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Advisable
 “All material in slides need not be understood.
Use your current working environment and
experience to relate to situations. Errors and
omissions regrettable. Subject to corrections
on being brought to notice”
 As felt 3 hours one session and 6 sessions in
total to complete all concepts of the subject in
depth is not possible. So giving an overview is
the aim.
Syllabus
 New Product Strategies: Understanding Concept of Product, Classification of
Products, Product Line & Product Mix. Product Life Cycle (PLC): Introduction,
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Growth, Maturity & Decline.
Importance of PLC as an aid in marketing planning and strategy; limitations of
PLC;
Branding as an element of Product planning. Brand Equity: Brand loyalty,
Brand awareness, Brand associations, other brand assets.. Types of Brands,
Brand Strategies, Brand Licensing; Characterisictics of a good Brand Name;
Packaging, Functions of Packaging; Factors governing Packing decisions;
Labelling, Product guarantee & Warranty;
New Product Planning; Concept of New product; New Product Development:
Exploration, Screening, Business Analysis, Development, Test Marketing,
Commercializtion. Product Failures, The Adoption Process, The Diffusion
Process, Product Positioning Strategies of Product Positioning; Product
repositioning strategy;
Managing Products after Commercialization; Marketing strategies in the
introductory, growth, maturity & declining stages.
Product & Brand
Product
 A Product is anything that meets the functional needs of the customer.
 A bundle of Satisfaction.
Brand
 A Brand can be defined as a specific name, symbol or design-or more
usually, some contribution of these
 Used to distinguish a particular sellers product.
Difference between a Product and a Brand
BRAND
Symbols
Brand
personality
Country of
origin
Scope
Functional
benefits
Organizational
associations
PRODUCT
Quality/value
Brand
customer
relationship
Attribute
User
imagery
Product
uses
Emotional
benefits
Self-expressive
benefits
Product to cover offerings that fall into one
of the following categories:
 Good
 Service
 Idea
Levels of a product
Core product
Problem solving service or core benefits that consumers are
really buying when they obtain a product.
Actual product
Incorporates the quality, features and design, brand name,
packaging and other attributes that combine to deliver core product benefits.
Augmented product
Incorporates the consumer services and benefits built around
the core and actual products.
Product classifications
 Products can be classified according to their durability and tangibility.
 Non-durable products are goods consumed quickly and used on one or a
few occasions, e.g. beer, soap, milk.
 Durable products are used over an extended time and may last for years,
e.g. Fridge, oven.
 Marketers also divide products and services into two other
classifications: consumer and industrial products.
Categories of Consumer Products-5
 Convenience Products
 Shopping Products
 Specialty Products
 Emergency Products
 Unsought Products
Categories of Consumer Products
 Convenience Products:–
 These are products that appeal to a very large market segment. They
are generally consumed regularly and purchased frequently.
 Examples include most household items such as food, cleaning
products, and personal care products.
 Shopping Products:–
 These are products consumers purchase and consume on a less
frequent schedule compared to convenience products.
 Consumers are willing to spend more time locating these products
since they are relatively more expensive than convenience products
and because these may possess additional psychological benefits for
the purchaser, such as raising their perceived status level within
their social group.
 Examples include many clothing, personal services, electronic
products, and household furnishings.
Categories of Consumer Products…
 Specialty Products:–
 These are products that tend to carry a high price tag relative to
convenience and shopping products.
 Consumption may occur at about the same rate as shopping
products but consumers are much more selective.
 In fact, in many cases consumers know in advance which product
they prefer and will not shop to compare products. But they may
shop at retailers that provide the best value.
 Examples iphone and ipads
 Emergency Products:–
 These are products a customer seeks due to sudden events and for
which pre-purchase planning is not considered.
 Often the decision is one of convenience (e.g., whatever works to fix
a problem) or personal fulfilment (e.g., perceived to improve
purchaser’s image).
 Example thermometer, Glucometer, BP instruments, etc
Categories of Consumer Products…
 Unsought Products:–
 These are products whose purchase is unplanned by the consumer but
occur as a result of marketer’s actions.
 Such purchase decisions are made when the customer is exposed to
promotional activity, such as a salesperson’s persuasion or purchase
incentives like special discounts offered to certain online shoppers.
 These promotional activities often lead customers to engage in Impulse
Purchasing.
 Example Life Insurance., online shopping purchases at huge discounts.
Industrial products
 Products bought for further processing or the purposes of resale.
 Materials and parts
 Capital items
 Supplies and services
Materials &
parts
Raw materials
Manufactured
materials
Component parts
Capital items
Subassemblies
Light equipment or
accessories
Installations or heavy
equipment
Plant & building
Suppliers &
services
Industrial products & services
Classification is done on the basis of three
broad groups:
Supplies
Services
Basic products like iron ore, crude oil, fish, fruits,
vegetables
Acids, fuel oil, steel, chemicals
Semi-finished parts like bearings, tyres, small motors,
batteries
Semi-finished goods like exhaust pipe in motorcycle
Hand tools, dies, computer terminals
Furnaces, machines, turbines
Offices, plants, warehouses, parking lots, real estate
property
Operating & maintenance suppliers like fuels,
packaging materials, lubricants, paints, electric items
Legal, auditing, advertising, courier, marketing
research agency
Product Line
 A line can comprise related products of various sizes, types, colors,
qualities, or prices.
