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MBA PAPER 4.11 ELECT !E GROUP " A PRODUCT MANAGEMENT #$LLABU# UN T 1 Product: classification, benefits product line decisions product mix decisions product modification product differentiation product elimination product management structure role of product managers. Product life cycle use as a strategic tool product positioning developing product plans product policy new product development need, risks and uncertainty classification of new product. New product development process: generation of ideas screening of ideas feasibility testing concept development and testing marketing strategy development business analysis - product development test marketing commercialization launc ing mistakes successful launc es. !iffusion of innovation: venture teams organisatoin for NP! top management contribution "# framework and its use in NP! team working. New product success and failures product researc areas of product researc $randing: selection of brand name brand valuation brand image brand e%uity brand positioning strategies packaging latest trends in packaging future trends in product management.
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&. )ntroduction to Product +anagement ,. Product -ine and +ix !ecisions .. Product +odification and !ifferentiation /. Product 0limination 1. 2rganising Product 3unction and t e 4ole of Product +anagers UN T " 5. Product -ife 'ycle ". Product Positioning 6. Product Planning 7. Product Policy UN T " &8. New Product !evelopment-an 2verview &&. NP! & : )dea 9eneration &,. NP! , : )dea #creening &.. NP! . : 'oncept !evelopment and +arketing #trategy !evelopment &/. NP! / : $usiness :nalysis &1. NP! 1 : Product !evelopment and *est +arketing &5. NP! 5 : *est +arketing for New Product &". NP! " : 'ommercialization and -aunc #trategies UN T " ! &6. !iffusion of )nnovation &7. *eams in NP! ,8. *op +anagement 'ontribution ,&. +ickinsey;s "s 3ramework and NP! UN T " !
,,. New Product #uccesses ,.. New Product 3ailures ,/. Product 4esearc UN T " ! ,1. )ntroduction to $randing ,5. $rand 0%uity ,". $rand Positioning ,6. Packaging ,7. 3uture *rends in Product +anagement
Lesson 1 ntroduction to Product Mana)e*ent )ntroduction :s t e liberalization, privatization and globalization becomes prominent, companies are gearing to face t em by becoming more specialized. <ence t e marketing department becomes mo8re professionalized and in t is context, product management gains prominence. * e expanding markets based on liberalization, privatization, and globalization needs a professional approac coupled wit t e sop istication in tec nology and consumers becoming more educated, t is development in product management is inevitable.
Product -evels :ccording to P ilip =otler, t ere are five levels of a product. +arketing managers need to t ink, t eir way around five different levels of product w en working t roug t e essentials of t e offer w ic is going to be made to t e customers. * ey are:
The core benefit: * e basic benefit w ic is w at t e customer really wants w en deciding on a particular product. 3or example, a toot paste w ic is able to clean t e teet .
The generic product: * is is t e basic version of t e actual p ysical product, for example, an electric cooker.
The expected product: : set of attributes and conditions t at buyers normally agree to w en t ey purc ase a product. 3or example, a soap is expected to last long and at t e same time does not wear away due to water.
* e augmented product: * e product includes additional services and benefits w ic elp to distinguis it from competitive offerings, for example, a manufacturer of television mig t extend t e normal warranty period from one year to say t ree years. )n fact, #<:4P television offered seven years warranty.
* e potential product: :t t e final level stands t e product of t e future, namely all t e transformations and augmentations t at a particular product mig t undergo in t e future. * is is w ere t e companies searc for new ways to satisfy t eir customers and differentiate t eir products. * e emergence of <yper markets is one example. !omini%uez conceives product management as a exagon and found to ave t e following as t e important aspects: Product 3orecasting Planning +arket Profit and
'oordination
Nuances in Product +anagement 0nsuring over time t at a product or service profitably meets t e needs of customers by continually monitoring and modifying t e elements of t e marketing mix, including t e product and its features, t e communications strategy, distribution c annels and price is t e >ob of product management. Product +anager is * e person assigned responsibility for overseeing all of t e various activities t at concern a particular product. #ometimes called a brand manager in consumer packaged goods firms. 3or t is a Product Plan wit detailed summary of all t e key elements involved in a new product development effort suc as product description, sc edule, resources, financial estimations and interface management plan is prepared. Product Platforms (nderlying structures or basic arc itectures t at are common across a group of products or t at will be t e basis of a series of products commercialized over a number of years are called product platforms. Product !evelopment : pre-determined list of activities and disciplines responsible for completing t ose activities used as a guideline to ensure t at all t e tasks of product development are considered prior to commercialization. * e collection of new product concepts and pro>ects t at are wit in t e firm;s ability to develop, are most attractive to t e firm;s customers and deliver s ort and long-term corporate ob>ectives, spreading risk and diversifying investments. Product !evelopment Process is a disciplined and defined set of tasks, steps, ad p ases t at describe t e normal means by w ic a company repetitively converts embryonic ideas into salable products or services. Product !evelopment #trategy is t e strategy t at guides t e product innovating program. Product !evelopment *eam comprises of a multifunctional group of individuals c arted to plan and execute a new product development pro>ect. * e entire task is undertaken during t e NP! stages. )t is ence important to know t em now.
Lesson % Product Line and Mi+ Decisions )ntroduction Product is any t ing t at can be offered to a market to satisfy a want or need. Product t at are marketed included p ysical goods, services, experiences, event persons, places, properties, organizations, information, and ideas. : product mix ?also called product assortment@ is t e set of all products and items t at a particular seller offers for sale. : product line is an element in t e product mix w ere a single line like soaps are product line for a company, e.g., =odak;s product mix consists of two strong product lines: information products and image products. : company;s product mix ad a certain widt , lengt , dept and consistency. * ese concepts are illustrated below: ,idt* e widt of t e product mix refers to ow many different product lines t e company carries. E+a*p.e / <industan lever limited as different product lines. )t offers different products for t e consumers. #ome product lines offered by <)N!(#*:N -0A0- -)+)*0! are !etergents, *oot paste, $ar soap etc. Len)t* e lengt of a product mix refers to t e total number of items in t e mix. * is is obtained by dividing t e total lengt by t e number lines. Dept* e dept of a product mix refers to ow many variants are offered of eac product in t e line. E+a*p.e / <industan -ever -imited offers toot paste named 'lose (p at different sizes like ,8 grams, 18 grams, &18 grams etc. )n t is case <*- as a product dept of t ree. Consistenc0 * e consistency of t e product mix refers to ow closely related t e various product lines are in end use, production re%uirements, distribution c annels, or some ot er way. PB9;s product lines are consistent insofar as t ey are consumer goods t at go t roug t e same distribution c annels. * e lines are less consistent insofar as t ey perform different functions for t e buyers. * ese four product mix dimensions permit t e company to expand its business in four ways. )t can add new product lines, t us widening its product mix. )t can lengt en eac product line. )t can add more product variants to eac product and deepen its product mix. 3inally, a company can pursue more product-line consistency. Product Mi+ #trate)ies 9odre> offers different brands of refrigerators, soaps and ot er t ings to its consumers. !id t is diverse assortment of products developed by accidentC No it reflects a planned strategy by t e company. *o be successful in marketing, producers and middlemen need carefully planned strategies for managing t eir product mixes. Positionin) t-e product +anagement;s ability to bring attention to t e product and to differentiate it in a favourable way from similar products goes a long way toward determining t at product;s revenues and t e company;s profits. * us management needs to engage in positioning, w ic means developing t e image t at a product pro>ects in relation to competitive products and to t e firm;s ot er products. +arketing executives can c oose from a variety of positioning strategies. #ometimes t ey decide to use more t an one for a particular product. <ere are several positioning strategies. Positionin) in re.ation to a co*petitor 3or some product t e position is directly against t e competition. * e strategy is especially suitable for a firm t at already as a already as a solid differential advantage or is trying to solidify suc an advantage. *o fend off rival maker of microprocessors, )ntel corp. launc ed a campaign to convince buyers t at its product is superior to
competitors. * e company even paid computer makers to include t e slogan. D)ntel insideE, in t eir ads. 'oca-'ola and Pepsi-'ola compete directly wit eac ot er in virtually every element of t e marketing mix ?even celebrity endorsers@. 3or ot er products ead-to- ead positioning is exactly w at not to do, especially w en a competitor as a strong market position. Positionin) in re.ation to a product c.ass or attri1ute #ometimes a company;s positioning strategy entails associating its product wit ?or disassociating it from@ a product class or attribute. #ome firms promote t eir wares as being in a desirable class, suc as D+ade in FapanE, or aving an attractive attribute, suc as Dlow energy consumptionE e.g. P ilips launc ed tube lig ts stating t at it will consume only less electricity. #ome aving an attractive attribute, suc as Denvironmentally friendly,E e.g., <ero <onda launc ed its two w eeler ve icle starting t at it is environment friendly. * is strategy is widely used not for food products. 3or example #unflower and #affola introduced oil wit common denominator t ey contain no c olesterol. Positionin) 10 price and 2ua.it0 'ertain products and retailers are known for t eir ig -%uality products and ig prices. )n t e retailing field, 4aymond offers %uality, products but its products are priced ig . Peter 0ngland ad factory retail s op w ic offers ig %uality products at ig er price. )n t e automotive field, positioning by price and %uality is common. )n recent years, DluxuryE cars t at accentuate %uality and carry comparatively ig prices ave proliferatedG )nfiniti and -exus are t e latest notewort y entries. <owever, t e makers of luxury cars are aving trouble differentiating t emselves from eac ot er wit respect ot important attributes suc as performance, comfort, and safety. :s a result, consumers are confused. Positionin) in re.ation to a tar)et *ar3et 4egardless of w ic positioning strategy is used, t e needs of t e target market always must be considered. * is positioning strategy doesn;t suggest t at t e ot er one ignore target markets. 4at er, wit t is strategy, t e target market-rat er t an anot er factor suc as competition is t e focal point in positioning product. Nestle offers different products using t is strategy t at address different consumer;s desire regarding taste, calories and price. Product4*i+ e+pansion Product-mix expansion is accomplis ed by increasing t e dept wit in a particular line andHor t e number of lines a firm offers to consumers. -et;s look at t ese options. I en a company adds a similar items to an existing product line wit t e same brand name, t is termed a line extension. 3or illustrations, pull t e coupons insert out of your #unday news paper. 3or example Pepsi-cola company introduced many new flavours for its drink like !iet Pepsi, -e ar *eam etc. -ike wise 'oca-'ola company introduced news flavours like sprite, diet coke etc. * e line extension strategy is also used by organizations in services fields. 3or example, universities now offer programs to appeal to prospective older students, and t e roman cat olic c urc broadened its line of religious services by adding #aturday and #unday evening masses. * ere are many reasons for line extensions. * e main one is t at t e firm wants to appeal to more market segments by offering a wider range of c oices for a particular product. -ine extensions mig t be t e most pronounced trend in marketing during t e early &778;s :s discussed in t e nearby box, line extensions ave becomes so common as to raise %uestions about t eir effectiveness. :not er way to expand t e product mix, referred to as mix extension, is to add a news product line to t e company;s present assortment. *o illustrate, w en Fo nson B Fo nson introduced a lilne of :cuvue disposable contact lenses, t at was mix extension because it added anot er product to t e company;s product mix. )n contrast, line extension adds more items wit in t e same product line. I en FBF adds new version of baby soaps, t at;s line extension. one
