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LOGO
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NEW PRODUCTSNEW PRODUCTS
PRESENTRD BY GROUP NO- 05
Abhijit Chakraborty
Himadri Sharma
Sanjeev Sharma
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In marketing, a product is anything that can be offered to a
market that might satisfy a want or need.
It may refer to a single item or unit
a group of equivalent products
a grouping of goods or services
Product can be also defined as bundles of tangible and
intangible attributes.
Tangible (Material, size, weight, design, packaging, etc.)
Intangible (Brand image, styling and other benefits)2
WHAT IS A PRODUCT ?
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It can be introduced mainly for two purposes
Offensive ( to gain sales or sales)
Defensive ( to match or block competitors )
While offering new products in market, two
things comes in mind
Which brand it is belonging
Who are the target customer
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NEW PRODUCTS
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TYPES OF NEW PRODUCT
oNew to the world products are products that create entirely newmarkets.
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oNew product lines are products that represent entries into existingmarkets that are new to the firm.
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o Line extensions are new products that allow the firm to extend its
served market by offering different benefits.
o
Cost reductions are versions of existing products that providecomparable performance at lower cost. E.g.- Tata nano
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o Improvements to existing products are usually designed as replacements for existing
product offerings. E.g.- Window7, LCD is replaced by LED with 3D screen.
o Repositioning are modest technical improvements that allow a product to offer
new applications and serve new needs. E.g.- Fiat cars
Old model New model
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It can be done through some process like continuous
quality improvement, redesigned, and updated styling.
Product modification can be of three types
a) Clearly better e.g.- an upgrade.
b) Different e.g.- ingredient change that is likely to
appeal more to some customer.
c) Inferior e.g.- substitution of a less expensive
ingredient.
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PRODUCT MODIFICATION
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Modification can also occur in offering.
Changing distribution channels
Lowering price
Change in advertising Service experience
Packaging (McD change in packaging from plastic to
biodegradable paper)
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ASSESSING THE IMPACT OF PRODUCT REDESIGN ON CUSTOMER
Current Customer Reaction Response after trial Impact on sale/profit
1) Loyal A. Try Prefer Gain
Like Neutral
Not like Loss
B. Not Try Loss
2) Occasional A. Try Prefer Gain
Like Neutral
Not like Loss
B. Not Try Loss
3) Non Customers A. Try Prefer Gain
Like Neutral
Not like Loss
B. Not Try Loss 9
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LINE EXTENSIONS
It can be defined as introducing additional product variant
that use the existing brand name.
It is a popular way to capitalize on the original brands
equity.
A line extension often adds a different flavor or ingredient
variety, a different form or size, or a different application for thebrand.
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Cokes line extension
Surf, Surf Excel, Surf Excel Blue.
EXAMPLES
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PROS
o Can appeal to multiple segment by giving slightlydifferent wants and preferences (e.g.- For car model like
ac or non ac etc, multiple fares and conditions for airline
seats) .
CONS
o It can confuse the customer.
PROS AND CONS OF LINE EXTENSION
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Adding Dro
Customer based:
New customer attracted Old customer lost
Old customer cannibalization Customer switching
Confusion and dilution of brand equity Signal of weakness
Operation based:
Loss of economies of scale Impaired efficiencyProblems in gaining additional distribution Maintaining distribution
Additional Servicing needs Servicing old versions
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CONSIDERATIONS IN ADDING OR DROPPING A VARIANT
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1)Idea Generation
2)Concept Development
3)Feasibility Screening4)Concept Testing
5)Product Development
6)Product Testing
7)Market Testing
8)Go No go Decision
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PRODUCT STAGES
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IDEA GENERATION
Idea for product modifications and extensions comes from
many sources, both proactive and reactive.
1) Customeranalysis
Usage/needs analyses and survey of attitudes and
attribute importance, including both unstructured ( e.g-
focus groups) and structured( e.g- conjoint analysis)
approaches.
2) Competitoranalysis
What competitors sell or working on.
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3) Activesearch
particularly of new product and process in other areas
with an eye toward incorporating them in the companyown product.
4) Categoryanalysis
Examining changing social trend and technologies.
5) Brainstorming
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Number of sources that lead to new products
1) Customers or ex- or noncustomers who rejectcurrent products
2) Employees, especially the sales force
3) Suppliers
4) Distribution Channels
5) Operations people6) Internal and External R&D
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CONCEPT DEVELOPMENT
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The organisation may have come across what they believe
to be a feasible idea, however, the idea needs to be taken to
the target audience.
What do they think about the idea?
Will it be practical and feasible?