 A product line is a group of related products manufactured by a
single company.
 For example, a cosmetic company's makeup product line might
include all closely related products as
 Foundation
 Concealer
 powder, blush
 Eyeliner
 eye shadow
 Mascara
 Lipstick
Product Mix
 Product mix, also known as product assortment, refers to the total
number of product lines that a company offers to its customers.
 For example, a small company may sell multiple lines of products.
 Sometimes, these product lines are fairly similar, such as dish washing
liquid and bar soap, which are used for cleaning and use similar technologies.
 Other times, the product lines are vastly different, such as diapers and
razors.
 The four dimensions to a company's product mix include
 Width-No of product Lines
 Length-total number of items a company carries within the product lines. In
Colgate’s oral care product line, several different categories of toothpastes, tooth
brushes, dental flaws can be identified.
 Depth- number of versions offered for each product in the product line. For
instance, Colgate toothpastes come in several tastes and variations.
 Consistency-refers to how closely related the product lines are in terms of end
use, production requirements, distribution channels or any other way.
 In Colgate’s case, we can observe a rather strong consistency, which is based on
the fact that all product lines constitute consumer products and go through the
same distribution channels.
Product Planning (PLC) & Marketing
Planning, Understanding the Relationship
Product Planning
 W.J. Stanton “Product planning embraces all activities which enable
the producers and middlemen to constitute a company’s line of
products”.
 Elements of Product Planning
 Product Innovation
 Product Diversification
 Product Standardisation
 Product Customisation
 Product Elimination
Elements of Product Planning: Product Innovation
 Product innovation is the idea of new product or process which is
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prospectively useful
Must for company to survive in the area of massive competition with
serving the present and potential market.
Product Diversification
Refers to product expansion in width and depth
Width refers to the number of product lines
Depth of product line refers to range of colours, sizes, designs, quality
and styles.
Shows managerial efficiency and brings growth and stability to the
organisation.
Elements of Product Planning: Product Standardisation
 Larger quantities or limited varieties of uniform quality may be
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manufactured reducing unnecessary varieties.
Standardisation helps in contributing towards economies of scale i.e.
reducing the cost and human resources, thus conserving scarce inputs.
Product Customisation
Producing goods and services to meet individual customer’s needs with
near mass production efficiency is the challenge of organisations for
ensuring better top line and bottom line.
Product Elimination
When a new technology or a better option is available.
If the decline rate is not steep the it call for harvesting but if decline is
steep then instant elimination as possible is thought off.
Marketing Planning
 American Marketing Association “Marketing Planning is the work
of setting up objectives for marketing activities and of determining and
scheduling the steps necessary to achieve such objectives”
Components of Marketing Planning
 Mission
 Setting of objectives
 Strategies
 Policies
 Procedure
 Programme/Schedule
 Budget
Understanding the relationship between
Product Planning & Marketing Planning
 Product Planning is the process of creating a product idea and
following it through until the product is introduced in the
market.
 Product Planning involves managing the products development,
manufacture , and positioning approaches recommending the
marketing and distribution, making modifications and setting
and changing prices and offering promotions.
 Marketing Planning provides a framework for implementing
marketing orientation factors (P’s).
 The Relationship between product planning and marketing planning is
that product planning is included in the marketing planning process at
the product level.
Product Life Cycle
 Product life cycle is the course of a product’s sales and profits
over time.
Sales and
Profits
Sales
Profits
Product
Development
Introduction
Growth
Maturity
Time
Decline
Sales and Profits Over the Product’s
Lifetime
 1). The product development stage begins when the company finds and
develops a new product idea.
 This is a pre-stage.
 During product development, sales are zero and the company’s investment
costs mount.
 2). The introduction stage is a period of slow sales growth as the product is
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being introduced in the market.
Profits are nonexistent in this stage because of heavy expenses of product
introduction.
3). The growth stage is a period of rapid market acceptance and increasing
profits.
4). The maturity stage is a period of slowdown in sales growth because the
product has achieved acceptance by most potential buyers.
Profits level off or decline because of increased marketing outlays to defend
the product against competition.
5). The decline stage is the period when sales fall off and profits drop.
PLC & Marketing Planning-Relationship….
 Introduction:
 The need for immediate profit is not a pressure.
 The product is promoted to create awareness and develop a
market for the product.
 The impact on the marketing mix and strategy is as follows:
 Product branding and quality level is established and intellectual
property protection, such as patents and trademarks are obtained.
 Pricing may be low penetration to build market share rapidly or
high skim pricing to recover development costs.
 Distribution is selective until consumers show acceptance of the
product.
 Promotion is aimed at innovators and early adopters.
Marketing communications seeks to build product awareness and
educate potential consumers about the product.
PLC & Marketing Planning-Relationship….
 Growth:
 Competitors are attracted into the market with very similar
offerings.
