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New Product Development
Product Mix
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What is new product?
Original products
Product improvements
Product modifications New brands that the firm develops through
its own research and development efforts
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Causes of New ProductFailures
Overestimation of Market Size
Product Design Problems
Product Incorrectly Positioned, Priced or
Advertised Costs of Product Development
Competitive Actions
To create successful new products, the
company must: understand its customers, markets and
competitors
develop products that deliver superior
value to customers.
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New Product DevelopmentProcess
IdeaGeneration
ConceptDevelopmentand Testing
MarketingStrategy
Development
IdeaScreening
BusinessAnalysis
ProductDevelopment
MarketTesting
Commercialization
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Systematic Search for NewProduct Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
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Concept development &Testing
1. Develop Product Ideas intoAlternative
Product Concepts
2. Concept Testing - Test theProduct Concepts with Groups
of Target Customers
3. Choose the Best One
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4. Marketing strategydevelopment
Part Two - Short-Term:Products Planned Price
Distribution
Marketing Budget
Part Three - Long-Term:Sales & Profit Goals
Marketing Mix Strategy
Part One - Overall:Target Markets size & structure
Product PositioningSales Goals
Market Share
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Business analysis & ProductDevelopment
Business Analysis
Review of Costs and Profits Projections to See ifThey Meet Company Objectives.
Business Attractiveness (estimating total salesand costs and profits
If Yes, Move toProduct Development -
Physical prototypes and
customer tests
If No, EliminateProduct Concept
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Consumer-Goods MarketTesting
Sales-
WaveResearch
Test offering trail toa sample of
consumers in
successiveperiods.
SimulatedTest Market
Test in a simulated
shopping environmentto a sample ofconsumers.
Standard
Test Market
Full marketing campaignin a small number ofrepresentative cities.
ControlledTest Market
A few stores that have
agreed to carry newproducts for a fee.
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Product mix
The set of all products and items that aparticular company offers for sale.
All the products a given companyproduces comprise the product mix, orproduct assortment
A companys product mix has a certainwidth, length, depth, and consistency.
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Product Mix
Width - number ofdifferent product
lines
Length - totalnumber of itemswithin the lines
Depth - number ofversions of each
product
Product Mix -all the product
lines offered
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Product mix
Width: the number of different product lines.
Product width is the number of differentproducts a company makes (Apple- Nano,
touch, shuffle, iPhone etc...)
Length: the total number of items within theline.
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Depth: how many variants are offered of eachproduct in the line or the different versions ofeach product that are produced (iPhone 3G/4,8mb..)
If lux has 4 variants in 2 sizes then depth is 8.
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Consistency: how closely related the variousproduct lines are in end use, production
requirement, distribution channels, or some
other way.
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Product line
A product linerefers to a number of products thatare related and developed by the same
manufacturer.
Items within a product line generally share thesame basic theme.
Frequently, a product line includes different
products that are offered to the public at varying
price points. This way, a manufacturer orcompany can ensure that all products within a line
will be purchased by all kinds of people.
Product line extension refers to any additional
roducts that ma be added to a current roduct
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Product-Line Length
Line Stretching- Line stretching is a strategyapplied by a company to add new flavors, newcolors, new varieties, new strategy used by thecompany minimize the costs and leverage thebrand equity.
Products are introduced into a product line isknown as line stretching
Down-marketUp market
Two-way
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Line stretching
Down-market stretch- In down stretch market,companies apply the strategy of low market for high
growth opportunities.
It looks for the higher margins and positionsthemselves as downscale .
They basically focus on the mass retail such asSpencer, Wal-mart, Big Bazaar that attract millions of
customers and they make a strong growth by thisstrategy.
These are for that customer who believe in value and
also gives value price for the products.
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Upmarket stretch- In up stretch market,companies apply the strategy of high market
for high growth.
It looks for the higher margins and positions
themselves to upscale segment e.g ice cream
Hagen Daaz is in up market stretch.
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Two-way stretch- Companies in the middlerange of the market might decide to stretchtheir lines in both directions.
Titan introduced its first watches in themedium price /quality segment and graduallyadded watches in the premium segment underthe brand names Nebula & Xylus and Sonata
for economy segments. This has helped Titan gain market dominance
in watch category.
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Line Filling
A firm can lengthen its product line by adding
more items within the present range for
Incremental Profits
Satisfy Dealers who complain about lost salesbecause of missing items in the line
Utilize existing capacity
Try to become a full-line company Try to plug holes to keep the competitors away
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One of the critical factor that a firm should
consider while line filling is the Differentiation.There has to be a just-noticeable difference
between the offerings other wise consumerswill get confused .
In the case of Maruti brands, there is a clear
differentiation either in terms of design or
performance between these brands.
Line Filling is the strategy adopted by Maruti
Suzuki to retain its grip in the Indian market
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