Will it offer the benefit that the organisation hopes it will?
Have they overlooked certain issues?
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FEASIBILITY SCREENING
The object is to eliminate unsound concepts prior to devoting
resources to them.
The screeners should ask several questions:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment/target market?
What is the current or expected competitive pressure for the product idea?
What are the industry sales and market trends the product idea is based
on?
Is it technically feasible to manufacture the product?
Will the product be profitable when manufactured and delivered to the
customer at the target price?
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Concept testing present the consumer with a proposed
product and measure attitudes and intention at this early stage
of development
The main purpose of concept test are :
1) Choose the most promising from a set of alternatives.
2) Get the initial notion of the commercial prospects of a concept.
3) Find out who is most interested in the concept.
4) Indicate what direction further development work should take.
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CONCEPT TESTING
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The data collection procedures fall into three major
categories:
o SurveyGetting large samples for projection purposes.
Through survey basically gather four types of
reaction.
a) Attitude ( Is the product good/bad?)b) Uniqueness/differentiation (How unique is this
product?)
c) Relevance (How relevant is the product to you?)
d) Intention (Will you bye the product?)
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o Focus group
The strength of focus groups is their
diagnostic power in that they can be used
to get detailed discussions of various aspects
of the concept.
o Demonstrations
A popular way to present a concept is to gather a group of
consumers, present them with a story about the new product and record
their reactions.
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PRODUCT DEVELOPMENT
It converts the concept into a working product or a physical
form
It is done by developing the product architecture; design
function, value, and appearance of the product; create and
develop product specifications; and consider manufacturing
and operational costs and operational constraints or tradeoffs.
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PRODUCT TESTING
It involves placing a product for sale in one or more
selected areas and observing its actual performance under
the proposed marketing plan.
The purpose of product test is to
1) Uncover product shortcomings
2) Evaluate commercial prospects
3) Evaluate alternative formulations
4) Uncover the appeal of the product to various marketsegments.
5) Gain ideas for the other element of the marketing
program.
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There are three major types of product use test.
First phase:
These initial tests are diagnostic, how the product actually used
and are directed toward eliminating serious problem with the
product.
Second Type:
It includes a limited-time-horizon forced-trial situation where
customer are given the product to use and asked for their
reaction to it.
Third Type:
In this type test requires placement of the product in home ( or
business settings for industrial product) for an extended period.25
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The purpose of such test is to
Predict sales and profits from a major product launch.
Practice so that marketing, distribution, and production skills
are developed before entering full scale operations.
In marketing testing several decisions must be made.o Where to test
o What to do
o How long
o Cost26
MARKET TESTS
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GO NO GO DECISION
After doing lots of exercise on the new product
development one should able to understand/make decision
whether go or not go for the new product launch.
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3000rawideas
(.03%)
300submitted
Ideas(.3%)
125beginning
Projects(.8%)
9large
developments
11%
4major
developments
25%
1.7launches
60%
1commercial
success
Source : Stevensand Burley, RTM May-June199728
Success Rate Entirely New Products
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WHY DEVELOP NDP
o To add to product portfolio
o To create stars and cash cows for the future
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To replace declining product
o To take advantage of new technology
o To defeat rivals
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To maintain/increase market share
o To keep up with rivals
o To maintain competitive advantage
o To full gap in the market29
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REALLY NEW PRODUCTS
They create or expand a new category, by making cross-
category competition.
They are new to customers.
Which raise broad issues such as appropriate channels of
distribution and organizational responsibility.
Create a need for infrastructure and software.
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EXAMPLES
Packaged goods : Bottled tea, light beer, frozen vegetables
Services : Overnight air delivery, ATMs, Credit cards, etc.
Durables : Microwave ovens, room air conditioners,
Dishwashers
Industrial products : Semiconductors, printing presses.
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GETTING IDEAS FOR REALLY NEW PRODUCTS
Asking or listening to dissatisfied customers.
Asking non representative customers.
Using open-ended, qualitative procedures.
Involving customers especially for industrial products.
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EVALUATING REALLY NEW PRODUCTS
CONSTITUENCY
ASPECTS CUSTOMERS
WITHIN
COMPANY SUPPLIERS CHANNELS PUBLIC
Relative
Advantage
Compatibility
Risk
Complexity
Communicability
Trial ability
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NEW PRODUCT CAN BE USED
o Increase/defend market share by offering more choice orupdating older products
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Appeal to new segments
o Diversify into new markets
o Improve relationship with distributors
o Maintain the firms reputation a leading edge company
o Even out peaks and troughs in demand
o Make better use of the organization's resources34
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