 In the growth stage, the firm seeks to build brand preference and
increase market share.
 Product quality is maintained and additional features and
support services may be added.
 Pricing is maintained as the firm enjoys increasing demand with
little competition.
 Distribution channels are added as demand increases and
customers accept the product.
 Promotion is aimed at a broader audience.
PLC & Marketing Planning-Relationship….
 Maturity:
 Those products that survive the earlier stages tend to spend
longest in this phase.
 At maturity, the strong growth in sales diminishes. Competition
may appear with similar products.
 The primary objective at this point is to defend market share
while maximizing profit.
 Product features may be enhanced to differentiate the product from
that of competitors.
 Pricing may be lower because of the new competition.
 Distribution becomes more intensive, and incentives may be
offered to encourage preference over competing products.
 Promotion emphasizes product differentiation.
PLC & Marketing Planning-Relationship….
 Decline:
 At this point, there is a downturn in the market.
 For example, more innovative products are introduced or
consumer tastes have changed.
 There is intense price cutting, and many more products are
withdrawn from the market.
 Profits can be improved by reducing marketing spending and
cost cutting.
 As sales decline, the firm has several options:
 Maintain the product-possibly rejuvenating it by adding new
features and finding new uses.
 Harvest the product–reduce costs and continue to offer it, possibly
to a loyal niche segment.
 Discontinue the product, liquidating remaining inventory or selling
it to another firm that is willing to continue the product.
PLC & Marketing Planning-Relationship….
 Repositioning:
 By imaginatively repositioning their products, companies can change
how customers mentally categorize them.
 They can rescue products struggling in the maturity phase of their life
cycles and get them back to the growth phase.
 And in some cases, they might be able take their new products forward
straight into the growth phase.
The Con of Using Product Life Cycles to
Direct Strategies
 According to Harvard Business School professor Youngme Moon,
though the product life cycle concept has been used successfully over
the past 40 years, it has made marketers assume that there is only one
trajectory for successful products.
 By viewing the product life cycle in the same way, marketers pursue
similar positioning strategies for products and services during each
stage of the life cycle. In the process, they miss out on opportunities to
differentiate themselves.
Brand Equity
 Concept: A brand is a name or symbol used to identify the source of
the product. When developing a new product, branding is an
important decision. The brand can add significant value when it is well
recognized and has positive associations in the minds of consumer.
This concept is referred to as brand equity.
 Definition: Brand equity is the added value that endowed to products
and services. This value may be reflected in how consumers think, feel,
and act with respect to the brand, as well as the prices, market share
and profitability that the brand commands for the firm. Brand equity is
an important intangible asset that has psychological and financial
value to the firm.
Factors Contributing to Brand Equity
Example-Apple Computers
 Value added to by Apple products by the brand name-Apple.
 Earlier though Apple launched the products that were additions to the
existing markets as Apple Mac computed as another personal
computer, and neither iPod nor iPad new versions at every interval
were not the first products in their categories but with best marketing
and branding initiatives all new versions with time managed to stand
out and capture the attention of the audience.
 Recently even before the recent launch of the Apple iPhone Model the
product generated a lot of interest among people, and there was
speculation as to the type of product being launched. This was due to
the interest and excitement generated in the new products by
customers who associated the brand with “a great experience” and
“innovation” in design.
What is 'Brand Loyalty'
 Brand loyalty is when consumers become committed to your brand and
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make repeat purchases over time.
Brand loyalty is a result of consumer behavior and is affected by a
person's preferences.
Loyal customers will consistently purchase products from their
preferred brands, regardless of convenience or price.
Brand loyalty can be developed through various measures such as
quick service, ensuring quality products, continuous improvement,
wide distribution network, etc.
Companies will often use different marketing strategies to cultivate
loyal customers, be it is through loyalty programs (i.e. rewards
programs) or trials and incentives (ex. samples and free gifts).
What is 'Brand Loyalty'
 Companies that successfully cultivate loyal customers also develop brand
ambassadors – consumers that will market a certain brand and talk positively
about it among their friends. This is free word-of-mouth marketing for the
company and is often very effective.
 When consumers are brand loyal they love “you” for being “you”, and they will
minutely consider any other alternative brand as a replacement.
 Examples of brand loyalty can be seen in US where true Apple customers have
the brand's logo tattooed onto their bodies.
 Similarly in Finland, Nokia customers remained loyal to Nokia because they
admired the design of the handsets or because of user- friendly menu system
used by Nokia phones.
What is Brand Awareness ?
 Brand awareness is the probability that consumers are familiar about the
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life and availability of the product.
It is the degree to which consumers precisely associate the brand with the
specific product.
Brand awareness can be regarded as a means through which consumers
become acquainted and familiar with a brand and recognize that brand.
Brand awareness includes both brand recognition as well as brand
recall.
The relative importance of brand recall and recognition will rely on
the degree to which consumers make product-related decisions with
the brand present or not.
Brand awareness is improved to the extent to which brand names are
selected that is simple and easy to pronounce or spell; known and
expressive; and unique as well as distinct. For instance - Coca Cola has
come to be known as Coke.
