Distance and Online Learning ENHANCE YOUR QUALIFICATION, ADVANCE YOUR CAREER.

M.Com 2 All right are reserved with CU-IDOL Marketing Management Course Code: MCM 605 Semester: First  e-Lesson:  SLM Unit: 7 7 www.cuidol.in Unit 7(MCM 605)

TOPICS TO BE COVERED 3 > New Product Development process > Product Life Cycle (PLC) > Marketing strategies at different stages. www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Marketing Management 43 OBJECTIVES INTRODUCTION  To make students aware that companies current  In this unit students are going to learn about products face limited life spans and must be replaced by newer products. the new product development process and how to use it for developing marketing  To look at internal and external considerations that strategy. affect new product development process.    Under this you will learn and understand the To develop an understanding of product life cycle various sources to get new product ideas. and its applications.  In this unit you will learn the implications of product policies in marketing. www.cuidol.in Unit 7(MCMM60650)5) INASlTl ITriUgThEt OarFeDrIeSsTeArNvCeEd AwNitDh OCNUL-IIDNOE LLEARNING

5 New Product Development www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Reasons for new product failure 6 • Overestimation of market size • High development costs • Poor design • Incorrect positioning • Wrong timing • Competition • Priced too high • Ineffective promotion • Management influence https://artofthekickstart.com/the-four-steps-of-new-product-development-with-sean-michael-ragan-aotk-242/ www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

New Product Development 7 Process Idea generation Idea screening Concept Marketing development and strategy testing development Commercialization Test marketing Product Business development analysis https://kalyan-city.blogspot.com/2012/02/stages-process-steps-of-new-product.html www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

8 https://kalyan-city.blogspot.com/2012/02/stages-process-steps-of-new-product.html www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Idea Generation 9 • New idea generation is the systematic search for new product ideas. It involves delineating sources of new ideas and methods for generating them. Sources Internal Sources: External Sources: Company’s own formal R&D, Management & Customers, competitors, suppliers & outside staff, & intrapreneurial activities design firms www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Idea Screening 10 • Idea screening is a process that evaluates and contrasts new product ideas to get the most promising ones for your business. Not every idea is relevant to your company. Through a successful idea screening process, it helps in focusing the whole product development process with a higher possibility of achieving success. • Idea screening refers to reviewing new-product ideas in order to drop poor ones as soon as possible • In product screening poor, unsuitable or otherwise unattractive ideas are weeded out from further actions www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Idea Screening 11 • Questions to be asked: 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? www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Concept testing 12 • Concept testing present the consumer with a proposed product and measure attitudes and intention at this early stage of development. • Concept testing of prototypes can help avoid costly mistakes. • It is a quick and inexpensive way of measuring consumer enthusiasm. It asks potential consumers to react to a picture, written statement, or oral description of a product. This enables a firm to determine initial attitudes prior to expensive, time consuming prototype development. www.cuidol.in https://www.leadquizzes.com/blog/concept-testing-surveys/ All right are reserved with CU-IDOL Unit 7(MCM 605)

Market Development 13 Strategy • Marketing development strategy refers to the initial marketing strategy for introducing the product to the market Part 1 Description of the target market Product positioning, sales, market share, profit goals Part 2 Price, Distribution & Budget Part 3 Long term Sales, profit goals & marketing mix strategies www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Business Analysis 14 • Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market Estimate profitability and breakeven point www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Product 15 Development • Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments requiring an increase in investment. • The creation of products with new or different characteristics that offer new or additional benefits to the customer. Product development may involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche. • It converts a product idea into a physical form and identifies a basic marketing strategy. www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Test marketing 16 • Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings • Test marketing provides the marketer with experience in testing the product and entire marketing program before full introduction • It involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan www.cuidol.in https://www.quora.com/What-are-some-advantages-of-test-marketing All right are reserved with CU-IDOL Unit 7(MCM 605)

Commercialization 17 Commercialization is the introduction of the new product • When to launch • Where to launch • Planned market rollout It involves implementing a total marketing plan and full protection https://qualityinspection.org/commercialization/ www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Effective Product Development 18 A high quality New product process • Emphasize the up-front predevelopment homework. • Building in the voice of the customer throughout • Having tough decision points where projects really do get killed Well Communicated New product Strategy for the Business • Clear goals for the new product effort: what percentage of sales or profits will it contribute to the business Adequate resources for the New Products • Devoted the necessary resources – people & money, marketing and technical- to achieve the business’s new product objectives • R&D budgets are adequate • The necessary people are in place and have time for new products www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Product Life Cycles (PLC) 19 All products have certain length of life during which they pass through certain identifiable stages. The PLC is a conceptual representation of product ageing process. Like your life is divided into stages same as life of a product is also divided. Product start with introduction in the market for the purpose of sale. The demand of that product is gradually increased in the market & it reach to its maximum, from where it start decline. It is effective lifespan of a product. Acc to Philip kotler: “The Plc is an attempt to recognize the distinct stages in the sales history of the product.” www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Sales & Profit Life Cycles 20 https://image.slidesharecdn.com/c3productdesign-110608113159-phpapp02/95/c3- product-design-9-728.jpg?cb=1307532922 www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Product Life Cycles (PLC) 21 https://in.images.search.yahoo.com/yhs/search;_ylt=AwrwJQ3tMxxeQRsAYKoO9olQ;_ylu=X3oDMTBsZ29xY3ZzBHNlYwNzZWFyY2gEc2xrA2J1dH Rvbg--;_ylc=X1MDMTM1MTIxODcwMgRfcg www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