(nder a mix-extension strategy, t e new line may be related or unrelated to current products. 3urt ermore, it may carry one of t e company;s existing brand names or may be given an entirely new name. ere are examples of t ese four alternatives. 4elated product, same brand: Pepsi cola;s pepsi, mirinda, le ar "up, !iet pepsi, etc. #mit kline beec am;s <orlicks, $oost etc. (nrelated product, same brand: 9odre> produces many unrelated products like refrigerators, soaps etc. 4elated product, different brand: Procter B 9amble introduces -uvs as a companions to its disposable diapers. (nrelated product, different brand: +c!onald;s testing leaps and bounds, an indoor playground for c ildren and t eir parents. +ost often, t e new line is related to t e existing product mix because t e company wants to capitalize in its expertise and experience. *rading (p and *rading !own * e product strategies of trading up and trading down involve a c ange in producer positioning and an expansion of t e product line. *rading up means adding a ig er price product to a line to attract a broader market. :lso, t e seller intends t at t e new product;s prestige will elp t e sale of its existing lower-price products. *rading down means adding a lower-price product to a company;s product line. * e firm expects t at people w o cannot afford t e original ig er-price product. * e reason: t e lower-price product carries some of t e status and some of t e ot er more substantive benefits ?suc as performance@ of t e ig er-price items, #ome times t e effect of trading down can be ac ieved t roug advertising, wit out introducing new, lower-prices products. : manufacturer of fine or c inaware mig t accomplis t is by advertising some of t e lower-price in its existing product lines. *rading up and trading down are perilous strategies because t e new products may confuse buyers, resulting in negligible net gain. )t is e%ually undesirable if sales of t e new item or line are generated at t e expense if t e establis ed products. I en trading down, t e new offering may permanently urt t e firm;s reputation and t at of its establis ed ig -%uality product. *o reduce t is possibility, new lower-price products may be given brand names unlike t e establis ed brands. )n trading up, on t e ot er and, t e problem depends on w et er t e new product or line carries t e establis ed brand or is given a new name. if t e same brand name is used, t e firm must c ange its image enoug so t at new customers will accept t e ig er-price product. :t t e same time, t e seller does not want to lose its present customers. * e new offering may present a cloudy image, not attracting new customers but driving away existing customers. )f a different brand name is used, t e company must create awareness for it and t en stimulate consumers to buy t e new product. A.teration of E+istin) Products :s an alternative to developing a completely new product, management s ould take a fres look at t e organizations existing products. 2ften, improving an establis ed product-product alternation can be more profitable and less risky t an developing a completely. New one. <owever product alternation is not wit out risks. I en 'oca-'ola co. modified t e formula for its leading product and c anged its name to new coke, sales suffered so muc t at t e old formula was broug t back . mont s later under t e 'oca-'ola classic name. Product +ix 'ontraction
:not er product strategy, product mix contraction, is carried out eit er by eliminating an entire line or by simplifying t e assortment wit in a line. * inner andHor s orter product lines or mixes can weed our low-profit and unprofitable products. * e intended result of product-mix contraction is ig er profits from fewer products. 0.g., (nilever as announced t at it would prune its brand portfolio by "1J from &,588 to /88. )n service fields, some travel agencies ave s ifted from selling all modes of travel to concentrate on specialized tours and trips to exotic places. :nd, to reduce t eir liability risks and insurance costs, many p ysicians ave stopped offering obstetrical service. !uring t e early &778;s most companies expanded-rat er t an contracted-t eir product mixes. Numerous line extensions document t is trend. :s firms find t at t ey ave an unmanageable number of products or t at various items or lines are unprofitable, or bot , product-mix pruning is likely. * e result in man organizations will be fewer product lines, wit t e remaining lines t inner and s orter. <ow many Products are too +anyC I et er it is <industan lever, Procter B 9amble, 'olgate-Palmolive, 9odre> soaps or +arico, t e story is same. Iit a plet ora of brands fig ing for t at s rinking s are space on retail s elves, companies are reworking t eir array of brands. :nalysts tracking t e sector view t is as part of natural market cycle. Post liberalization, w en multinationals entered t e country in ordes, t ere were product launc es by t e day. *o compete, domestic companies offered t e same. :s a result t ere was intense competition. *o generate more excitement and get consumers to talk about t eir product, companies launc ed variants. * ese came in t e form of a different flavour, new packaging, or a slig t c ange in t e product formulation. :nd now its tome for brand s akeout companies are rationalizing, consolidating t eir brand portfolios. )nternationally, brand rationalization as been on companies agendas for some time )n #eptember &777, (nilever announced t at it would prune its brand portfolio by "1J - from &588 to /88. * e basket of /88 include brands like !ove, -ux, and t e 'alvin =lein range of fragrances. :ccording to Procter B 9amble, extensions are a company;s way of responding to consumer;s desires, w ic are often gauged t roug researc . #till, many consumers cannot differentiate across t e numerous alternatives and get frustrated or angry in t e process. * e large number of new offerings also poses problems for many retailers. #upermarkets, in particular, lack of s elf space to add all or even most of t e new products. #upermarket managers may s%ueeze more separate items into t eir stores by reducing t e average amount of space allocated to eac item.
Lesson & Product Modification and Differentiation )ntroduction +anagers try to stimulate sales by modifying t e product;s c aracteristics t roug %uality improvement, features improvement, or style improvement. * is strategy as several advantages. New features build t e company;s image as innovator and win t e loyalty of market segments t at value t ese features. * ey provide a opportunity for free publicity and t ey generate sales and distributor ent usiasm. * e c ief disadvantage is t at feature improvements are early imitated: unless t ere is permanent gain from being first, t e feature improvement mig t not pay off in t e long run. !ifferentiation is t e act of designing a set of meaningful differences to distinguis t e company;s offerings from competitor;s offeringsE. !ifferentiation of p ysical products takes place in a continuum. * e main product differentiations are 3eatures, Performance, 'onformance, !urability, 4eliability, 4eparability, #tyle and !esign. 3eatures 3eatures are c aracteristics t at supplement t e product;s basic function. * e starting point of features differentiation is a stripped down version of t e product. * e company can create additional versions by adding extra features. : company can identify and select new features by contacting recent buyers and asking t em %uestions as to w at t ey like about t e product, its good and bad features, etc. t e next task for t e company is to decide w ic factors are wort adding. * e company also needs to consider ow many people want eac feature, ow long it would take to introduce eac feature, w et er competitors could easily copy t e feature, etc. Performance Kuality Products are establis ed at four performance levels, low, average, ig and superior. Performance %uality refers to t e level at w ic t e product;s primary c aracteristics operate. : 'ompany must decide to manage performance %uality t roug time. * ree strategies are available. 3irst, w ere t e manufacturer continuously improves t e product, often improves t e product, often produces t e ig est return and market s are. * e second strategy is to maintain product %uality at a given level. * ird strategy is to reduce product %uality to offset rising costs, oping t e buyers will not notice and difference. 2t ers reduce t e %uality deliberately to increase t eir current profits alt oug it increases t eir long run profitability. 'onformance Kuality 'onformance %uality is t e degree to w ic specifications. !urability !urability is a very important product attributes to most buyers. !urability is a measure of t e product;s expected operating life under natural or stressful conditions. $uyers will pay more for products t at ave more durability. 4eliability 4eliability is a measure of t e profitability t at product will not malfunction or fall wit in a specified time period. $uyers want to avoid t e ig costs of breakdowns and repair time. 4epair ability 4epairability is a measure of t e ease of fixing a product t at malfunctions or fails. )deal repariability would exist if users could fix t e product t emselves wit little or no cost or time lost. #tyle $uyers are wiling to pay ig price for products t at are attractively styled. #tyle describes t e product;s looks and feel to t e buyer. #tyle as t e advantage if creating product distinctiveness t at is difficult to copy. all t e product units are identified and meet t e promise target
!esign !esign is t e totality of features t at affect ow a product looks and functions in terms of customer re%uirements. !esign is important in making and marketing durable e%uipment, apparel, retain services and packaged goods. Fack *rout;s !ifferentiation Fack *rout as been a proponent of t e !ifferentiation strategies followed among products. )n t e book !ifferentiate or !ie e as given t e different kinds of sacrifice a company as to make w ile following differentiation strategies. * ey are of t ree kindsProduct sacrifice #taying focused on one kind of product is far superior to t e everyt ing-for-everyone approac ?unless you use multiple brands@: !uracell in alkaline batteries, =3' in c icken, 3oot -ocker in at letic s oes, I ite 'astle in small amburgers. #ubaru in four-w eel-drive cars, #out west :irlines in s ort- aul air travel. * e company can become different as t e expert and t e best of t e breed in t is kind of product. Attri1ute sacrifice #taying focuses on one kind of product attribute is superior to telling a multiple attribute story. )t enables one to be different by taking owners ip of a perceived benefit. Aolvo took owners ip of DsafetyE in automobiles. 'rest took owners ip of Dcavity prevention.E Nordstrom took owners ip of Dservice.E !ell took owners ip of selling Ddirect.E * e product mig t offer more t an one attribute, but t e message s ould be focused on t e point t at one wants to preempt. Tar)et *ar3et sacrifice #taying focused on one target segment in a category enables t e company to be different by becoming t e preferred product by t e segment: Pepsi for t e younger generation, 'orvette for t e generation t at wants to be young. )f one looks for anot er target segment, c ances are t e original customer will be lost. * ere is c ance of undermining t e basic differentiation idea w en too muc versions are added. )f, as in +arlboro;s case, t ey stand for full flavor, but w en t ey offered ot er flavours t e focus s ifted. +ic elob was once a very successful, expensive full-flavored beer. * en it introduced +ic elob -ig t and +ic elob !ry. * e brand went down ill. <eineken, anot er expensive full-flavored beer, obviously learned from t at mistake. * eir lig t beer was called :mstel -ig t, w ic is doing very nicely wit t e brilliant differentiating idea D71 calories never tasted so imported.E 2nce 0veready ad a strategy to offer w atever kind of battery t at was re%uired. * ey introduced !uracell. * ey sacrificed a lot of business and offered only alkaline batteries. !uracell became t e specialist in long-lasing alkaline batteries and a differentiated success. $ut t ey were not t e leader and ad not ing to lose. :s you saw in an earlier c apter, t e need for growt tends to make market leaders vulnerable. 4at er t an give up anyt ing, t ey kept adding more. +ost failed brands once ad a differentiating idea t at t ey destroyed by adding more and more versions. #o even if one differentiates one s ould bring too many versions w ic kills t e focus. Product !ifferentiation in 4efrigerator )ndustry in )ndia Refri)erator ndustr0 * e Product !ifferentiation is very evident in t is closely competitive sector. * e players like 9odre>, $P-, I irlpool, Aideocon and Aoltas ave ac ieved economies of scale. 9odre> as a capacity utilization of "1J and t e ig est capacity in t e industry. * is declines t eir unit cost of every function of business and enables t em to keep t eir prices low. * e companies like 9odre>, $P- and Aideocon, being very old players in t e )ndian market en>oy ig brand awareness and consumer loyalties. * ese brand names are associated wit trust and reliability in t e )ndian market. * e =orean players like -9 and #amsung w o engaged in eavy advertising and brand promotion during t e last year ave also created a nic e for t em in t e premium segment.