There are two types of brand awareness:
 Aided awareness- This means that on mentioning the product category,
the customers recognize your brand from the lists of brands shown.
 Top of mind awareness (Immediate brand recall)- This means that on
mentioning the product category, the first brand that customer recalls from
his mind is your brand.
What is Brand Awareness ?
 Building brand awareness is essential for building brand equity.
 Brand Awareness includes use of various renowned channels of
promotion such as advertising, word of mouth publicity, social media like
blogs, sponsorships, launching events, etc.
 To create brand awareness, it is important to create reliable brand image,
slogans and taglines.
 The brand message to be communicated should also be consistent.
 Strong brand awareness leads to high sales and high market share.
Brand Identity
 Brand Identity is a unique set of brand associations that the brand
strategist aspires to create or maintain. These associations represent
what the brand stand for and imply a promise to customers from the
organization members.
 Brand identity is the noticeable elements of a brand (for instance Trademark colour, logo, name, symbol) that identify and differentiates
a brand in target audience mind. It is a crucial means to grow your
company’s brand.
 Brand identity is the total proposal/promise that an organization
makes to consumers. The brand can be perceived as a product, a
personality, a set of values, and a position it occupies in consumer’s
minds. Brand identity is all that an organization wants the brand to be
considered as. It is a feature linked with a specific company, product,
service or individual. It is a way of externally expressing a brand to the
world
Brand Identity….
 Brand identity includes following elements - Brand vision, brand culture,
positioning, personality, relationships, and presentations.
 Brand identity is a bundle of mental and functional associations with the
brand. Associations are not “reasons-to-buy” but provide familiarity and
differentiation that’s not replicable getting it. These associations can
include signature tune(for example - Britannia “ting-ting-ta-ding”),
trademark colours (for example - Blue colour with Pepsi), logo (for example
- Nike), tagline (for example - Apple’s tagline is “Think different”),etc.
 Brand identity leads to brand loyalty, brand preference, high credibility,
good prices and good financial returns. It helps the organization to express
to the customers and the target market the kind of organization it is. It
assures the customers again that you are who you say you are. It establishes
an immediate connection between the organization and consumers. Brand
identity should be sustainable. It is crucial so that the consumers instantly
correlate with your product/service.
Brand Associations
 Brand Associations are images and symbols associated with a brand or
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a brand benefit.
For example- The Nike Swoosh, Nokia sound, Film Stars as with “Lux”,
signature tune Ting-ting-ta-ding with Britannia, Blue colour with
Pepsi, etc.
Associations are not “reasons-to-buy” but provide acquaintance and
differentiation that’s not replicable.
It is relating perceived qualities of a brand to a known entity. For
instance- Hyatt Hotel is associated with luxury and comfort; BMW is
associated with sophistication, fun driving, and superior engineering.
Most popular brand associations are with the owners of brand, such as
- Bill Gates and Microsoft, Reliance and Dhirubhai Ambani.
Types of brand
 There are two main types of brand – manufacturer brands and own-
label brands.
 Manufacturer brands
 Manufacturer brands are created by producers and bear their chosen
brand name. The producer is responsible for marketing the brand. The
brand is owned by the producer.
 By building their brand names, manufacturers can gain widespread
distribution (for example by retailers who want to sell the brand) and
build customer loyalty (think about the manufacturer brands that you
feel “loyal” to).
 Own-label brands
 Are created and owned by businesses that operate in the distribution
channel – often referred to as “distributors”.
 Often these distributors are retailers, but not exclusively.
 Sometimes the retailer’s entire product range will be own-label. Ownlabel branding – if well carried out – can often offer the consumer
excellent value for money and provide the distributor with additional
bargaining power when it comes to negotiating prices and terms with
manufacturer brands.
What is brand strategy?
 By definition, brand strategy is a long-term plan for the development
of a successful brand in order to achieve specific goals.
 Brand strategy defines what you stand for, a promise you make, and
the personality you convey. And while it includes your logo, color
palette and slogan, those are only creative elements that convey your
brand. Instead, your brand lives in every day-to-day interaction you
have with your market:
 The images you convey
 The messages you deliver on your website, proposals and campaigns
 The way your employees interact with customers
 A customer’s opinion of you versus your competition
Brand Licensing
 The leasing of a brand name to a company other than the owner of
that particular brand.
 Branding is costly and time consuming and in an effort to short circuit
the process, some organisations seek licensing agreements for big
brands especially in emergent markets.
 The fastest growing licensing category is corporate brand licensing, a
form of licensing whereby a firm rents a corporate trademark or logo
made famous in one product or service category, and uses it in a related
category.
 Examples: Spykar, Lee, Lewis some examples of Sports licensing
Features of a Good Brand Name
 A good brand name should have following characteristics:
 It should be unique / distinctive (for instance- Kodak, Mustang)
 It should be extendable.
 It should be easy to pronounce, identified and memorized. (For
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instance-Tide)
It should give an idea about product’s qualities and benefits (For
instance- Swift, Quickfix, Lipguard).
It should be easily convertible into foreign languages.
It should be capable of legal protection and registration.
