Productivity

Productivity

Abu Bashar

Productivity refers to the physical relation between the quality produced (output) and the quantity of resource used in the course of production (input)

Productivity (P) =output (O)/input (I) Output implies production while input means

land, labour, capital, management etc. Productivity measures the efficiency of the

production system. Higher productivity means producing more

from a given amount of input or producing a given amount with minimum level of inputs.

PRODUCTIVITY

Productivity and production are two different terms.

Productivity is a relative term indicating the ratio between total output and the total inputs used therein on the other hand production is an absolute concept, which refers to the volume of output.

The volume of production may increase but productivity may decline due to inefficient use of resource.

Efficient use of input may increase productivity but the volume of production may not increase.

Production refers to the end result of production system whereas productivity reflects its efficiency.

Productivity and production

Benefits derived from higher productivity are as follows:

It helps to cut down cost per unit and thereby improve the profits.

Gains from productivity can be transferred to the consumers in from of lower priced products or better quality products.

These gains can also be shared with workers or employees by paying them at higher rate.

A more productive entrepreneur can have better chances to exploit export opportunities.

It would generate more employment opportunities.

SIGNIFICANCE OF PRODUCTIVITY

Productivity may be measured either on aggregate bases or on individual basis, which are called total and partial productivity respectively.

MEASUREMENT OF PRODUCTIVITY

This index measures the efficiency in the use of all the resources.

Partial productivity Indices, depending upon factors used, it measures the efficacy of individual factor of production.

Following are productivity indices for individual inputs.

Partial productivity Indices

Productivity is outcome of several interrelated factors, which may broadly be divided into two categories- human factors and technological factors.

Human Factors: (a) Ability to work and(b) Willingness to work Technological Factors Managerial factors Natural Factors Sociological Factors Political Factors Economic Factors

FACTORS INFLUENCING PRODUCTIVITY

NEW PRODUCT AND NEW PRODUCT DEVELOPMENT

PROCESS

A product that opens an entirely new market A product that adopts or replaces an existing

product A product that significantly broadens the

market for an existing product An old product introduced in a new market An old product packaged in a different way An old product marketed in a different way

What is a new product ?

Innovative products New product lines – to allow the firm to enter

an existing market Addition to product line – to supplement the

firm’s existing product line Improvements and revisions of existing

product Repositioned products – existing products

targets at new market Cost reduction new product that provide

similar performance at lower cost

Types of new product

New to the world – high definition TV, ipod,

flat screen TV, Probiotic Ice Cream

Product improvement & replacement :SPEED

by BPCL

Cost reduction new product: Moser Baer.

Examples of new products

Increase/defend market share by offering more choice or updating older products

Appeal to new segments Diversify into new markets Improve relationship with distributors Maintain the firm’s reputation a leading

edge company Even out peaks and troughs in demand Make better use of the organization's

resources

New product can be used to

To replace declining product To take advantage of new technology To defeat rivals To maintain/increase market share To keep up with rivals To maintain competitive advantage To fill gap in the market

Why develop New Product ?

This is the strategic stage The firm assesses

It current product portfolio Opportunities and threats

The firm then determines the type of product which would best fit in with the corporate strategy

New product planning

New product development is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the Growth or survival of the organisation.

New product development

Idea Generation Idea Screening Concept development and

testing Market strategy development Business Analysis Test marketing Commercialization

Stages in New product development

Idea generation is continuous, systematic search for new product opportunities. It involves delineating sources of new ideas and methods for generating them.

Ideas for new products can be obtained from basic research using a SWOT analysis

(OPPORTUNITY ANALYSIS), Market and consumer trends, company's R&D

department, competitors, focus groups, employees, salespeople, corporate spies,

Idea Generation

The object is to eliminate unsound concepts prior to devoting resources to them.

The screeners must ask these 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?

Idea Screening

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.

Concept testing

2. Outlines the planned price, distribution strategy, and marketing budget for the first year.

3. Describes the long-run sales and profit goals and marketing-mix strategy over time.

Market Strategy Development

1. Describe the market’s size, structure, and behaviour, the planned product positioning, and the sales, market share, and profit goals for first few years.

Includes development of three part strategy plan

Estimate likely selling price based upon

competition and customer feedback

Estimate sales volume based upon size of

market

Estimate profitability and breakeven point

Business & financial Analysis

Test marketing involves placing a

product for sale in one or more selected

areas and observing its actual

performance under the proposed

marketing plan

Test Marketing

Commercialization involves implementing a total marketing plan and full productionLaunch the productProduce and place advertisements and other

promotionsFill the distribution pipeline with productCritical path analysis is most useful at this stage

Commercialization