Product differentiation
LG-LG 18/20 CU ft Top mount w/ F !t fre!h coo"ing * ese premium refrigerators offer an extensive array of sop isticated features including exclusive 3ast 3res !oor 'ooling. * is -9 innovation provides a second cooling element in t e refrigerator door t at c ills from t e front of compartment, to reinforce t e standard cooling from t e back and increase cool air circulation evenly t roug our t e interior. )t means everyt ing is cooled more %uickly and stays cool consistently ?including items stored in t e door s elves@, to maintain fres ness, texture, and nutritional value even w en t e refrigerator door is opened often. #ome of t e features offered are: 3ast3res !oor 'ooing #ystem Kuiet 2peration #ound power /8.7 d$ :merica;s New Kuietest 0nergy #tar 4eversible door +odern B 0legant 4ound-!oor !esign -ong Aertical 9rip <andles 0mbossed 'oated +etal 3inis HA'+ 3inis
#hir"poo" $ whir"poo" w ter fi"tr tion refriger tor !o"ution * e I irlpool (ltra0ase Iater 3iltration system uses a sediment and activated carbon filter to remove dirt, rust, c lorine, odor and lead. * e long, torpedo-s aped filter enables water to keep in contact wit t e activated carbon longer for effective filtration resulting in clear, better-tasting water. %&L )t as launc ed its D'onvertiE model wit a freezer t at can, at t e switc of a button, function like any ot er part of t e refrigerator. $P- is now looking at models based on non-'3' tec nologies. * is activity in t e frost-free segment is only to be expected. Godre'-G( 9odre> as launc ed DdesignerE refrigerators wit colour images on door panels. * e various innovative features, recently added, include: : curd-o-matic-a special area to make curdsHyogurt : deodorizer-to keep away foul odors : umidity control switc to keep vegetable crisper : flexible s elf mec anism 3our temperature zones
) m!ung *ndi e"ectronic! )t as launc ed new ig -end top-of-t e-line frost-free refrigerators. * ey launc ed five new frost-free models of refrigerators in /88 litres of 5/8 liters. * e new, top-of-t e-line frost-free models in 5/8 liters ?#9 5/6@ and 1"8 liters come wit #amsung;s patented twin cooling tec nology. * e /88 and //8 litre bio fres refrigerators models come wit uni%ue bio friendly features.
Product !ifferentiation in Ias ing +ac ine in )ndia &. LG e"ectronic! effectively applied t e various rules of brand creating to create a company brand and became )ndia;s second largest consumer electronics brand only next to $P- wit Aideocon at t e t ird spot. )n an environment w ere t eir consumer was being given various exc ange offers, -9 differentiated t eir products on t e basis of tec nology. * ey realized t at t e )ndian customer was not price but value conscious. * e was ing mac ine were launc ed wit t e +ch o! punch p"u! three techno"og,- . )n semi automatic was ing mac ine instead of launc ing a /.1 kg mac ine t at dominated t e entire market, -9 launc ed 5 kg mac ine w ic was more convenient for large )ndian ouse olds. ,. LG # !her/.r,er Combo * is 'ompact ,/E unit ouses and d/ nced-de!ign !her nd dr,er in one- an amazing combination of efficient space usage and fine fabric care. * e was er features a vertical basket t at gently and t oroug ly rotates even your most delicate clot es-rat er t an violently agitating t em. * en it rinses and dries t em in one simple automatic operations. :ll using one-t ird of t e water of a conventional mac ine. ("ectro"ux plans to introduce low-end top loading, twin-tub mac inesG a fully automatic mac ine and a range of front-loading was ing mac ines from )taly;s Portryal. * e company as launc ed a new model was ing mac ine &8/1 model t at provides four rinses as against t ree rinses of all ot er was ing mac ines. * e fourt rise removes t e dirt and soap residues completely from t e fabric. .. 0ideocon1 w ic ad pioneered was ing mac ines in )ndia, was t e market leader wit its range of low-priced +w !her!- 2!pinning tub!3 and semi-automatic mac ines, w ic re%uired manual supervision and some labour and claims to be t e first company in )ndia to introduce fully automatic was ing mac ines. /. )3$ $2#'< fully automatic was ing mac ines is anot er premium brand t at as successfully differentiated itself on product features. )t as gained a distinct competitive edge by offering features like an in-built geyser for not water was ing re%uired for removal of grease, tumble was facility, a c oice of two speeds for drying, and a front loading facility available only in )3$ at t e moment. 1. #hir"poo" I irlpool introduced Ias ing mac ines wit a &-,, &-, <and Ias :gitator #ystem as it wanted to induce t e feeling of was ing wit ands. I irlpool;s anot er offering is t e I itemagic a%uas ower range of semi-automatic was ing mac ines. * e mac ine offers a otwas facility and is e%uipped wit an inbuilt eater. * e new was system is a combination of t e uni%ue :gitator and t e special :%uas ower. 2t er features of t e mac ine include t e Luni-mix; detergent dispenser w ic ensures t e uniform mixing of detergent and water as t e water flows into t e was tub. 5. ) m!ung *ndi ("ectronic! Ltd4 as launc ed t e new #5 6787 and #5 6789 was ing mac ines w ic ave been customized to suit )ndian re%uirements by being e%uipped wit a new memory back-up feature; w ic offers programme settings. 'ost between 4s. &/,/88 to 4s. &",188. Product differentiation in *elevision #ector in )ndia LG * e televisions were launc ed wit t e digital flatiron *A wit 9olden eye tec nology. )nnovative features are constantly adde.d to t eir models. * e most imaginative of t ese was in field of televisionG multilingual screen display ?t e menu appears on t e screen in five )ndian languages@. %&L Ltd4 )ndia largest color television ?'*A@ manufacturer. I en '*As t e company as a wide range of product catering to all segments of t e market. * e company as also entered into t e net savvy tec nology I0$ *A and interactive *As, multimedia *A, w ic combines t e latest in television and computer tec nology. <owever t ese products are more to cater to t e market craze and ave yet to turn commercially viable. ) m!ung *ndi e"ectronic! Ltd4 #amsung launc ed its new, advanced, digital ready range of 3lat 'olour *elevision ?Plano@ and Pro>ection televisions in t e market.
:nid * ey ave come wit different versions for different segments of people. 3or t e upgraders t ere is )go. * e style conscious teenager as 'andy a &/inc *A wit 0arp ones. * e =M * under is meant for t ose w o want t eir music to sound like eavenly rage. : new range is also planned for t e premium segment- t e 9ulliano $ellini designed range. * en t ere are uni%ue collections wit models w ic can be ung on t e wall ?Pure 3lat@ or turned at angles to suit viewing ?*wister wit swivel base@. Product !ifferentiation in +icrowave #ector in )ndia * e microwave oven market is in a nascent stage of development in t e country. <owever, wit consumers in a mood to buy ouse old goodies, many players ave entered t e market in t e past few mont s. :nd in consonance wit t e demand-supply t eory, prices ave come down. <owever, t e microwave oven, w en first launc ed in )ndia, did not get an ent usiastic response. )ndustry sources believe t at t e reason mig t well ave been t e ig -prices and t e fact t at t e average )ndian ouse old was not yet ready to c ange its food abits. * ere is no practice of using leftovers or frozen foods or food in any unprocessed form. +oreover, )ndian cuisine normally involves constant stirring or frying and one cannot stir or fry food in t e microwave. * e microwave could not replace usual cooking met ods. )n addition, t e microwave re%uires special containers for use. #o microwaves were generally used for re eating in )ndian kitc ens. LG )t as t ree varieties of microwave ovens in its kitty-solo model, grill variety and convector variant. -9 microwave ave a robo gri"" n uto-mo/ing he ther t at can be set at various angles. )t also as an nti-b cteri c /it,1 w ic prevents t e growt of bacteria inside t e cavity and absorbs odour. LG also offers an :/er-the-; nge <icrow /e with )en!or, )n yet anot er stunning display of -9 innovation, t is microwave is arrayed wit a network of sensors t at detect t e exact amount of time to cook a given food item by monitoring gasses released from food as it cooks. ) m!ung models of +icrowave 2vens ave a special features and t at is t at t ey ave a cer mic en me" c /it,. :s a result, t e conductivity is ,./ times less t an stainless steel, w ic means less time and ence less power consumption. * e cavity is so scratc proof t at t e user does not ave t e problem of getting spilled food stuck in crevices. )t also as a .!-s ower wave for uniform eating. 3renc company <ou"inex as also made its mark in )ndia. )ts microwave ave two !he"/e! so t at one can cook two dis es simultaneously. * is is a uni%ue feature and is not available in any ot er microwave. *F% * e +egatron and t e 0lectron models from )3$ are wit out grill. * e Neutron, Proton and t e Position ave an uto-coo= memor, along wit grill and browning facility. * e Proton as a &88J convection system. #hir"poo" " unched < gicoo= coo=ing r nge I irlpool as announced t e launc of its +agicook cooking range. * e inside walls of t e cooking range are coated wit a special porcelain enamel t at automatically vapourises food stains from t e oven walls. The *nno/ tion )erie! * ese models feature t e new, time-saving >et .efro!t ),!tem4 )nnovative tec nology and 0uropean design permit defrosting up to "8J faster t an ot er previous microwave ovens. #hir"poo" Go"d mode" $ : new Tupper # /e :/ " )te mer not is included wit t e unit. * is new feature makes it %uick and easy for consumers to prepare ealt ful tearned vegetables, rice, pasta, fis , s rimp, and many ot er foods. :nd wit t e *upper Iare 2val #teamer, t ere is no need for any ot er small steaming appliances.
