Types of New Product Introductions
High
Low
New product lines
20%
Improvements toexisting products
26%
Additionsto existing
product lines26%
Repositionings 7%Cost
reductions11%
New-to-world products10%
HighNewness to market
New
ness
to c
ompa
ny
Size of circle denotes number of introductions relative to total.
Idea GenerationIdea Generation
ScreeningScreening
Concept Develop-ment & Testing
Concept Develop-ment & Testing
Marketing StrategyMarketing Strategy
Business AnalysisBusiness Analysis
Product DevelopmentProduct Development
CommercializationCommercialization
Test MarketingTest Marketing
The New Product Development Process
Product DevelopmentProduct Development
Create (engineer) prototype versions of the physical
product.
Test for performance (lab)
Test prototypes with convenience samples for
functional, aesthetic, psychological performance
(taste, use, feel, appearance).
Actual or projected product comparison tests
(blind/not blind) with users/experts or influencers.
Test MarketingTest Marketing
Completed “offering bundles” designed and prepared for marketing response
Sales wave studies -- selected sample, free trial, offered repeat brand options.
Simulated Test Marketing Controlled Test Marketing Test Marketing
Test marketing should take full advantage of information gathering -- well beyond sales projections
AwarenessAwareness
InterestInterest
EvaluationEvaluation
TrialTrial
AdoptionAdoption
New Product Adoption Process
Loyalty?
Time of Adoption of InnovationsTime of Adoption of Innovations
Laggards 16%
LateMajority
34%
EarlyMajority
34%
Early Adopters 13.5%
Innovators 2.5%
Adopter Categories
Adopter Categorization on the Basis of Relative Time of Adoption of Innovations
Five product characteristics influence the rate of adoption:
• Degree of relative advantage• Degree of compatibility• Degree of complexity• Degree of divisibility or trial-ability or risk• Degree of communicability
SOME REASONS FOR NEW PRODUCT FAILURES
1. Market too small2. Poor match or fit with company 3. Not new / Not different 4. No real benefit5. Poor positioning Vs competition 6. Forecasting errors7. Poor Timing8. Competitive Response too good9. Changes in Customer tastes10. Poor after sales service 11. Insufficient return on investment12. Lack of coordination in functions13. Inadequate support14. Poor recovery strategies
Concepts
– Importance of distribution – Players in distribution– Objectives of distribution
Channels of distribution– Channel system – flows and costs– Channel structure for consumer products– Channel structure for services– Channel structure for industrial products
Channel Management Goals
• Efficiency vs Effectiveness
• Control vs. Flexibility • Learning and Knowledge
Marketing Flows in a Channel
4. Information Flow
5. Promotion Flow
Customer
Customer
Customer
Customer
Advertising Agency
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
1. Physical Flow
2. Title Flow
3. Payment Flow
Customer
Transporters Warehouses
Manufacturer
Transporters
Warehouses
Dealers Transporters
Manufacturer Dealers
Banks Manufacturer
Banks Dealers
Banks
Transporters
Warehouses Banks
Manufacturer
Transporters
Warehouses Banks
Dealers
Transporters Banks
Manufacturer
Advertising Agency
Dealers Activation
Agency
Costs Associated with channel functions
• Physical Possession: Breaking bulk , Storage and delivery/installation cost
• Ownership: inventory carrying cost• Promotion: personal selling, advertising, sales promo,
PR• Negotiation: time and legal cost• Financing: credit terms, terms and conditions of sale• Risk Taking: warranty, insurance, repair, damage,• Ordering: order-processing cost• Payment: collection, bad debt cost
Traditional Distribution Model: Disadvantages
• Distribution Costs High As % of Cost Price• Distributor margins do not Represent The
Activity Cost• No Visibility of Stock in The Supply Chain• End Customer Knowledge Limited• No Control Over End User Pricing• Concerns Over Product ‘Diversion’ & Cross
Border Trade
Channel Management Decision areas
1. Channel tasks
2. Channel Structure
3. Channel Goals
4. Channel Design
5. Channel Configuration
6. Channel Conflicts
Channel Design Process
1. Recognize the need forchannel design decision
1. Recognize the need forchannel design decision
7. Selectchannel members
7. Selectchannel members
5. Evaluaterelevant variables
5. Evaluaterelevant variables
6. Choose the “best”channel structure
6. Choose the “best”channel structure
2. Set & coordinatedistribution objectives
2. Set & coordinatedistribution objectives
3. Specifydistribution tasks
3. Specifydistribution tasks
4. Develop alternative channel structures
4. Develop alternative channel structures
Retailing
• Formats and Types of Retailing• Emerging Retail Scenario in India; Size, Growth Rate etc.. • Complexity of The Indian Retail Market
Traditional Formats
Itinerant SalesmanHaatsMelas
Mandis
Established formats
Kirana shopsConvenience/
department storesPDS/
fair price shopsPan/ Beedi shops
Emerging Formats
Exclusive retail outletsHypermarket
Discount StoresSeconds Stores
Malls / Specialty MallsMultiplexes
Shop-in-shopsService galleries
The Evolution of retail in India
What are CSFs for Retail?
