PRODUCT

• PRODUCT VARIETY

• QUALITY

• DESIGN

• FEATURES • WARRANTIES

• SERVICES

• BRAND NAME

• SIZE & FORM

• PACKAGING

• RETURNS

Piyoosh Bajoria

Time

Introduction

Profits

Sales

Growth Maturity Decline

Sales and Profits Over the Product’s Life From Development to Decline

Product Life Cycle

Development

Piyoosh Bajoria

Product Life Cycle

• Demand / Technology life Cycle

• Product Form Life Cycle

• Brand Life Cycle

Piyoosh Bajoria

Time

Product category

profits

Product category

sales

Introductory Introductory stagestage

Growth Growth stagestage

Maturity Maturity stagestage

Decline stage

Product Life Cycle

Piyoosh Bajoria

The Shape of the Sales Curve May Vary...

Time

Time Time

Time

Sale

s

Sale

sSa

les

Sale

s

TRADITIONAL FAD

SEASONAL (CYCLICAL) REVIVAL or NOSTALGIA

Piyoosh Bajoria

Marketing Strategies for PLCINTRODUCTION GROWTH MATURITY DECLINE

ProductStrategy

DistributionStrategy

PromotionStrategy

PricingStrategy

Limited modelsFrequent changes

More modelsFrequent changes.

Large number of models.

Eliminate unprofitable

models

LimitedWholesale/

retail distributors

Expanded dealers. Long-term relations

Extensive.Margins drop.Shelf space

Phase out unprofitable

outlets

Awareness. Stimulate

demand.Sampling

Aggressive ads.Stimulatedemand

Advertise. Promote heavily

Phase outpromotion

Higher/recoupdevelopment

costs

Fall as result ofcompetition &

efficient produc-tion.

Prices fall (usually).

Prices stabilize at low level.

Piyoosh Bajoria

Sales

Costs

Profits

Marketing Objectives

Product

Price

Low sales

High cost per customer

Negative or low

Create product awareness and trial

Offer a basic product

Usually is high; use cost-plus formula

Distribution High distribution expenses

Advertising Build product awareness among early adopters and dealers

Introduction stage

Piyoosh Bajoria

Sales

Costs

Profits

Marketing Objectives

Product

Price

Rapidly rising sales

Average cost per customer

Rising profits

Maximize market share

Offer new product features, extensions, service, and warranty

Price to penetrate market

Distribution Increase number of distribution outlets

Advertising Build awareness and interest in the mass market

Growth Stage

Piyoosh Bajoria

Sales

Costs

Profits

Marketing Objectives

Product

Price

Peak sales

Low cost per customer

High profits, then lower profits

Maximize profits while defending market share

Diversify brand and models

Price to match or best competitors

Distribution Build more intensive distribution

Advertising Stress brand differences and benefits

Maturity stage

Piyoosh Bajoria

Market Market ModificationModification

Product Product ModificationModification

MarketingMarketingMixMix

ModificationModification

Maturity Stage Product Defense Strategies

Maturity stage

Piyoosh Bajoria

Sales

Costs

Profits

Marketing Objectives

Product

Price

Declining sales

Low cost per customer

Declining profits

Reduce expenditure and maintain, reposition, harvest or drop the product

Phase out weak items

Cut price

Distribution Go selective: phase out unprofitable outlets

Advertising Reduce to level needed to retain hard-core loyal customers

Decline stage

Piyoosh Bajoria

NEW PRODUCT DEVELOPMENT

Piyoosh Bajoria

Objectives

• Challenges in New Product Development (NPD)• Organizational Structure & NPD• Stages & Management of NPD• Diffusion & Adoption of New Products• Look at the Product lifecycle• Fads, style, etc

Piyoosh Bajoria

• Original products, product improvements, product modifications and new brands that the company develops through its own research and development.

What is new product

Piyoosh Bajoria

Categories of New ProductsNew-To-The-World

New Product Lines

Product Line Additions

Improvements/Revisions

Repositioned Products

Lower-Priced Products

SixCategories

ofNew

Products

Piyoosh Bajoria

• Not introducing a “superior” product • Overestimation of Market Size• Product Incorrectly Positioned, Priced or

Advertised• Blow out in costs of Product Development• Competitive Actions - price wars etc• Disharmony between marketing and R&D

Causes of new product Failure

Piyoosh Bajoria

To create successful new products, the company must:

•understand its customers, markets and competitors,

•develop products that deliver superior value to customers.