Lesson 4 Product E.i*ination )ntroduction Product deletion is some t ing w ic is an integral part of product management. )t plays a vital role in keeping t e profit margin of t e organisation ig . 3or an organisation w ic is a continuous entity, t e customers are very precious. #o are t e customer preferences. )n t e modern context of business, t e wort of t e business is calculated on terms of t e s are value t at t e organisation fetc es. :lso in t e context of increased competition, a teeny tiny flaw found in t e main competitor is over blown and s own to t e s are olding public as a ma>or disaster etc. t is causes t e organisation to loose its image in t e public. )n all t ese contexts, t e product deletion process gains more relevance. Product deletion strategies mainly include t e following Price ad>ustments Product reformulation 4evised distribution etc I en a product dies or w en companies merge, w at does one do wit a product w en its profitability declines steadily and cannot be revived. 2bviously, t e product s ould be eliminated. Met most companies, do not ave a wellplanned procedure for andling products t at are in decline. :merican industry as traditionally paid less attention to establis ing formal procedures for eliminating products t an to establis ing procedures for developing new products. Need for Product !eletion Product deletions can occur due to many t ings. 2r t ese, t ose pertaining to t e markets are t e most important ones. * oug we can attribute t e need to be due to many reasons, market acceptance and re>ection is t e key cause for all indicators. Ie can categorize t e need to delete t e product as t e following. &. +arket re>ection ,. *ec nological improvements H obsolescence .. +acro economic factors /. 9overnmental regulations 1. 0cological H 0nvironmental 'onsiderations 5. Non-availability of raw materials Mar3et re5ection +arket re>ection can occur due to many factors. * e marketer may be blinded of many factors in t e market t at may go against t e product and launc t e product. * en t e adverse factors may come into play and t e complete re>ection of e product is t e result. * en t e company as to wit draw t e product. <ere t ere is no strategy is need as t ere is no relevance of t e product. Tec-no.o)ica. i*pro6e*ents7o1so.escence * e advancements in t e tec nological fields can render a product useless. 'ustomers may find a better product, at a better price, due to tec nological advancement. :n apt example for t is in t e )ndian market is t e Pagers. $P- ad a pager service network in )ndia. $ecause of t e rapid tec nological advancement t at appened in t e field of communications, t ere is no need to carry a pager. Met anot er example will be t e andsets by )ridium tec nologies. * e andsets were t oug t to be of very ig use as it could revolutionize t e communications tec nology because of t e 9lobal Positioning #ystem of 9P#. $ut t e andset was too eavy and t e company ad to drop t at product because of t e rapid advancement made by #ony B 'o. in miniaturizing t e mobile.
#trate)ies to 1e app.ied )n t is case t ere are certain strategies w ic cold be applied. * is is important because t ere may be many a brand loyal customers w o would not like to c ange t eir product. * eir support and satisfaction is important for t e company to survive. <ence t e company as to strategize t e wit drawal of t e product. *ncre !ing the price * is could to be applied in t e case of products w ic are price sensitive. * is will cause t e customer to move away from t e product, w ic will ultimately result in t e deat of t e product. .ecre !ing the ?u "it, * is could t e applied in t e spread between upper segments to t e price sensitive segment. * oug t is could affect t e company in adverse way also, t e company could say t at it is wit drawing t e product because of t e decreased %uality. Macro econo*ic factors * e environmental factors suc as 9lobal environment, t e Political environment etc may lead to t e deletion of t e product. +acro economic factors may affect t e company and t e many factors w ic may affect t e company. 3or example a company w ic is operating in t e foreign markets may be affected by t e new %uality standards set by t e 9overnment t ere. :n example would be t e re>ection of t e )ndian 9arments by t e (# 9ovt, w ic as practically led t e )ndian manufacturers to close down t eir factories. Go6ern*enta. re)u.ations 9overnmental regulations in a specific industry etc can act as t e deat knell to t e product. * ere are many products w ic ave gone to t e darkness of t e unknown due to t is particular factor. Eco.o)ica.8en6iron*enta. conditions * e products w ic are causing damages to t e environment may be wit drawn by t e company. I en it was known t at t e '3' w ic is being used in t e fridges is causing t e environmental damage, t e fridge manufacturers wanted to make c anges and t is ad affected t e c emical companies w ic ad been supplying t e material to t e 3ridge +anufacturers. :gain t e production of !!*, a armful product as been stopped due to t e environmental factors. Non a6ai.a1i.it0 of ra9 *ateria.s * is is a factor w ic is increasingly affecting t e small scale industry w ic maintains t e bare minimum stocks. I en t is continues for a w ile, t e company as to stop t e production as t e demand for t e product may ave died out t e customers mig t ave found alternate product etc. $enefits of Product !eletion &. Per aps t e most obvious benefit to be derived from a formalized product deletion plan is t e potential effect on profitability. * is is per aps most often true during a merger or ac%uisition w en t ere is generally a great deal of product redundancy. 4educing t e number of products offered streamlines t e new company;s product line and can improve efficiency as well as profitability. ,. 2ften a large percentage of firm;s product mix accounts for a small percentage of its total sales and profits. * is suggests t at at least some of t ese products are unprofitable or ave an unacceptably low return on investment. 3or example, one firm wit annual sales of N/8 million eliminated &5 products t at accounted for only eig t percent of its sales volumes. Iit in t ree years, t e firm;s profits increased ,8-fold: aggressive product abandonment was cited by management as t e prime reason. .. #ince weak product can consumer important company resources, deleting t em can spur overall sales by freeing up resources for more promising uses. :lso, marginal products tie up sale personnel, ware ouse space, advertising budgets, e%uipment, raw materials, and ot er resources to t e same extent as strong products. Ieak products also tend to re%uire a disproportionate amount of management time. 3inally, failure to dump weak products may delay an aggressive searc for more profitable products.
/. 0stablis ing procedures for determining under w at circumstances a product s ould be eliminated offers ot er benefits as well. )t may cause a firm to analyze for t e first time w y certain products need to be dropped. :s a result, past mistakes are more likely to be identified and practices instituted to prevent a recurrence of t e same problems. 4easons for Product !eletions 0ventually all products reac t e end of profitable lives. I atever t e reason for t e demise p asing out, t e weak products calls for careful planning. 'andidates for elimination from a firm;s line are identified t roug management;s regular monitoring of product performance. 2nce suc candidates ave been identified, t ere are typically considerable resources at stake w en t e product drop decisions are made. !ecisions to drop a product are difficult. #ome times powerful arguments for retaining t e products are given by t e sales force, by manufacturing and by ot er areas of organisation. 3urt er more t e measurement of product performance is complex. : product;s real contribution to operating results is difficult to determine because t e products sales and cost are interrelated wit t ose of ot er products. Met t e elimination of a product can make important profit contributions and free scarce marketing resources for ig er priority needs. !eleting a product is a difficult decision to make because dropping even a single product will alter t e product line and product portfolio. <owever, t ere are certain warning premonitions t at a company cannot leave alone. * ey are: !eclining sales !eclining prices declining product profitability !eclining prices )ncreasing effective alternatives or substitutes !evotion of excessive attention to ot erwise weak link product due to emotional influences
$ut too many companies ignore t ese warnings. Product;s are maintained in t e company;s line because of concern t at t e customers w o still buy t em may be upset if t ey are no longer available t at t eir decision may ave a negative affect on sales of t e firm;s ot er products, or t at t e sales force of distributors will ob>ect to t e loss of old familiar standbys. * is suggests t e need to establis a product deletion process t at is >ust as compre ensive and t roug . 4evitalizing a !eclining Product * ere may be ways to revitalize a decline product. Production cost may be reduced t roug value analysis. Foint cost mig t be reallocated. * e product mig t be positioned as in t e case of 3a cosmetics range or re-launc ed in a foreign market. * e product mig t be made more profitable in its waning years by raising its price as in t e case of old-'int ol soap from 9odre>, by cutbacks in promotion expense or t roug more economical distribution, suc as consolidating field inventories in a central ware ouse. * e drain on company;s resources mig t be reduced and customer demand still met by subcontracting production of t e product to anot er manufacturer. $ut w en t ese alternatives old little ope, t e best approac is to program t e product;s elimination in suc a way t at t e least disturbance is created for t e company, its distributors and customers and so t at replacement and repair parts will still be available to customers. 2ne tec ni%ue for doing is to aut orize anot er company, w ic can operate profitability serving t e remaining core market, to take over t e product. :s a part of t e marketing control process, product performance s ould be evaluated against standards on a regular basis. * e results of suc evaluations can lead to t ree possible actions like continue to market t e product in t e market, modify t e producer to remedy t e problem, or p ase out t e product. * is is explained in t e below flow c art. * e option selected depends on w at s ows up during t e evaluation. )n order to determine t e impact on production operations and marketing activities, t e demands on management time, servicing re%uirements and t e alternative uses of resou6rces made available by a drop.
:s a part of t e marketing control process, product performance s ould be evaluated against standards on a regular basis. * e results of suc evaluations can lead to t ree possible actions like continue to market t e product in t e market, modify t e product to remedy t e problem, or p ase out t e product. * is is explained in t e below flow c art. * e option selected depends on w at s ows up during t e evaluation. )n order to determine t e impact on production operations and marketing activities, t e demands on management time, servicing re%uirements and t e alternative uses of resources made available by a drop. ' annel participants and suppliers: assessment is made of t e impact of a producer drop on c annel relations ips, sales and profit impact of drop on c annel members and t e probable reaction of suppliers to a drop. 'ompetitive: :dvantages t at a drop provides to competition are assessed.
#ome of t ese criteria can be %uantified and for ot ers suc as t e impact of a proposed product drop on c annel relations ips, only a more sub>ective evaluation is possible. * e selection of t e criteria for a product drop s ould be based on assessment of t e factors t at relate to t e product performance in a particular firm. #ince t ese factors may involve economic, market and tec nical performance a team of executives representing t e top management and various ot er functional areas of t e firm s ould select and assign weig ts to t e criteria. 3ormal procedures s ould be establis ed for monitoring of t e products of t e firm. :n evaluation team made up of representatives of t e key functional areas in t e firm can review data on t e performances of t e product and apply t e criteria. * e fre%uency of meeting of t is team depends on t e rate of c ange in t e product life cycle and in istorical product performance, t is varies from firm to firm. :n annual review is usually t e minimum time span longer intervals may be appropriate, depending on t e situation. +atc ing criteria wit performance t e criteria set by management are used to measure t e performance of t e existing products. I en a company as a large product mix, t e performance assessment s ould be done in steps of w ic t e first step is to %uickly screen for possible drop candidates. )t would be too costly and time consuming to perform a compre ensive analysis for eac product of a w olesale food or drug firm because of t ousands of products involved. 'omputer models ave been developed for screening w en evaluative criteria and performance information be %uantified. * e Product 4eview and 0valuation #ubsystem ?P40##@ model is one computerized approac to identify t e product. !eletion candidates. )t utilizes t e standard cost accounting and marketing informations to generate product rankings. * e products wit low selection indexes are considered for elimination from t e product line of t e firm. * e selection index ?#)N@ is calculated by t e formulaG I ere, #)Ni 'mi 3ci 'mi 3ci O selection index number for product i, O contribution margin for product i, O facilities costs for product i, O summation of contribution margins of all products O summation of facilities cost of all products
)f products : and $ ave e%ual contribution margins, but :;s facilities costs are double t ose of $, t en :;s #)N value will be alf t at of $. !epending on t e particular evaluation criteria t at t e appropriate in a given firm, factors ot er t an facilities costs could be used, suc as s elf space of floor space in a retail firm. * e P40## model can also apply available sub>ective and istorical date to examine price-volume relations ips, sales trends and product complimentarily and sustainability. 0valuation terms elp ensure t at t e assessment process considers t e impact of a proposed product drop on various areas of t e firm. #ince it is impossible to %uantify all of t e evaluation criteria, t e teams must sub>ectively assess t e impact of t e drop on customers, competitors and suppliers.