• Merchandising • Financing and other services• Branding and Private Labels• SCM – Inventory Turnover• Data Analytics and Decisions• REAL ESTATE MANAGEMENT• STORE DESIGN• STORE OPERATIONS
Services Marketing
• How are Services different from Products?• The Marketing Challenges Posed by Services• The Expanded Marketing Mix Required for
Services
Value Added by Physical, Intangible Elements Helps Distinguish Goods and Services
Physical Elements
High
Low Intangible Elements High
SaltDetergents
CD PlayerWine
Golf ClubsNew Car
Tailored clothingFast-Food Restaurant
Plumbing RepairHealth Club
Airline FlightLandscape Maintenance
ConsultingLife Insurance
Internet Banking
The Four I’s of Service Intangibility Services cannot be held, touched, or
seen before the purchase decision.
Inconsistency Service quality varies with the capabilities of the people whoprovide the service.
Inseparability The consumer cannot separate the deliverer of the service from the service itself.
Inventory The inventory cost of a service isthe cost of paying the person usedto provide the service along with the cost of any
needed equipment.
Services are DifferentGoods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.
Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend onemployee actions.Service quality depends on many uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.
Productionseparate fromconsumption
Simultaneousproduction andconsumption
Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.Decentralization may be essential.Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.
Services Pose Distinctive Marketing Challenges
• Marketing management tasks in the service sector differ from those in the manufacturing sector
• The eight common differences are:
1. Most service products cannot be inventoried2. Intangible elements usually dominate value creation3. Services are often difficult to visualize and understand4. Customers may be involved in co-production5. People may be part of the service experience6. Operational inputs and outputs tend to vary more widely7. The time factor often assumes great importance8. Distribution may take place through nonphysical channels
• What are marketing implications?
Key Concept
A Service is delivered (not made), experienced (not used), availed (not owned) and highly personal. (not replicable)
The 8Ps of Services Marketing
• Product Elements
• Place and Time
• Price and Other User Outlays
• Promotion and Education
• Process
• Physical Environment
• People
• Productivity and Quality
• A distinction between causes (ideas), persons, events and places marketing and marketing of products/services
1. Person Marketing– to cultivate attention, interest, & preference of a
target market toward a person
2. Place Marketing– attract visitors to a particular area
3.Event Marketing– mkt of sporting, cultural, & charitable activities to
selected target markets
4. Organization Marketing– seek to influence others to accept the goods of,
receive the services of, or contribute in some way to an organization
Cause marketing or Idea marketing
• “A strategic positioning and marketing tool that links a company or brand to a relevant social cause or issue, for mutual benefit.”
• “A commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit.”
Issues and target audience
• Funds and volunteers raising• Identifying three target audiences
– The first target audience – decision makers– The second – people: social marketing– The third – firms
Who is the target audience?
Target Example Communications
People Stop smoking All
Legal systemNo smoking in public places Voters
FirmsDo not close a
factory Boycott
Social marketing
• What is the difference between Cause marketing and Social Marketing?
• Social marketing is the use of marketing principles and techniques to influence a target audience to voluntarily accept, reject, modify or abandon a behavior for the benefit of individuals, groups, or society as a whole
Affecting people
Social arena:Social issue
Health:Birth Defects
Safety:Drowning
Environment: water supply and quality
Community involvement: voting
Target audience Pregnant women Parents of toddlers Homeowners who live in the suburbs
College students living out of state
Accept a new behavior
Take a multivitamin…
Put a life vest on your toddler at the beach
Replace your lawn with native plants and ground cover
Apply for an absentee ballot
Reject a potential behavior
Do not drink alcohol
Never leave your toddler alone in the bathtub
Do not use fertilizers that contain toxic chemicals
Do not submit an application if you have a permanent absentee ballot
Modify current behavior
Drink at least eight glasses of water a day
To model the behavior, parent should always wear life vests when boating
Water deeply but slowly, so it penetrates and reaches roots
Read details about candidates and issue
Abandon an old behavior
If you smoke, quit Do not use “water wings” as a substitute for a life vest
Do not water your lawn if it’s going to rain
Mail your ballot before deadline
4Ps Promotion: messages on coasters at bars
Product: retail displays of coast-guard-approved life vest
Price: $50 rebate on electric mulching movers
Place: absentee ballots online
Benefit Healthier babies Safer toddlers Water availability for the community and lower rates
Youths experience having a voice S
ourc
e: K
otle
r, R
ober
to, L
ee 2
002
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