It should suggest product/service category (For instance Newsweek).
It should indicate concrete qualities (For instance Firebird).
It should not portray bad/wrong meanings in other categories. (For
instance NOVA is a poor name for a car to be sold in Spanish country,
because in Spanish it means “doesn’t go”).
Packaging
 Packaging is the technology of enclosing or protecting products for
distribution, storage, sale, and use.
 Functions of Packaging-Packaging performs five basic functions:
 1) Protection
 A. Natural deterioration
 B. Physical protection
 C. Safety
 D. Waste reduction
 2) Containment
 3) Information
 4) Utility of use
 5) Promotion
Factors Governing Packing Decisions
 Protection – Packaging is used to protect the product from damage
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during shipping and handling, and to lessen spoilage if the protect is
exposed to air or other elements.
Visibility – Packaging design is used to capture customers’ attention as
they are shopping or glancing through a catalog or website.
This is particularly important for customers who are not familiar with the
product and in situations, such as those found in grocery stores, where a
product must stand out among thousands of other products.
Packaging designs that standout are more likely to be remembered on
future shopping trips.
Added Value – Packaging design and structure can add value to a product.
For instance, benefits can be obtained from package structures that make
the product easier to use while stylistic designs can make the product more
attractive to display.
Distributor Acceptance – Packaging decisions must not only be accepted
by the final customer, they may also have to be accepted by distributors
who sell the product for the supplier.
For instance, a retailer may not accept packages unless they conform to
requirements they have for storing products on their shelves.
Factors Governing Packing Decisions
 Cost – Packaging can represent a significant portion of a product’s selling
price. For example, it is estimated that in the cosmetics industry the
packaging cost of some products may be as high as 40% of a product’s
selling price. Smart packaging decisions can help reduce costs and
possibly lead to higher profits.
 Expensive to Create - Developing new packaging can be extremely
expensive. The costs involved in creating new packaging include: graphic
and structural design, production, customer testing, possible destruction
of leftover old packaging, and possible advertising to inform customer of
the new packaging.
 Long Term Decision – When companies create a new package it is most
often with the intention of having the design on the market for an
extended period of time. In fact, changing a product’s packaging too
frequently can have negative effects since customers become conditioned
to locate the product based on its package and may be confused if the
design is altered.
 Environmental or Legal Issues – Packaging decisions must also include
an assessment of its environmental impact especially for products with
packages that are frequently discarded. Packages that are not easily biodegradable could draw customer and possibly governmental concern.
Also, caution must be exercised in order to create packages that do not
infringe on intellectual property, such as copyrights, trademarks or
patents, held by others.
Labeling
 Display of information about a product on its container, packaging, or
the product itself.
 Labels have many uses, including providing information on a
product's origin, use, shelf-life and disposal, some or all of which may
be governed by legislation
 For several types of consumer and industrial products, the type
and extent of information that must be imparted by a label is governed
by the relevant safety and shipping laws.
Labeling
 Specialized labels can be produced on any material in any colour and
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at any size.
You have a lamination film on top which is only on one half of the
label, you can write on the second half, then seal it with the film.
Applications include electrical safety labeling, NHS labeling etc.
Piggyback labels are made from combining two layers of adhesive
substrate. The bottom layer forms the backing for the top.
The label can be applied to any object as normal, the top layer can be a
removable label that can be applied elsewhere, which may change the
message or marking on the remaining label underneath.
Often used on Express mail envelopes.
Other applications include price change labels where when being
scanned at the till, the till assistant can peel back the price-reduction
label and scan the original barcode enabling stock flow management.
Labeling-Types
 Smart labels have RFID chips embedded under the label stock.
 Blockout labels are not see-through at all, concealing what lies
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underneath with a strong gray adhesive.
Radioactive labels The use of radioactive isotopes of chemical elements,
such as carbon-14, to allow the in vivo tracking of chemical compounds.
Laser or printer labels are generally die cut on 8.5" x 11" (US letter) or A4
sized sheets, and come in many different shapes, sizes, formats and
materials.
Security labels are used for anti-counterfeiting, brand
protection, tamper-evident seals, anti-pilferage seals, etc.
Antimicrobial labels with the growth in hospital acquired infections
such as MRSA and E-Coli the use of antimicrobial labels in infection
sensitive areas of hospitals are helping in combating these types of
microbes.
Fold-out labels, also known as booklet, multi-page or extended labels,
or lablets (combined label + leaflet). Where the pack is not large enough
for a single label to carry all the required information, fold-out labels are
often preferred to separate leaflets, which can easily be lost. These labels
are frequently seen on agricultural chemicals and consumer
pharmaceuticals.
Labeling-Types…
 Barcode labels A large proportion of labels produced today carry barcodes,
either for product identification, for traceability in items such as freight
packages, and on items requiring brand authentication and protection.
 There are many different formats of barcodes found on labels, but one of the
most commonly distributed formats is the International Article Number
(EAN).
 This is the code used to identify retail products worldwide, and is found on
almost all consumer level packaging labels.