&" nning product ph !eout: * e p aseout of a product must be planned for and coordinated. +anagement may c oose one of t e t ree possible strategies. &. #elling t e product to anot er firm may en ance t e financial attractiveness of t e product elimination decision. * is strategy as been followed by many firms seeking to restructure t eir product mixes. ,. )f selling a product is not feasible, management may decide to drop t e product gradually, allowing time for inventory reduction, facilities conversion, assisting t e customers in finding t e new sources of supply and ot er internal restructuring. .. )t may be necessary in some instances to bite t e bullet by rapidly eliminating t e product and accepting t e conse%uences Product !eletion #tages * e product deletion strategies follow four stages eac stage in essential if a clear decision is to be made: Reco)ni:e 9ea3 products * is determination s ould been made as part of a continuing and systematic monitoring of all company products. Products are to live up to t e expectations for profitability sales growt and market s are and consumer attitude. Portfolio tec ni%ues like $'9 matrix will elp identify t ese weak links. Ana.0sis of 9ea3 products +anagement must examine t e products identified in t e above step to determine w y t ey are falling s ort. $efore product deletion, ot er possibilities like product modification, repositioning and improved marketing mix strategies needs to be found. )n ot er words, t e cost of resources, executive time and likely need to be considered for t e deletion decision. Cause and effect e6a.uation )f repositioning, product modification in t e marketing mix seem unlikely to salvage be product, t e next obvious step is to consider t e implication of cause effect of product deletion. * e influence of product deletion upon t e entire company in terms of finance, resources, marketing and management are to be analysed. * e potential fallout on t e financial positions, t e influence and impact of t e top management commitment on t e deletion will ave to be studied and analysed. *p.e*entation of t-e de.etion decision :fter t e decision is made t roug all t e above steps t e timing and t e procedure of elimination must be planned in order to minimize t e disruption from t e constituents of t e relations ip marketing. * is stage may be used to sell t e product to some interested party, per aps including patents and production and distribution facilities. ;ar6estin) strate)0 $efore product elimination company s ould recover t e cost incurred in producer development, promotional expenses, management expenses etc. $efore deletion, t e company can fix ig price to de-motivate t e customer to purc ase a product. : company may be prevented from implementing t e arvesting strategy if t ere are exit barriers to reckon wit , since t ey reduce t e firm;s strategic flexibility 0xit barriers refer to circumstances wit in an industry t at discourage t e exist of competitors w ose performance in t e particular business may be marginal. * ere types of exit barriers are: a. : t in resale market for t e assets involved b. )ntangible strategic barriers ?eg. Aalue of distribution network, customer goodwill for t e ot er product of t e company, or strong corporate identification wit t e products of a company, or strong corporate identification wit t e product@ as deterrents to timely exitG and c. +anagement;s reluctance to terminate a sick line. I en t e exit barriers disappear, or t eir effect ceases to be of concern, t e arvesting strategy may be pursued.
: researc was conducted on product elimination by t e researc ers in t e :merican (niversity. * e outcome of t at researc is as follows. * e product elimination decision is a decision of great strategic importance in today;s increasingly competitive marketplace. * e purpose of t is manuscript is to examine w et er marketing decisionmakers assess t e relative correctness or appropriateness of suc strategically important decisions following t eir implementation. :n Dafter-t e-factE or post- oc analysis of recent product elimination decisions was conducted among :merican manufacturing firms. * e product itself ad been eliminated wit t e focal pint for t e study being t e decision-making process used to do so. 0xample for Product 0limination #trategy I en t e )ndian automobile industry was opened up along wit t eir most tried and tested DescortE. * e product was positioned 0scort was successful in bringing revenue to t e company but adopted various strategies to revive t e product as reac ed t Dford ikonE replacing t e old ford. t e ot er global players, 3ord motors also launc ed along wit 2pel :stra and +itusbis i -ancer initially later on it s owed a declining trend. * e company e deletion stage and launc ed Dford ikonE replacing
#imilar case was found on P:- Peugeot "87. * is model was initially success but wit years, but later it was found t at s owing decline trend. Now company is tied wit *0-'2. Now Peugeot is not releasing car pegeout "87 cars at present. <industan motors deleted t e :mbassodor car-delux model now t ey released t e model called :mbassodor-classic. =awasaki #P 0ndura was deleted from its product line after certain years as a part of product mix strategies. #un *A network launc ed new c annel #un +ovies and #un +usic c annels were eavily cannibalizing t e parent c annel #un *A. * ey decided to delete t e c annels from t e product line. I en <ewlett Packard introduced t e printer-<P !F-188. :fter going t roug t e first %uardent of t e model t e printer failed to bring in profits to t e firm, irrespective of eavy promotional efforts. <P finalized wit t e strategy of product deletion. <-- : )n t e annual meeting ,88&, t e company;s plan is to reduce down t e product portfolio from &&8 to .5, over a t ree years period. 2f t ese &6 will be international brands, w ile t e remaining will be ome-grown. *o ensure t at t e company does not lose sales by not supporting non-core brands. -ever plans to subsume some e%uities t roug an umbrella-branding exercise. 3or instance, in branded staples, kissan :nnapurna will be t e core brand. )n ,88& -ever will ave access to yet anot er brand in t e branded staples business, 'aptain cook, t roug its ac%uisition of )nternational $est 3oods. 2ver a t ree-year period, t e company will attempt to bring t e captain cook franc ise under =issan :nnapurna and p ase out t e former. * e core brand strategy will ensure t at bigger brands get for greater support. )nnovation efforts will also be streamlined. D0arlier, if a researc manager worked on four different pro>ects, e would now probably work on one big pro>ect. * e result of t e focus are bound to be far more effectiveE, says a -ever executive. :n analysis s owed t at all personal products division ad ,& brands in all, but only nine brands made up 61-78J of sales. 'learly, t e core brands were being deprived of ade%uate support to develop newer brands. 'adbury as wit drawn its product +ocka, year and a alf ago. $P- #anyo *ec as pruned t e number of models from t e earlier /8 to && in its old cassette player-based audio systems. * is strategy is to focus on '! player segment t an t e #tereo segment in t e audio market. * e company;s turnover as dropped to 4s. 6..,, crore, or alf of w at it used to be two year ago. $P-;s market s are in audio segment also reduce to ,8J in terms of value. :iwa is t e single reason w y $P- #anyo *ec ;s as dropped its turnover. #uzuki automobile dropped its two w eeler #uzuki sogun and #uzuki s aolin. +aruti (dyog -td. dropped +aruti &888 due to problem in t e engine. Pepsico and 'oca-fola dropped it diet Pepsi and diet 'oke respectively due to nonacceptance by our customers.
Lesson ' Or)anisin) Product <unction and t-e Ro.e of Product Mana)ers )ntroduction 0ven t oug product managers are wit in t e marketing department, t ey are aving considerable autonomy in t eir functioning. * is lesson looks at t e determinants of t eir work, t eir position in t e organisation and t e work related activities of t em in detail. Deter*inants of 9or3 #everal different factors determine ow many sales persons ave to work under a product manager. Ie s ould keep in mind t at t is consideration is for a period of time, since t ere could be temporary overloads. :nyt ing beyond a few weeks will cause significant deterioration in performance. Cu!tomer mix 3irst among t e considerations is t e customer. *o know w at is t e customer mix one as to c eck t e company;s relation wit t eir customer. * at includes w et er t e company sells t em a wide variety of products and services, or do t e customers all buy a relatively small number of t e %uantities purc ased etc. 2r are t e firm;s customers govtal agenciesC 'onsumersC Non profit organisatoinsC :ny mix of types will complicate customer relations ip. :nd t ere are numerous ways to mix, even wit in categories. 0ac type of entity as specific re%uirements, in terms of products or services and re%uirements for business dealings. )n ot er words t e organisation must be sensitive to t e organizational cultures of its customers. )n t e final analysis t at alone is t e key. Iit a range of customers and relations ip complexities it is impossible to standardize t e manner in w ic customers are andled. #o it will be impossible to ave one type of sales procedure or one type of sales personnel. #omeone as to be t ere to track down all t ese. Naturally t is falls under t e sales manager. )t is impossible for im to keep track of t at many levels if so many people too are working under im. :ctually t e sales function by definition re%uires more uman efforts t an neatly any ot er function in t e company. &roduct mix * is depends on t e variety of products offered by t e company. I en t e company is selling a very low number of different items t e task will be relatively simple for t e sales function in general and t e product manager in particular. 2nly t e customer mix adds to t e complexity. &roduct "ife c,c"e 2n eac level like setting up or declining stage t e product function will be different. Naturally t e product manager will be working more closely wit t e sales force during difficult times. Now wit a wide variety of products t is becomes even more complex. * ese kinds of complexities are found in bot small as well as large firms. * at is w y and ow %uality of supervision will ave a direct relations ip to t e %uantity and %uality of t e work accomplis ed by t e sales function, especially over long period of time. (ffect of geogr ph, )t almost goes wit out saying t at t e geograp ical area for w ic a product manager is responsible will affect ow many people can be effectively supervised. * e only solution for t e product manager to spend even more time wit t e sales people in t e field. )f not in field t e product managers must spend more time communicating wit t em bot verbally and in writing. Or)anisation t0pes * ere are t ree types of organizational structures. )n simple terms organizational structure refers to organizational lines will be drawn. Line )n t is type all employees report to a superior and t ere is no formal communication between levels of t e organisation. * e sales person covering one area wil not ave any direct communication wit any ot er subordinate or superiors. :ll t e work is done by t e sales people. * ere is no support staff. * e advantage of t is system is its ow