Causes of new product Failure

Piyoosh Bajoria

New Product Development Process

IdeaIdeaGenerationGeneration

ConceptConceptDevelopmentDevelopmentand Testingand Testing

MarketingMarketingStrategyStrategy

DevelopmentDevelopment

IdeaIdeaScreeningScreening

BusinessBusinessAnalysisAnalysis

ProductProductDevelopmentDevelopment

MarketMarketTestingTesting

CommercializationCommercializationPiyoosh Bajoria

Original Products

ProductImprovements

ProductModifications

NewBrands

AcquiredCompanies

Acquired Patents

AcquiredLicenses

Strategies for Obtaining New Product Ideas

New product development strategies

Piyoosh Bajoria

Step 1: Idea GenerationCustomers

Employees

Distributors

Competitors

R & D

Consultants

Creative Thinking

Sources ofSources ofNew-ProductNew-Product

IdeasIdeas

Piyoosh Bajoria

Attribute Listing

The process of listing down major attributes of existing products & modifying each attribute for an improved

product

Piyoosh Bajoria

Forced Relationships

In this process several objects are considered in relationships

with each other to create a new product.

Piyoosh Bajoria

Morphological Analysis

This method calls for identifying structural

dimensions of a problem and examining the relationship

amongst them.

Piyoosh Bajoria

Need /problem identification

This method calls for identifying needs, problems &

even asking for ideas.

Piyoosh Bajoria

Brainstorming

The process of getting a group to think of unlimited ways to

vary a product or solve a problem.

Piyoosh Bajoria

• Process to spot good ideas and drop poor ones as soon as possible.

• Many companies have systems for rating and screening ideas which estimate:• Market Size• Product Price• Development Time & Costs• Manufacturing Costs• Rate of Return

• Then, the idea is evaluated against a set of general company criteria.

Step 2: Idea Screening

Piyoosh Bajoria

1. Develop New Product Ideas into Alternative Detailed

Product Concepts

2. Concept Testing - Test theNew Product Concepts with Groups of Target Customers

3. Choose the One That Has theStrongest Appeal to Target

Customers

Step 3: Concept Development & Testing

Piyoosh Bajoria

Part Two Describes Short-Term:Product’s Planned Price

DistributionMarketing Budget

Part Three Describes Long-Term:Sales & Profit Goals

Marketing Mix Strategy

Marketing Strategy Statement Formulation

Part One Describes Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

Step 4: Market Strategy Development

Piyoosh Bajoria

Business Analysis

Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If Yes, Move to Product Development

If No, Eliminate Product Concept

Step 5: Business AnalysisStep 6: Product development

Piyoosh Bajoria

Advertising

Packaging

ProductBudget Levels

Positioning Strategy

DistributionPricing

Branding

Elements that May be Test

Marketed by a Company

Test Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic

Market Settings.

Step 7: Test Marketing

Piyoosh Bajoria

When? Where?

Commercialization is the Introduction of the New Product into the Marketplace.

Step 8: Commercialization

Piyoosh Bajoria

Step 8: Commercialization

Production

Inventory Buildup

Distribution Shipments

Sales Training

Trade Announcements

Customer Advertising

Steps in Steps in Marketing a Marketing a New Product New Product

Piyoosh Bajoria

Diffusion

The process by which the adoption of an innovation spreads.

Piyoosh Bajoria

Categories of adoptersin Diffusion process

• Innovators• Early adopters• Early majority• Late majority• Laggards

Piyoosh Bajoria

Perc

enta

ge o

f Ado

pter

s

Time

Innovators2.5%

EarlyAdopters

13.5%

LateMajority

34%

EarlyMajority

34%Laggards

16%

Categories of Adopters

Piyoosh Bajoria

Diffusion process and product life cycle curve

InnovatorsEarly adopters

Early majorityLate majority

Laggards

ProductProductlife cyclelife cyclecurvecurve

DiffusionDiffusioncurvecurve

Introduction Growth Maturity Decline

Sale

s

Piyoosh Bajoria

Product characteristics and the rate of adoption

• Complexity• Compatibility• Relative advantage• Observability• Triability

Piyoosh Bajoria

Marketing implications of the adoption process

Communication aids the diffusion process

• Word-of-mouth• Direct from marketer

Piyoosh Bajoria