Guarantee & Warranty
 Guarantee is an agreement from the manufacturer confirming that they will
repair or replace an item if something goes wrong within a certain amount of
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time after you buy it.
A guarantee gives you additional protection and strengthens your consumer
rights.
The guarantee usually applies to the item during a specific time after you
purchase it.
Household products like electrical and kitchen appliances and furniture often
come with a guarantee.
Guarantees can also apply to services, for example, installation and repair
services in your home can have a guarantee.
Warranty-when you are buying a product, the shop may ask if you would like
to buy a warranty. This is like an insurance policy - it covers the product beyond
the manufacturer's guarantee period.
So, you shouldn’t have to pay for repairs if the item breaks or becomes faulty
within the period covered by the warranty.
Guarantees and warranties are legally binding on the company – they are
enforceable through the courts if necessary.
New-Product Development Process
1.
2.
3.
4.
5.
6.
7.
8.
Idea generation
Idea screening
Concept development and testing
Marketing strategy development
Business analysis
Product development
Test marketing
Commercialization
1.Idea Generation

New idea generation is the systematic search for new
product ideas
Sources of new-product ideas
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Internal
External
Internal sources refer to the company’s own formal
research and development, management and staff.
External sources refer to sources outside the company
such as customers, competitors, distributors, suppliers,
and outside design firms
2. Idea Screening
Idea screening refers to reviewing new-product ideas in order
to drop poor ones as soon as possible
 Process to spot good ideas and drop poor ones as soon as
possible based on.
 Market Size
 Product Price
 Development Time & Costs
 Manufacturing Costs
 Rate of Return
 Then, the idea is evaluated against a set of general company
criteria.
 Set of general company criteria.
 The product should fit into company’s present market
structure.
 The idea should fit into the company’s present production
structure.
 The product should fit as per the financial resources
available.
3. Concept Development and Testing

The process of shaping and refining the idea into a more
complete product concept.
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Product idea is an idea for a possible product that the company
can see itself offering to the market
Product concept is a detailed version of the idea stated in
meaningful consumer terms
Product image is the way consumers perceive an actual or
potential product
Concept testing refers to new-product concepts with groups
of target consumers
Choose the best option.
4. Marketing Strategy Development

Marketing strategy development refers to the initial
marketing strategy for introducing the product to the
market
 Marketing strategy statement
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Part 1:
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Description of the target market
Product positioning, sales, market share, and profit goals
Part 2:
•
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Price, distribution, and budget
Part 3:
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Long-term sales, profit goals, and marketing mix strategy
5. Business analysis

Business analysis involves a review of the sales, costs, and
profit projections to find out whether they satisfy the
company’s objectives
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Sales-estimate sales volume based upon size of market.
Costs-estimate likely selling price based upon competition
and customer feedback.
Profit Projections-estimate profitability and break even
point.
6. Product development
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Product development involves the creation and testing
of one or more physical versions by the R&D or
engineering departments.
Finding out if the product requires an increase in
investment
7. Test Marketing
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
Test marketing is the stage at which the product and
marketing program are introduced into more realistic
marketing settings
Test marketing provides the marketer with experience in
testing the product and entire marketing program before
full introduction
7. Test Marketing-Elements that May be
Test Marketed by a Company
Budget Levels
Packaging
Branding
Pricing
Product
Elements that
May be Test
Marketed by a
Company
Positioning
Advertising
Distribution
8. Commercialization

Commercialization is the introduction of the new product
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Launch the product.
Produce and place advertisements and other promotions.
Fill the distribution pipeline with product.
Critical path analysis is most useful at this stage.
When?
Where?
To
Whom?
How?
Diffusion of Innovations by Everett
Rogers
 Innovation is any new idea, new behavior, new product, new
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message i.e., a new thing that one brings to you for your
adoption.
Diffusion is the process by which an innovation spreads.
Diffusion is a spread of a new idea from its sources of
invention or creation to its ultimate users or adopters.
A major difference between diffusion and adoption process is
that diffusion occurs among persons (groups) and adoption is an
individual matter
Diffusion is the process by which an innovation is
communicated through certain channels over time among the
members of a social system.
Basic Elements of diffusion process
 Innovation
 An idea, practice or object that is perceived as new by an individual.
 The perceived newness of the idea for the individual determines his
reaction to it.
 If it is perceived new to the individual it is an innovation
 Communication Channels
 A communication channel is the means by which messages get from
one individual to the other.
 How quickly innovation spread depends on channel on
communication.
 There are two sources for communication:
 Impersonal-Mass media
 Interpersonal-Internet, Peers & Respected leaders
Basic Elements of diffusion process
 Social System
 Diffusion occurs within a social system.
 The social structure of the system affects the innovations
diffusion.
 The social system constitutes a boundary within which the
innovation diffuses.
 It is a physical, social or cultural environment in which people
belong and within which they function
 It can be of two type :
Traditional social system i.e. societal groups
II. Modern social system- i.e. professionals groups as lawyers, trader
associations, student unions, online community.
I.
Basic Elements of diffusion process
 Time
 Backbone of diffusion process.
 The innovation decision-process by which an individual passes
from first knowledge of an innovation through its adoption or
rejection.