simplicity. #o t ere is no duplication of work. 0veryone;s responsibility is sales results in t e s ort term. $ut t is type of organisatoin is slower to develop and respond to product and market opportunities. )ts very simplicity and lean structure also means t at its primary concern is s ort term results. <ere all of t em ave only direct link wit #ales manager and Product managers does not ave muc role. Combin tion "ine-!t ff +any organizations experience a great deal of success wit a combination tailored for t eir particular needs. : combination structure allows for t e staff support specialists to assist t e line people, or sales people, at t e appropriate level in t e company to meet t eir needs. 3lexibility to meet c anging needs is built in. #taff and line personnel can establis communication and interact at any level of t e two groups as needed. * e extent of up-down communications across staff boundaries will strictly a result of t e organizational culture. * us t ere is a minimum of outside influence determining t e flow of communication. Or)ani:in) t-e product depart*ent :not er series of issues must be explored before decision can be made about t e sales department organisation. * ese %uestions deal wit t e deployment of t e field sales force. )n most cases, t ose issues can be dealt wit separately from t ose determinants explored previously. :n alternative way to define t is step is to revisit t e ob>ective of t e sales function. -et;s deal wit it in detail. Function 2ne option it to structure t e roles t e salespeople along functional lines. * at is, some sales person will specialize in new account establis ments. * eir main duty is to sign up new customers. 2ften t is strategy is called DblitzE because fre%uently t e company will put several new account specialists into an area at one time. )f t e company;s ob>ective is to build long term relations ip wit customers, t is tactic works well. )n a function oriented sales force some sales people will specialize in managing establis ed accounts. * eir role will be to ensure t at t e customer is deriving maximum convenience and benefit from t e relations ip wit t e company. +any firms allow inside sales persons to do t is duty. * ese sales positions will concentrate t eir efforts on telemarketing and is also elpful for new trainees. * ey may also coordinate communications between t e administrative staff and t e outside sales people. I en customers do visit t e company;s facilities t ese inside sales people will andle all aspects of t e visit. I en t e firm serves a wide geograp ic area dividing t e sales force between inside and outside is often economical and efficient. &roduct! I en t e sales volume will support it, aving t e sales people specialize by products can be efficient. * e more complex t e more increased specialization makes sense. * us eac sales group will be extremely proficient in its application. :nd customers will be benefited from t is expertise. $ut w en t e customer as wide range of activity t en t ere could be duplications t at is more t an one sales person could visit t e very same customer. (sually if it can be >ustified on an economic basis, t e customer will benefit and at little cost to t e supplier company. Cu!tomer! !ividing t e sales force along customer lines again re%uires volumes. )n a business environement t e customers really are divided by #)' ?#tandard )ndustry 'lassification@ codes, lines of business. * e customers principal business interest will be t e criterion for dividing accounts. *wo possible problems may arise.first, t e customer may be in more t an one business. * en eit er two or none will visit t e customer t inking t e ot er will go. #econdly t e sales person could pass up some customers t inking t at particular customers may not fall into certain specific categories. Nevert eless concentrating on one particular type of customers allows t e sales person to build a ig degree of knowledge of t e customer;s c allenges and opportunities. Geogr phic org ni! tion !ividing sales responsibilities among geograp ic lines is t e most efficient in terms of travel time and coverage concentration and make t e most sense in most situations ingnoring t e considerations of t e ot er met ods. )t is certainly t e simplest to operate and administer. * e sense of concern responsibility, and responsiveness is definitely
ig est w en t is strategy is employed. * e sales person will not be able to become as familiar wit a given customer group. 2r a product or tec ni%ue for opening new accounts or maintaining old customers. Combin tion )t goes wit out saying t at most firms will need to employ some type of combination reflecting t e realities of t eir particular marketplace and t eir product service mix. : company may c oose to specialize or divide t e functions differently w en analyzing different customer groupings or different geograp ic areas or any number of ot er considerations. <unctiona. Product co*pan0 9eneral +anager
+anager !istribution
3ig. 1.& Ro.e of product *ana)ers &. 'reating a product plan on an annual basis ,. !eveloping demand planning and forecasting for t e product category .. !iscussing t e forecast wit t e production department and agreeing on sc edules /. =nowledge of t e industry w ere t e product manager is wo8rking 1. 'reating innovating marketing strategies for t e respective products in consultations wit t e marketing c ief 5. !iscussing about packaging wit production, advertisingH marketing departments ". 4esponsible for product line extensionsHstretc ing 6. New product identification and working on t e development process 7. Preparing communication and working on t e development process &8. Proposing sales promoting plant to t e salesHmarketing department &&. 0stablis ing sales force training management wit salesHmarketing department &,. 'onducting marketing researc wit t e agency concerned &.. #etting up controls to monitor performance.
Product +anager
+anager#ales
!istribution +anager
!istrict managers
!istrict managers
!istrict managers
!istrict managers
#ales 0xecutive
#ales 0xecutive
#ales 0xecutive
#ales 0xecutive
<i). '.% 4obert 4udolp summed up t e product manager;s responsibilities as: &. Product strategy ,. Product planning .. Product development monitoring /. Product marketing and 1. Product business activities * e various interfaces of t e Product manager wit are: &. *op management on guidance and mission H vision ac ievement ,. #ales department for implementing product strategies .. +arketing department for marketing plans and strategies /. -egal department for contracts 1. 3inance department for getting t e budgets cleared and on return on investment 5. 4esearc and !esign for new product development activities ". Production and +aterials departments for manufacturing according to sc edule
-esson 5
Product Life C0c.e )ntroduction * e product life cycle reflects sales and profits of a product over a period of time. 9enerally, most products follow an establis ed pat or w en t eir sales are plotted against time, one gets an #-s aped curved as s ows in 3igures. :not er approac to examining product mix is to look at t e life cycle p ase of eac product. 0ac product goes t roug a life cycle. )t s ows introductions, growt , maturity and decline during its period of existence.
9rowt )ntroduction
*ime <i). (.1 <owever, t ere are exceptions w en t e product may not follow t is pat . :s s own in 3igures, t ere are products t at eit er s ow a s arp growt and t en s arp decline or remain in a maturity p ase for a long time and in fact may never faced a decline. I ile fads and fas ions can be grouped in t e first category, products in a closed and s eltered market or in a monopolistic market represent t e second type. 2ne may aloso ave commodities like steel, cement and food products w ere t e demand remain inelastic relative to ot er manufactured products. )n )ndia, Premier and :mbassador cars, refrigerators and many ot er products; sales did not experience a decline until t e competition set in following liberalization and opening of t e economy in &768s but more specifically after &77&. :not er factors t at as to be borne in mind is t at profits from a product peak before its sales. Profits never or rarely appear in t e introduction p ase, 9rowt p ase brings profits and by t e time product enters later part of growt or early maturity, profits start declining. 3igure s ows t is relations ip between sales, profit and time.
3ig. 5.,
3ig. 5..
3ig 5./ ,-0 Profits Pea3 Before #a.es : %uestion t at intrigues marketers is t at sales maximization does not mean profit maximization. 2ne of t e reasons for profits maturing even before sales is t e competition rat er t e intensity of inter-firm rivalry in a product market situation. +ost competition in all imitation route and tend to draw away customers from t e pioneer firm wit an
attraction of low price, or better service or better distribution network, or aggressive promotions. *o fig t back competition and retain market s are, t e pioneer firm, ?i.e. t e firm launc ed t e product first time in a market@ as to spend more money on media, distribution c annels and sales force. * e irony is t at t e firm as to eit er retain its current price level or reduce it to remain competitive in t e market place. )n eit er case, t e sales revenue generated is not enoug to meet or marketing cost and ence profits start eroding. :not er reason is s ifting customer preference and loyalties. :s competition intensifies, better and more efficient products are made available to t e market by rival firms. * ese firms are use state of t e art tec nology and customers preference c ange. 'onsider for example, t e watc industry: wit t e introduction of %uartz tec nology in t e watc industry, mec anical watc es faced a decline. :nd once a firm like *itan entered t e )ndian market, t e leader <+* ?<industan +ac ine *ools@ lost out as it as focused primarily on mec anical watc es for a long time, even after *itan ad been launc ed, senior <+* to exclusive believed t at an average )ndian consumer cannot afford. : %uartz watc priced affords of 4s. .18.$ut wit *# watc and later introduction *imex %uartz watc es by *itan at price level lower t an 4s. .18, t e market scenario c anged dramatically and mec anical watc es now became outdated <+* kept loosing t e markets s are and profits. * us customer preference c ange and t ere is know loyalty in t e market w ic cannot be boug t wit a better tec nology marketed at an affordable price.
<i). (.'
