MKT4 - Slide 1 to 19 1 4. Product Planning & Screening MKT4.

MKT4 - Slide 1 to 19MKT4 - Slide 1 to 19 11

4. Product Planning & 4. Product Planning & ScreeningScreening

MKT4MKT4

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Primary Strategic OrientationPrimary Strategic Orientation

Starting point to developing a product Starting point to developing a product development strategy; must focus on 6 primary development strategy; must focus on 6 primary product development orientations:product development orientations: Time-to-Market – getting the product to the market Time-to-Market – getting the product to the market

fast. Typical of rapidly changing fast. Typical of rapidly changing technologies/fashions. Trade offs: product technologies/fashions. Trade offs: product optimisation, performance, cost & reliabilityoptimisation, performance, cost & reliability

Lower Production Cost – lowest cost or highest value. Lower Production Cost – lowest cost or highest value. Usually for commodity types or products reaching Usually for commodity types or products reaching maturity or where there is a consolidation/shrinking maturity or where there is a consolidation/shrinking marketmarket


Primary Strategic Orientation Primary Strategic Orientation (contd)(contd)

Low Development Cost – involves tradeoffs Low Development Cost – involves tradeoffs with product performance, innovation, cost & with product performance, innovation, cost & reliabilityreliability

Product Performance, Technology & Product Performance, Technology & Innovation – focuses on highest level of Innovation – focuses on highest level of performance, functionality & features. performance, functionality & features. Involves high risk with newer technologies. Involves high risk with newer technologies. Trade offs: time & cost involvedTrade offs: time & cost involved


Primary Strategic Orientation Primary Strategic Orientation (Contd)(Contd)

Quality, Reliability, Robustness – assures Quality, Reliability, Robustness – assures high level of these, i.e., where safety, high level of these, i.e., where safety, reliability issues are important, e.g., reliability issues are important, e.g., pharmaceuticalspharmaceuticals

Service, Responsiveness & Flexibility – Service, Responsiveness & Flexibility – focuses on providing a high level of focuses on providing a high level of responsiveness to customer requirements. responsiveness to customer requirements. Requires additional resourcesRequires additional resources


Product Development ProcessProduct Development Process

Again?!Again?!

5 Step Process:5 Step Process:

Idea generationIdea generation

Idea screening & evaluaIdea screening & evalua


Product Development Process Product Development Process (contd)(contd)

Idea generation – can be from customers/users Idea generation – can be from customers/users of company products, from market research, of company products, from market research, ideas from competitors, from employees/dealersideas from competitors, from employees/dealersIdea Screening & evaluation - this step should Idea Screening & evaluation - this step should consider how attractive product is form long term consider how attractive product is form long term & short term perspective; how it will affect & short term perspective; how it will affect consumers over time. consumers over time. Need to screen against company’s marketing Need to screen against company’s marketing

strategies/strategic planstrategies/strategic plan Against company sales/profitability requirementsAgainst company sales/profitability requirements Against customer/buyers info collected in first stage Against customer/buyers info collected in first stage



Idea development – Need for customer Idea development – Need for customer feedback again, thru market research, i.e., feedback again, thru market research, i.e., concept testing. Allows company to identify concept testing. Allows company to identify potential market, estimate cost, revenue, potential market, estimate cost, revenue, profitability (idea can be dropped at this profitability (idea can be dropped at this stage)stage)

Product development – first stage product Product development – first stage product makes physical appearance (could be on makes physical appearance (could be on CAD system)CAD system)



Commercialisation – choose marketing Commercialisation – choose marketing mix and go ahead!mix and go ahead!


Strategic Implications of PLCStrategic Implications of PLC

Embryonic (or introduction): sale rises Embryonic (or introduction): sale rises slowly as customers try new product. slowly as customers try new product. Need to spend more (say on advertising) Need to spend more (say on advertising) than earningsthan earnings

Growth: Product is successful and growth Growth: Product is successful and growth accelerates. Experience curve effect accelerates. Experience curve effect lowers costs. Need to keep spending on lowers costs. Need to keep spending on promotion. Cash inflows may only equal promotion. Cash inflows may only equal outflowsoutflows


Strategic Implications of PLC Strategic Implications of PLC (Contd)(Contd)

Shakeout: imitators come in, and weaker Shakeout: imitators come in, and weaker similar products leavesimilar products leave