22 • Market introduction stage costs are very high • slow sales volumes to start • little or no competition • demand has to be created • customers have to be prompted to try the product • makes no money at this stage https://in.images.search.yahoo.com/yhs/search;_ylt=AwrwJQ3tMxxeQRsAYKoO9olQ;_ylu=X3oDMTBsZ29xY3ZzBHNlYwNzZWFyY2gEc2xrA2J1dHRvbg-- ;_ylc=X1MDMTM1MTIxODcwMgRfcg www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

23  Growth stage costs reduced due to economies of scale  sales volume increases significantly  profitability begins to rise  public awareness increases  competition begins to increase with a few new players in establishing market  increased competition leads to price decreases https://in.images.search.yahoo.com/yhs/search;_ylt=AwrwJQ3tMxxeQRsAYKoO9olQ;_ylu=X3o DMTBsZ29xY3ZzBHNlYwNzZWFyY2gEc2xrA2J1dHRvbg-- ;_ylc=X1MDMTM1MTIxODcwMgRfcg www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

24 Maturity stage costs are lowered as a result of production volumes increasing and experience curve effects •sales volume peaks and market saturation is reached •increase in competitors entering the market •prices tend to drop due to the proliferation of competing products •brand differentiation and feature diversification is emphasized to maintain or increase market share Industrial profits go down https://in.images.search.yahoo.com/yhs/search;_ylt=AwrwJQ3tMxxeQRsAYKoO9olQ;_ylu=X3oDMTBsZ29xY3ZzBHNlYwNz ZWFyY2gEc2xrA2J1dHRvbg--;_ylc=X1MDMTM1MTIxODcwMgRfcg www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

25 Saturation and decline stage costs become counter- optimal sales volume decline or stabilize prices, profitability diminish profit becomes more of a challenge https://in.images.search.yahoo.com/yhs/search;_ylt=AwrwJQ3tMxxeQRsAYKoO9olQ;_ylu=X3oDMTBsZ29xY3ZzBHNlYwNzZW FyY2gEc2xrA2J1dHRvbg--;_ylc=X1MDMTM1MTIxODcwMgRfcg www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Multiple Choice Questions 26 The following is the source(s) for developing new or improved product (A) Research and Development department of the enterprise (B) Consumer suggestions and Complaints (C) Other competitive products in the market (D) All of the above www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Multiple Choice Questions 27 The ultimate objective of the product is (A) To provide a new look (B) Utilizing existing manpower (C) To monopolize the market (D) All of the above www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Multiple Choice Questions 28 _____ is the development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts. A. Idea generation B. Concept testing C. Test marketing D. New product development www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Multiple Choice Questions 29 New-product development starts with _____. A. idea screening B. idea generation C. concept development and testing D. marketing strategy development www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Summary 30 • Every company will have to find replacement for its products that have entered the declining stage. Hence, new product development and launch should be ongoing process. • New products become popular due to the diffusion of innovation and adoption process. • The marketing strategy vary with different stages in product life cycle. www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

Frequently Asked Questions 31 Q1. Explain market penetration . Ans. The extent to which a product is recognized and bought by customers in a particular market. Q2. What is test marketing? Ans. Test marketing is an experiment conducted in a field laboratory (the test market) comprising of actual stores and real-life buying situations, without the buyers knowing they are participating in an evaluation exercise. It simulates the eventual market-mix to ascertain consumer reaction. Q3. What is product planning? Ans. Product Planning is the ongoing process of identifying and articulating market requirements that define a product's feature set. Product planning serves as the basis for decisions about price, distribution and promotion. Q4. Which are the marketing strategies used during product life cycle? Ans. Marketing strategies used in introduction stages include: rapid skimming - launching the product at a high price and high promotional level. slow skimming - launching the product at a high price and low promotional level. Slow penetration - launching the product at a low price and minimal promotion. www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL

REFERENCES 32 1. Kotler,P., Keller, K.L. Koshy, A. and Jha, M. (2009). Marketing Management: A South Asian Perspective. New Delhi: Pearson Education. 2. Etzel, M., Walker, B., Stanton, W. and Pandit, A.(2007). Marketing Management. New Delhi: Tata McGrawHill. 3. Ramaswamy, V.S., Namakumari, S. (2009). Marketing Management: Global Perspective Indian Context. New Delhi: Macmillan Publishers India Ltd. 4. Saxena, Rajan. (2010). Marketing Management. New Delhi: Tata McGraw Hill Education Pvt. Ltd. www.cuidol.in Unit 7(MCM 605) 3A2ll right are reserved with CU-IDOL

33 THANK YOU For queries Email: [email protected] www.cuidol.in Unit 7(MCM 605) All right are reserved with CU-IDOL