)t is for t e above reasons competition and customer preferences t at firms ave to evolve strategies to reduce t eir break even time and also t e introduction p ase. * e firm as to start early in production modifications and adapting to new tec nology if it as to maintain study flow of profits and growt rate. +ost progressive and market driven firms follow t is rout only and t ere one sees product life cycle curve as s own in figure. * is modification could be in packaging are in t e product from like from solid to li%uid ?example antacid w ic were originally available in li%uid form now available in tablet parag, t e leader in t e pan masala segment, according to industry sources, grew by more t an ,1J w en t e farm strted using sac ets of different sizes to pack t e product. :nd t e scales and profits furt er >umped as it introduced a new flavour for tobacco addicts called pan parag zarda. -ike wise, 4asna, a leader in soft drink for tobacco addicts called pan parag grow meteorically as it increased t e numbers of flavours available to t e customers and also extend its usage to anto er situations too. * us, a market driven firm anticipates competition and evolves strategy to preempt any competitive moves. *o ave a better under standing of t e concept of product life cycle, let;s understand t e condition prevailing in eac of t e four p ase and t e strategies available to a firm. Rapid #3i**in) * is strategy of ig promotion effectively works only w en t e customer awareness for t e product is not very ig , and among t ose w o are aware, willingness to pay any price to possess or buy it is ig . * is strategy also works w en t e market size for t e product is large and t read from competition is imminent. +ost consumer electronics and non-durables could be classified in t is group. * at;s t e reason w y most consumer electronics like *.A., A'4, +usic #ystem, Aideo 9ames, etc., are initially priced ig and t en gradually reduced to maintain market s are. #ince t e t read from competition is real, t e pioneer firm always try to rapQidly skin t e cream off t e market as it will elp to reduce t e firm;s break even time and ence more profits. * e strategy also works in situations w ere t e firm;s t e ob>ective is s ort term, i.e., sales or profit maximization in t e s ort-term or w ere t e firm;s basic strategy is to fig t a guerilla warfare. I ile we s all learn more about it in t e c apter on marketing strategy, it is sufficient to say t at a guerilla always vacates before t e going gets toug for im or er. : large number of die manufacturers, specifically < acid used in textiles and leat er garments, adopted t is strategy w en dies w ere included on t e export priority list following c emical firms vacating t is sector in t e developed countries. +ost of t ese firms went
out t e business in five years as t eir plants got totally corroded and more efficient and low cost firms came in t e business. * ey also exited is more environmental friendly substitutes were developed. #.o9 s3i**in) * is strategy is based on t e assumption t at t e firm as sufficient time to recover its pre-launc expenses. * is appens w en eit er t e tec nology being used by t e firm is ig ly sop isticated and competition will ave to invest substantial resources to get t is tec nology. 3urt er most competitions may not ave t e re%uired %uantum or resources, competition may be limited to >ust one or tow large companies. anot er environmental c aracteristic supporting t is strategy is t at t e market size for t e product is limited and t ose w o are aware are willing to pay any price to buy it. +any of t e industrial products, more specifically renewable energy resources or laser tec nology or petroc emicals may fall in t is category. )n consumer products, t is strategy may work in a closed and protected market as )ndia as been until recently. Rapid penetration strate)0 * is strategy of rapid penetration is based on t e same assumptions and environmental conditions as t e one mentioned under t e rapid skimming strategy. * e only difference between t e rapid skimming and penetration is t e firm;s long term ob>ectives. )f t e ob>ectives is market s are and profit maximization in t e run and t e market is c aracterized by intensive competition or ot er entry barriers, a firm may c oose to enter t e market wit t is strategy. Fapanese firms adopted t is strategy to launc t eir products in Nort :merica and 0urope. -ater in t e &768s #out =oreans, *aiwanese and <ong =ong firms used t e same strategy to uproot Fapanese and ot er local competitor firms from t ese markets. * e same strategy of uproot Fapanese and ot er local competitor firms from t ese markets. * e same strategy is now being used by t ese firms from #out east :sia to penetrate t e )ndian +arket. * e leading example of )ndian firms aving adopted t is strategy is one of Nirma and *-series audio cassette. $ot t ese firms ave successfully used ig promotion low price strategy to grow in t e price sensitive )ndian market. #.o9 penetration strate)0 * is strategy delivers results w en t e t read from competition is minimal, market size is large, market is predominantly price sensitive and ma>ority of t e market is familiar wit t e product. * e firm;s ob>ectives is maximize sales or profits in t e long run. * us, some of t e considerations at t e introduction stage revolve around pricing and promotion levels. :s we mentioned earlier, affirm offers only a limited version of t e product at t is stage. 'onsider t e example of +aruti. )nitially t e firm, +aruti (dyog., offered only one version of #uzuki 688 'ar and was priced not at t e common man;s level. * e firm offered tangible benefits of fuel efficiency and safety over t e existing products. * e firm;s initial production levels could not meet t eir demand generated in t e market and we all know ow people made money on t e #uzuki allotment letters. Gro9t- P-ase 2nce t e product crosses t e introduction p ase, it enters t e growt p ase. :s we s all learn in our next c apter on New products, t e introduction p ase is indeed t e most crucial one. 3or more t an 71J of products fail at t is p ase only. <owever, t ose 1J lucky products w o enter t e growt p ase meet wit a more strengt ened and increased competition. * is competition now offers greater c oice to t e customer in t e form of different product types, packaging and prices. +ore trade c annels are now willing to keep t e product and one generally observes softening of prices. 2rganizationally, t e pioneer firm now operates at economical levels. * ere are lesser production bottlenecks and ence costs are lower now. *o remain competitive over a period of time, t e pioneer firm initiates t e product improvement or modification programme. * e sales and profit grow exponentially. $ut profits taper off at t e end of t is p ase. * e marketing task is t at of cultivating selective demand. * is involves, in some cases, nic e marketing and in ot ers, focused marketing strategies. I atever be t e ultimate c oice of t e strategist, one t ing emerges, t at growt p ase also marks an end to standardization or mass marketing approac . * e growt p ase involves strategy of product modification, enlarging distribution and service network and maintaining a competitive price level. * e
strategy also involves one of extending product to different use situation s and considering newer packaging alternatives to attract more and more new customers. Maturit0 P-ase +ost products t at survive t e eat of competition and customer;s passion to ac%uire t em now enter t e maturity p ase. * is p ase is c aracterized by slowing of growt rates of sales and profits. )n fact, t e decline in profits seem to appear now. * is p ase is also marked by a cut t roat competition w ic often tends to narrow down to price and promotion war. :s mentioned earlier, it is an irony t at w en t e firm as establis ed its product and generated customer preference for its brad, competition gets intensified and t e firm as not ot er alternative but to invest resources in service augmentation and also simultaneously undertake t e task of cost reduction and ence price reduction. +aturity p ase also sees a boom in t e market demand as more and more customers are now willing to accept t e product. )nternally, t e firm derives benefits of economics of scale in production and distribution. Product modification programme is at a muc ig er level and t e firm also introduces a modified product during t is p ase. :s was mentioned earlier, profits and margins are low now, in fact on t e decline, as t e firm continues to invest resources to maintain its competitive position in t e market place. * e marketing task is one of adopting a segmental approac . )n fact, carving a nic e even wit in a specific market segment, service augmentation, image marketing, and creating a new value image are critical tools to retain competitive edge. #trengt ening t e brand t roug repositioning or making c anges in t e c annels of distribution ?e.g. moving from indirect to direct or s ortening t e lengt of t e c annel@ now become imperative for w ile t e firm as to fig t competition and take its product nearer to t e customer, it as to also make ade%uate profits to remain in t e business. Dec.ine P-ase * is is t e p ase w en sales decline because customer preferences ave c anged in favor of more efficient and better products. * e umber of competing firms also get reduced and generally t e industry now as limited product versions available to t e customer. 'ustomer;s value perception of t e product also undergoes a c ange. <owever, t e firm may get a kink in its profit curve largely coming from people w o will be willing to pay a ig er price to possess eit er for its anti%ue value or because t ey resist any c ange. * e marketing task is one of diverting and gradual wit drawal of t e product. *o cater to a small nic e, a firm may consider generating primary demand for t e product rat er t an t e brand demand. Nonet eless, products aving entered a decline p ase need to be pruned. * e 4easons for ' anges 2ccurring in * e Product -ife 'ycle: :s may be evident, t e most important factors leading to c anges in a product;s life cycle are ' anging customer;s need and $etter and more efficient user friendly products.
C-an)in) custo*er needs * e most fundamental of all t e environmental factors is t e customer;s needs, t at s ape t e product;s life cycle over a period of time. * ese needs c ange as customers become more aware and ave ig er disposable incomes loading to a c ange in t eir life-style and aspirations. *oday, we are noticing t is c ange occurring all over in t e country, largely because of t e wider reac of television a single source of mass media t at t e revolutionized markets and products. #atellite communications, dis antenna, cable *.A., DAideo-on-w eelsE, and ot er telecommunication products are c anging customer;s needs and expectations all over )ndia and conse%uently many of e products t at saw t eir sales stagnating now find spurt, in t eir sales largely coming form it erto unexplored markets. I ile customers in metro cities are looking for more sop isticated products, t e urban and ot er rural customers are seeking basic product versions. 3irms t at are sensitive to t ese c anging customer needs are able to incorporate t em in t eir ?firms@ product strategies. * e most interesting example is provided by #ony;s ' airman :kio +orita in is book D+ade in Fapan /.E 9iving t e example of walkman;s development, +orita says t at er wife. <e ad seen a large number of people in New Mork ang large portable music systems on t eir back wit music
blaring from t em. * e same sig t was visible all over t e world capitals and ma>or towns. #o, #ony decided to develop a personal portable music systems-now known to world generically as walkman. 3urt er, needs get developed over a period of time as customer uses t e product and finds t at t ere are ot er situations too in w ic e or s e can use it. Better and *ore efficient product *oday tec nology offers p enomenal opportunities to firms to develop more user friendly, low prices and attractive looking products. !evelopments in packaging is one suc example t at Parle $ottling used to successfully launc t eir mango drink 3rooti, *etrapack did wonders for 3rooti. * is made t e product convenient, easy to use and carry and also more attractive t an >ust a mango drink in a glass bottle. * e product caug t customer;s fancy and was successful. -ikewise, using computers and user friendly packages in retail banking made <ongkong $ank;s :ny *ime +oney ?new p rase for :utomated *eller +ac ine concept@ successful in all ma>or cities in )ndia. -ikewise, we find t at success of ot er products, be t ey agricultural like nitrogen based fertilizers of more urban products like credit cards, can be explained by tec nology t at as been used to serve customers more efficiently. P.c4a critica. assess*ent P-' is an important strategic tool in marketing. <owever, in t eir article D3orget t e Product -ife 'ycleE, ! aila and Muspe argued t at t e concept was essentially descriptive and if t e management used it as perceptive tool, it will be making a grievous mistake. : firm could commit blunders w ic may affect its bottom line too. #ome of t ese blunders are: *oo muc of emp asis on new product development as against continuing t e revitalization process of existing brands. :s we mentioned earlier, more t an 71J of new products fall. <ence, pursuing t e pat of new product development at t e cost of building current brands can be a costly and risky affair. $esides, all new products are going to ave s orter lives as competitions catc and limit ate t e pioneer firm. 0xecutive brands and products may still ave several unexplored uses and user groups. 3irms t at blindly follow t e P-' concept may find t emselves in a strategic trap. :rising out of t e above t e an obsession for P-', may lead a firm to kill its product or brand in t e belief t at it as reac ed t e decline p ase. #tagnation in sales or negative growt rates in sales may lead management to belief so. I at is important is to look at t e background or backdrop of t e product, i.e. t e market and explore new uses and users for t e product. $ut most firms ignore t is aspect and ence get trapped in t eir own self-fulfilling prop ecies. $ut -evitt believes t at P-' is a planning tool and not >ust a descriptive tool. *o view t e concept of P-' as a fixed pattern for all product types or brands is an error in marketing t inking. )t s ould be seen as a trend of sales over time, t at suggests different opportunities at different p ases of a product;s existence. * e goal of t e marketer s ould be to alter t e s ape and duration of t e life cycle curve by.
&. Promoting more fre%uent usage of t e product among existing customers. ,. !eveloping more uses or varied usage of product among current users .. 'reating new users for t e product by expanding t e market, and /. 3inding new uses for t e product. !efending t e strategy of new product development or extension strategy, -evitt believes t at t e planning for extension s ould begin at t e pre launc stage itself. 3or, suc planning can be useful in t ree waysG )t generates a proactive rat er t an a reactive product policy. )t lays out a long-term plan designed to infuse new life into t e product at t e rig t time, wit t e rig t degree of care and wit t e rig t amount of effort. 0xtending or market stretc ing can elp a firm take a wider view of t e nature of product it is dealing wit an in turn elp fig t myopia.
