Product Development

1. Product Development

2. Types of New Product Introductions High New-to-world products 10% New product lines 20% Additions to existing product lines 26% Improvements to existing products 26% Newness to company Repositionings 7% Cost reductions 11% Low High Newness to market Size of circle denotes number of introductions relative to total.

3. The New Product Development Process Idea Generation Business Analysis Screening Product Development Concept Develop- ment & Testing Test Marketing Marketing Strategy Commercialization

4. Product 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.

5. Test 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

6. Commercialization Scope Timing Location Operational Plan

7. New Product Adoption Process Awareness Interest Evaluation Trial Loyalty? Adoption

8. Adopter Categories Adopter Categorization on the Basis of Relative Time of Adoption of Innovations Innovators 2.5% Late Majority 34% Early Majority 34% Laggards 16% Early Adopters 13.5% Time of Adoption of Innovations

9. PLC and Boston matrix

10. 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

11. SOME REASONS FOR NEW PRODUCT FAILURES • Market too small • Poor match or fit with company • Not new / Not different • No real benefit • Poor positioning Vs competition • Forecasting errors • Poor Timing • Competitive Response too good • Changes in Customer tastes • Poor after sales service • Insufficient return on investment • Lack of coordination in functions • Inadequate support • Poor recovery strategies

12. Place, Distribution, Channels, Logistics, Order fulfillment, Supply Chain, Route-to-Market… …

13. 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

14. Channel Management Goals • Efficiency vs Effectiveness • Control vs. Flexibility • Learning and Knowledge

16. 1. Physical Flow Transporters Warehouses Transporters Warehouses Suppliers Manufacturer Dealers Transporters Customer 2. Title Flow Suppliers Manufacturer Dealers 3. Payment Flow Suppliers Banks Manufacturer Banks Dealers Banks Transporters Warehouses Banks Transporters Warehouses Banks Dealers Transporters Banks Suppliers Manufacturer Advertising Agency Dealers Manufacturer Suppliers Marketing Flows in a Channel Customer Customer 4. Information Flow Customer 5. Promotion Flow Activation Agency Customer Advertising Agency

17. 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

18. 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

19. Channel Management Decision areas • Channel tasks • Channel Structure • Channel Goals • Channel Design • Channel Configuration • Channel Conflicts

20. Channel Design Process Recognize the need for channel design decision 7. Select channel members 2. Set & coordinate distribution objectives 6. Choose the “best” channel structure 3. Specify distribution tasks 5. Evaluate relevant variables 4. Develop alternative channel structures

21. Retailing Formats and Types of Retailing Emerging Retail Scenario in India; Size, Growth Rate etc.. Complexity of The Indian Retail Market

22. The Evolution of retail in India Emerging Formats Exclusive retail outlets Hypermarket Discount Stores Seconds Stores Malls / Specialty Malls Multiplexes Shop-in-shops Service galleries Established formats Kirana shops Convenience/ department stores PDS/ fair price shops Pan/ Beedi shops Traditional Formats Itinerant Salesman Haats Melas Mandis

24. 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

25. Services Marketing • How are Services different from Products? • The Marketing Challenges Posed by Services • The Expanded Marketing Mix Required for Services

26. Salt Detergents CD Player Wine Golf Clubs New Car Tailored clothing Plumbing Repair Fast-Food Restaurant Health Club Airline Flight Landscape Maintenance Consulting Life Insurance Value Added by Physical, Intangible Elements Helps Distinguish Goods and Services Physical Elements High Internet Banking Intangible Elements High Low

27. The Four I’s of Service IntangibilityServices cannot be held, touched, or seen before the purchase decision. InconsistencyService quality varies with the capabilities of the people who provide the service. InseparabilityThe consumer cannot separate the deliverer of the service from the service itself. InventoryThe inventory cost of a service is the cost of paying the person used to provide the service along with the cost of any needed equipment.

28. Services are Different

29. Services Pose Distinctive Marketing Challenges • Marketing management tasks in the service sector differ from those in the manufacturing sector • The eight common differences are: • Most service products cannot be inventoried • Intangible elements usually dominate value creation • Services are often difficult to visualize and understand • Customers may be involved in co-production • People may be part of the service experience • Operational inputs and outputs tend to vary more widely • The time factor often assumes great importance • Distribution may take place through nonphysical channels • What are marketing implications?

30. Key Concept A Service is delivered (not made), experienced (not used), availed (not owned) and highly personal. (not replicable)

31. 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

32. Marketing of causes (ideas), persons, events and places

33. A distinction between causes (ideas), persons, events and places marketing and marketing of products/services

34. 1. Person Marketing • to cultivate attention, interest, & preference of a target market toward a person 2. Place Marketing • attract visitors to a particular area

35. 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

36. 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.”

37. 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

38. Who is the target audience?

39. Social marketing Affecting people • 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

40. Source: Kotler, Roberto, Lee 2002