 It pervades the study of diffusion in three distinct ways :
The amount of purchase time.
II. The identification of adopter categories
III. The rate of adoption.
I.
Adoption Process
 The second major process of innovation is adoption.
 The adoption process focuses on “ the mental process through
which an individual passes from learning about an innovation to
the final adoption”.
 In order for adoption to occur the individual must perceive that
the potential benefits for adoption outweigh the expected efforts
required for adoption.
Rogers’ (1995) Diffusion of Innovation
 Stages of adoption
• Awareness - the individual is
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exposed to the innovation but lacks
complete information about it
Interest - the individual becomes
interested in the new idea and seeks
additional information about it
Evaluation - individual mentally
applies the innovation to his present
and anticipated future situation, and
then decides whether or not to try it
Trial - the individual makes full use
of the innovation
Adoption - the individual decides to
continue the full use of the
innovation
Adoption of innovation over time
Innovations do not spread equally over different society
RANKING MUNDIAL DE USUÁRIOS DE INTERNET
segments (social groups) but through 5 stages with
particular profile of reaction
5 particular profile
Innovators
Adopt new ideas
(technologies, concepts, and
behaviors in early stages
Early Adopters
Still have some traits of
innovation (risk concern)
Early Majority
First sign of diffusion
Late Majority
Delay its adoption, must be
Laggards
Mature implementation and
clearly its advantages
risks involved are smaller
Product Positioning Process
The product positioning process involves: Defining the market in which the product or brand will compete (who
the relevant buyers are)
 Identifying the attributes (also called dimensions) that define the
product 'space'
 Collecting information from a sample of customers about their
perceptions of each product on the relevant attributes
 Determine each product's share of mind
 Determine each product's current location in the product space
 Determine the target market's preferred combination of attributes
(referred to as an ideal vector)
 Examine the fit between the product and the market.
Types Of Positioning
There are three types of positioning concepts:
 Functional positions
 Solve problems
 Provide benefits to customers
 Get favorable perception by investors (stock profile) and lenders
 Symbolic positions
 Self-image enhancement
 Ego identification
 Belongingness and social meaningfulness
 Affective fulfillment
 Experiential positions
 Provide sensory stimulation
 Provide cognitive stimulation
Product Repositioning
 Repositioning involves changing target markets or the differential
advantage or both.
 Firms may consider repositioning a product due to
 Declining performance
 Due to major shifts in the environment
 Customer requirements may have changed and the product has to be
modified to be able to serve the new needs effectively.
 Repositioning refers to the major change in positioning for the
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brand/product.
To successfully reposition a product, the firm has to change the target
market’s understanding of the product. This is sometimes a challenge,
particularly for well-established or strongly branded products.
The product is modified to make it more acceptable to its present target
market.
The company may have acquired new resources and competencies
enabling it to modify the product so that it serves the target market better.
Many firms choose to launch a new product (or brand) instead of
repositioning because of the effort and cost required to successfully
implement the change.
Commercialization
 Commercialization is the process of introducing a new product or
production method into commerce—making it available on
the market.
 The term often connotes especially the entrance into the mass
market as opposed to earlier niche markets.
 The commercialization process has three key aspects:
 The funnel. It is essential to look at many ideas to get one or two products
or businesses that can be sustained long-term.
 It is a stage-wise process, and each stage has its own key goals and
milestones.
 It is vital to involve key stakeholders early, including customers.
Commercialization
 Proposed commercialization of a product can raise the following
questions:
 When to launch: Factors such as potential cannibalization of the sales of
a vendor's other products, any requirement for further improvement of the
proposed new product, or unfavorable market conditions may operate to
delay a product launch.
 Where to launch: A potential vendor can start marketing in a single
location, in one or several regions, or in a national or international market.
Existing resources (in terms of capital, and operational capacities) and the
degree of managerial confidence may strongly influence the proposed
launch-mode. Smaller vendors usually launch in attractive cities or regions,
while larger companies enter a national market at once.
Global roll-outs generally remain the exclusive preserve of multinational
conglomerates, since they have the necessary size and make use of
international distribution systems (e.g., Unilever, Procter & Gamble).
Other multinationals may use the "lead-country" strategy: introducing the
new product in one country/region at a time (e.g. Colgate-Palmolive).
Commercialization
 Whom to target: Research and test marketing may identify a primary
consumer group. The ideal primary consumer group should consist
of innovators, early adopters, heavy users and/or opinion leaders. This
will ensure adoption by other buyers in the market during the productgrowth period.
 How to launch: The prospective vendor should decide on an action
plan for introducing its proposed product - plan shaped by addressing
the questions above. The vendor has to develop a viable marketing-mix
and to structure a corresponding marketing-budget.
Managing Products after
Commercialization-Product Life-Cycle
Strategies

Product life cycle (PLC) is the course that a
product’s sales and profits take over its lifetime
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Product development
Introduction
Growth
Maturity
Decline
Product Life-Cycle Strategies

Introduction stage is when the new product is first launched
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Product category has recently been introduced in to the market.
Consumers are unaware of the product.