Maturity: market saturation and sales stop Maturity: market saturation and sales stop rising. The product (if still in the market) starts rising. The product (if still in the market) starts paying off, and profits rise further if organization paying off, and profits rise further if organization has good sharehas good share

Decline: Technical advancement brings new Decline: Technical advancement brings new products. There is a decline. Need to spend products. There is a decline. Need to spend minimal money and strategy of harvestminimal money and strategy of harvest


PLCPLC

Since the profits (& cashflows) vary Since the profits (& cashflows) vary according to stage of growth of the according to stage of growth of the product, the organization should have a product, the organization should have a mix of products at different stages in the mix of products at different stages in the PLCPLC

Many doubt validity of this tool – may not Many doubt validity of this tool – may not apply to branded goods which have a very apply to branded goods which have a very long & profitable lifelong & profitable life


Why extend the PLC?Why extend the PLC?

To gain more sales thru longer presenceTo gain more sales thru longer presence

By extending each stage of the PLC, there By extending each stage of the PLC, there is a better chance of exposure of the is a better chance of exposure of the product to relevant customer groups product to relevant customer groups


Product Management Strategies for Product Management Strategies for Extending the PLC Extending the PLC

Product diversification – creating different Product diversification – creating different product variants (e.g., newer versions of product variants (e.g., newer versions of WINDOWS)WINDOWS)

New Product uses – applying core products to New Product uses – applying core products to different uses (e.g., using Macintosh computer different uses (e.g., using Macintosh computer for desktop publishing), MP3 players, etcfor desktop publishing), MP3 players, etc

Changing product layers – altering product Changing product layers – altering product features to create different product families (e.g., features to create different product families (e.g., HP ink let and laser printers)HP ink let and laser printers)


Product Marketing Strategies for Product Marketing Strategies for Extending the PLCExtending the PLC

Re-positioning – changing the perceived value/intent of Re-positioning – changing the perceived value/intent of product product Co-branding – enhancing (or diluting) the products brand Co-branding – enhancing (or diluting) the products brand by associating with another strong brand by associating with another strong brand Re-packaging - e.g., Colgate toothpaste in a new Re-packaging - e.g., Colgate toothpaste in a new dispenserdispenserRe-branding – a drastic/costly measure to disassociate Re-branding – a drastic/costly measure to disassociate the brand from the previous values attached e.g., - the brand from the previous values attached e.g., - DATSUN to NISSANDATSUN to NISSANIncrease frequency of use – e.g., CHIVAS REGAL, from Increase frequency of use – e.g., CHIVAS REGAL, from special occasions to drink more oftenspecial occasions to drink more often


Product Marketing Strategies for Product Marketing Strategies for Extending the PLC (contd)Extending the PLC (contd)

New markets and segments – e.g., New markets and segments – e.g., Eastern Europe & Africa to senior citizens Eastern Europe & Africa to senior citizens and womenand women

Pricing & special offers – this is a Pricing & special offers – this is a positioning tool positioning tool


Strategy Application Within the PLC Strategy Application Within the PLC ModelModel

Introduction – Increasing frequency of use, Introduction – Increasing frequency of use, pricingpricing

Growth – Pricing, product diversification, new Growth – Pricing, product diversification, new product uses, changing product layersproduct uses, changing product layers

Maturity – Re-packaging, Co-branding, Pricing, Maturity – Re-packaging, Co-branding, Pricing, Product diversification, New product usesProduct diversification, New product uses

Decline – Re-branding, Re-positioning, Increase Decline – Re-branding, Re-positioning, Increase frequency of use, New markets & segments, frequency of use, New markets & segments, PricingPricing


PLC – Limitations & BenefitsPLC – Limitations & Benefits

Limitations Limitations difficult to foresee transitions in stages; may difficult to foresee transitions in stages; may

cause incorrect application of strategiescause incorrect application of strategies Not all products/services go thru every stageNot all products/services go thru every stage Products do not spend the same amount of Products do not spend the same amount of

time at each stagetime at each stage Inefficient when dealing with Brands and Inefficient when dealing with Brands and

servicesservices


PLC – Limitations & Benefits PLC – Limitations & Benefits (Contd)(Contd)

Managers need a predictive tool for Managers need a predictive tool for strategy and dealing with competitorsstrategy and dealing with competitors

Good for strategies application on a macro Good for strategies application on a macro basisbasis

MKT4 - Slide 1 to 19 1 4. Product Planning & Screening MKT4.

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