Proper capitalization is important.
Industry sales are low, but growing
Industry profits are negative.
Advertising usually tries to develop the primary demand.
Creating awareness and trial are the common marketing
objectives.
Sales promotion is a trigger to product trial.
The product is unknown.
The price is generally high.
The placement is selective.
The promotion is informative and personalized.
High distribution and promotion expense
Product Life-Cycle Strategies

Suggested Strategy
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Rapid Skimming Strategy
Slow Skimming Strategy
Rapid Penetration Strategy
Slow Penetration Strategy
Product Life-Cycle Strategies

Growth stage is when the new product satisfies the market
Sales are rising rapidly.
Profits appear, peak and begin to decline just before the end of
the period.
•
Promotion shifts from primary to secondary demand.
•
Building market share is a common marketing objective.
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The product is more widely known and consumed.
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The sales volume increases.
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The price begin to decline with the entry of new players.
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The placement becomes more widely spread.
•
The promotion is focused on brand development and product
image formation.
Suggested Strategy
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•
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Enter in to new market segments.
Enter in to new distribution channels.
Reduce the prices to attract buyers.
Increase promotional activities.
Product Life-Cycle Strategies

Maturity stage is a long-lasting stage of a product that has
gained consumer acceptance
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The product is competing with alternatives.
Sales rise to their peak, then level off.
Industry profits are in a slow decline.
Competition increases.
Products become more homogeneous i.e. Substitute products,
triggering price competition.
The prices reach to its lowest point.
Need to differentiate brand.
Diversify brand and models.
Efficiency is the key factor for staying alive in this phase.
The placement is intense i.e. many suppliers.
The promotion is focused on repeat purchase.
Increased promotion and R&D to support sales and profits
Product Life-Cycle Strategies
Suggested Strategy
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Improve the quality of the product
Give proper attention to usage among current customers
Try to discover new uses of the product
Try to convert non users in to users of the product i.e. creating
new buyers.
Give proper emphasis to advertisement and promotional
programmes.
Product Life-Cycle Strategies

Decline stage is when sales decline or level off for an
extended time, creating a weak product
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The product faces reduced competition.
The sales volume reduces.
Profits decrease and eventually disappear.
The price is likely to fall.
The placement is selective.
The promotion is focused on reminding.
Suggested Strategy
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Improve the product in a functional sense, or revitalize it in some
manner.
Maintain the product-Spend enough on promotion to maintain
hard core brand loyal customers.
Make sure that the marketing and production programmes are as
efficient as possible.
Product Life-Cycle Strategies
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Reduce cost and milk or harvest the product
Streamline the product by pruning out unprofitable sizes and
models. Frequently this tactic will decrease sales but increase
profits.
Eliminate unprofitable outlets.
Drop the product
Questions
 Q 1) Fill in the blanks
i.
A Product is anything that meets the functional needs of the customer.
ii.
A Brand can be defined as a specific name, symbol or design-or more usually,
some contribution of these.
iii.
Marketers also divide products and services into two other classifications:
consumer and industrial products.
iv.
Industrial Products are products bought for further processing or the purposes of
resale.
v.
A Product Line is a group of related products manufactured by a single company.
vi.
Product mix, also known as product assortment, refers to the total number of
product lines that a company offers to its customers.
vii.
Product planning embraces all activities which enable the producers and
middlemen to constitute a company’s line of products.
viii. Marketing Planning is the work of setting up objectives for marketing activities
and of determining and scheduling the steps necessary to achieve such objectives
ix.
Product life cycle is the course of a product’s sales and profits over time.
x.
Diffusion is the process by which an innovation spreads. The adoption process
focuses on “ the mental process through which an individual passes from learning
about an innovation to the final adoption”.
Questions
 Q 2) Write short notes on
 Difference between a Product and a Brand
 Levels of Product
 Product Line
 Product Mix
 Product Planning & Elements of Product Planning
 Marketing Planning & Components of Marketing Planning
 Relationship between Product Planning & Marketing Planning
 PLC & the con of using Product Life Cycles to Direct Strategies
 Q 3) Discuss Product Classification?
 Q 4) Discuss PLC & Marketing Planning-Relationship?
Questions
 Q 5) Write short notes on
 Brand Equity
 Brand Identity
 Brand Loyalty
 Brand Awareness
 Brand Associations
 Type of Product
 Labeling
 Packaging
 Brand Strategy
 Brand Licensing
 Features of Good Brand Name
 Difference between Guarantee and Warranty
 Product Repositioning
 Commercialization
 Q 6) Define Packaging? What are the functions of Packaging? Discuss
Factors Governing Packing Decisions?
 Q 7) Define Labeling? Discuss Labeling Types?
Questions
 Q 8) Discuss New-Product Development Process?
 Q 9) Diffusion of Innovations by Everett Rogers? Discuss Basic
Elements of diffusion process?
 Q 10) What is Adoption Process? Discuss Rogers’ (1995) Diffusion of
Innovation?
 Q 11) Discuss “Managing Products after Commercialization-Product
Life-Cycle Strategies”?
Thanks