* us, P-' is indeed an important planning tool and firms need to use it. :s we mentioned, P-' s ould be seen as providing opportunities to a firm. *o do so, it is important for t e marketer to examine is or er brand;s fit wit t e industry;s product life cycle. 3or, it is not necessary t at t e brand be in t e same p ase of its life cycle as t e industry;s product. 0x ibit & s ows ot to use P-' as an indication of opportunities. E+-i1it 1. PLC / ndication of Opportunities Brand=s Position in Life C0c.e Gro9tGro9t?a@ +arket !evelopment ?b@ !ifferentiation Maturit0 ?a@ 'ategory 4epositioning ?)dentify new uses, reasons to buy and new customers@ ?a@ Product -ine 0xtension and Product +odification ?b@ Price Iarfare Dec.ine ?a@ 4epositioning revision of brand and promotion strategy Promotion ?a@ Kuit Dec.ine $uild $rand )mage
Maturit0
Thu! the fin " deci!ion to dump the br nd !hou"d be t =en on", when the br nd nd the product! re in the dec"ine ph !e4 Let-! con!ider few ex mp"e! to i""u!tr te the bo/e m trix4 Onida T.!. 2N)!: was launc ed in later part of &76/ w en t e colour *.A. market was saturated wit more t an a undred brands of w om at least a dozen were national brands. * e market opportunity t at was created in &76, at t e time of :sian 9ames and subse%uently in &76. wit commercialization and t e dawn of soap operas on *.A. and almost dried up in late &76/. #o, w en 2nida entered t e market it was not t e first, net er was it t at t e market was eagerly looking forward to it. )n fact, t e trade refused to even provide s elf space to 2nida and offered to deal in t e brand only on consignment basis. #o, faced wit an indifferent dealer network and customer and large nmber of establis ed brands like 'rown, Ieston, #olidiare, Nelco, $us , etc. t e management decided to position 2nida in a different way. :ll along till t en all brands ig lig ted t eir features and claimed t at t eirs was t e largest selling brand. None of t e brands was advertised on television. 2nida was t e first to be advertised on television and t roug t eir advertising messages like Dit wasn;t t at t e boss was late. )t was ot er w o arrived in a urryE and Downer;s pride, neig bour;s envyE or D!on;t 0nvy Dbuy itE, t e company did a category repositioning by giving a new reason for people to buy t e reason being status. )t was a bold strategy an positioning strategies, all ot er brands followed suit. $ut ere was a brand t at entered a matured market, provided new reasons to customers to buy and used life style marketing to emerge a leader in t e market. ,i*co safet0 *atc-es :not er example of using P-' as an indicator of opportunities is t at of I)+'2;s safety matc es. $ot , t e brands of I)+'2 and t e safety matc es, are in t e maturity p ase +uc of t e growt in safety matc es as got eroded because of usage of gas lig ter by urban ousewives and a general decline in cigarette smoking in urban areas. )n an urban area, safety matc es are used in emergency situations ?like an electricity failure@ to provide t e lig t and also to lig t a candle at t e deity. )n rural areas and states perennially s ort of power, safety matc es are still and essential grocery item of a ouse old. I)+'2 faces competition in t ese markets form a large number of small safety matc es manufacturers w o market t eir product at a muc lower price in #afety matc es by coming wit a bigger pack containing tow undred sticks and launc ed a product improvement programme w ic included
carbonization of matc sticks making t em absolutely safe, using cardboard w ic and also a new wrapper for w olesale packing. Pan para)
Pan Parag a pan masala as been able to grow by consistently adding new ingredient to it like zarda or tobacco, t ereby attracting new customer groups and also by c ing it;s packaging to make it more economical and easy to use. )ntroduction of sac et packing elped Pan Parag reduce its price and also attract more buyers w o were esitant to buy a tin can containing &88gms of masala. Product E6o.utionar0 C0c.e !ivergence !evelopment !ifferentiation !emise #tabilization Locatin) products in t-eir .ife c0c.e 1. Ana.0se past perfor*ance #ales growt progression since introduction. :ny design problems and tec nical building t at need to be sorted out. #ales and profit istory of skilled products. No of years t e product as been on t e market 'asualty istory of similar products in t e pats.
%. Re6ie9 t-e co*petition Profit istory 0ase wit w ic investment needed to enter t e business Number of competitors and t eir strengt Number of competitors and t eir strengt Number of competitors t at ave left t e industry -ife cycle of t e industry 'ritical success factors in t e business
&. Understand Current Position 4. Matc- t-is infor*ation 9it- t-e C-aracteristics of a particu.ar sta)e of PLC
Product -ife 'ycle and Portfolio Position Product classification Kuestion mark #tar 'as cow !og -ife cycle stage 9rowt 9rowt +aturity +aturity Product stage )ntroduction 9rowt +aturity !ecline #trategy guideline )nvestment +aintanance <arvesting Iit drawal
Product -ife 'ycle t e 'ase of Nylon Nylon was a product t at was primarily used for t e military purposes to make parac utes, and ropes. * en it was extended to circular knit market t at is women;s istory. :t t at stage, t e necessity for t e growt of nylon was found. * en t ere are steps taken to vitalize nylon. #teps *aken *o Aitalise Nylon <re2uent usa)e * en steps were taken to vitalize nylon. * e usage of nylon was increased and t e convenience t at nylon ad created a market for itself. 3re%uent usage of nylon was promoted t e bare laggardness of t e users were used. * e stockings were promoted using t at. !aried usa)e Nylon was promoted as a fas ion product. * is product is perceived as a osiery functional product. * e clot ing function of it was to promote as a large extent. * ere t e varied usage of t e nylon was stressed to t e users and was promoted in t e market. Ne9 users * e users of t e nylon products were first t e military, t e it was targeted at istory function and fas ion users, and younger teenagers and substitutes were using t ose products. Ne9 uses New uses were created for t e nylon, it was stretc ed and socks, tires and bearings t ere uses of t e nylon w ic was created to promote it wrap knits were invented in &7/1 and nylon tire cord was invented in &7/6. Nylon textured yarns were invented in &711 and carpet yarns were invented in &716. :s a result of t is in &75, t e sales went up of to 188 million pounds w ic was previously 18 million pounds.
<i). (.(
:dditional )nformation Product life cycle operates a t ree levels &. Product level ,. Product sub-category level .. $rand level )t can be explained wit t e elp of an example : D'omputersE &. &roduct c tegor,: )t involves all configuration of computers super computers, mainframes, microHmini and personal computers. ,. &roduct !ub $ c tegor,: * e #ub-category is personal computers wit in computers. Iit in t e sub category of P', it involves brands like <'-, Iipro and #iva. .. %r nd "e/e" : :t t e brand levelG <'-, Iipro and #iva brands are aving t eir own pat s. #o, w en a company wants to pro>ect its life cycle ?i.e.@ Iipro wants to pro>ect t e life cycle of its P', it cannot make a realistic analysis unless it studies are life cycle of a product sub-category personal computers as a w ole. Iipro;s life cycle at t e brand level cannot evolve totally independent of ot er P';s in t e market. #o, w en t e life cycle of brand is assessed, it is essential to study t e life cycle of t e product category and t e product sub category as well.
<owever, an idea of t e likely life cycle of t e main product category of computers is elpful in understanding t e course of t e sub category personal computers. )n concluding t at, a meaningful picture of t e pat t e brand is taking, it as to be studied in t e context of t e life cycle of t e product sub category and product category.
Lesson > Product Positionin) )ntroduction * is topic speaks about t e met od of positioning t e products in t e market. Positioning is t e act of fixing t e exact locus of t e product offer in t e c osen marketG it decides ow and around w at distinctive features, t e product offer as to be couc ed and communicated to t e consumers. I ile positioning its product, a firm analyses t e competitor;s positions, searc es its own competitive advantages and t en identify t e best possible position for t e product. * e significance of product positioning can be easily understood from t e !avid 2gilvy;s wordsG Dt e results of your campaign depends less on ow we write your advertising t an on ow your product is positionedE. Positioning is t e art of designing t e company;s offering and image to occupy a distinctive place in t e target markets; mind. * e end result of positioning is t e successful creation of a market a focused value proposition, cogent reasons w y t e target market s ould buy t e product. *wo advertising executives, :l 4ies and Fack *rout, popularized t e word positioning. * ey see positioning as a creative exercise done wit an existing product. Positioning starts wit a product. : piece of merc andise, service, a company, an institution, or even a person... $ut positioning is not w at you do to a product. Positioning is w at you do to t e mind of t e prospect. * at is, you position t e product in t e mind of t e prospect. 4ies and *rout argue t at well known products generally old a distinctive position in consumer;s minds. 3or example: 'oca-cola as t e world;s largest soft drink company. $rands like t ese own t ese positions and it would be ard for a competitor to claim t em. : competitor as t ree strategic alternatives. * ey are #trengt en its own current positions in t e consumer;s mind. *o grab an unoccupied position *o deposition or reposition t e competiton
:ll product can be differentiated to some extend. $ut not all brand differences wort w ile or meaningful. : difference is wort establis ing to t e extend t at it satisfies any of t e following criteria. *mport nt $ t e difference delivers a ig ly valued benefit to a sufficient number of buyers. .i!tincti/e $ t e difference is delivered in a distinctive way. #uperior " t e difference is superior to ot er ways of obtaining t e benefit. Pree*pti6e4 t e difference cannot be easily copied by competitors Afforda1.e " t e buyer can afford to pay for t e difference Profita1.e " t e company will find it profitable to introduce e difference. ;o9 Man0 Differences to Pro*ote? 0ac company must decide ow many differences ?example., benefits, features@ to promote to its target customers. +any marketers advocate promoting only one central benefit ?(ni%ue selling proposition@. 4ies and *rout 3avour one consist positioning message. 0ac brand s ould select an attribute and tout itself as Dnumber oneE on t at message. Number one positioning include Dbest %ualityE, best serviceE, Dlowest price,E best value,E Dsafest,E Dmore customizedE, Dmost convenientE and Dmost advance tec nologyE. )f a company ammers away at one of t ese positioning and delivers on it, it will probably be best known and recalled for t is strengt . Not every one agrees t at benefit positioning is not always best. !ouble positioning may be necessary if two or more firms claim to be best on t e same attribute. 3or example, Aolvo positions its automobiles as DsafestE and Dmost durablesE.
* ere are even cases of successful triple positioning. 3or example, #mit kline $eec am positioned its :%ua fres toot paste as offering t ree benefitsG anti-cavity protection, better breat and w iter teet . :s companies increase, t e number of claims for t eir brand, t ey risk disbelief and a loss of clear positioning. )n general, a company must avoid four ma>or positioning errors. &. Underpo!itioning: #ome companies discover t at buyers ave only a vague idea of t e brand. * e brand is seen as >ust anot er entry in crowed market place. ,. :/erpo!itioning: $uyers may ave too narrow an image of t e brand. * us a consumer mig t t ink t at diamond rings at *iffany start at N1888 w en infact *iffany now offers affordable diamond rings starting at N&888. .. Confu!edpo!itioning: $uyers mig t ave a confused image of t e brand resulting from t e company;s making too many claims or c anging t e brand;s positioning too fre%uently. /. .oubtfu"po!itioning: $uyers may find it ard to believe t e brand claims in view of t e product;s features, price, or manufacturer. !ifferent *ypes of Positioning #trategies Attri1ute positionin) : company position itself on an attribute, suc as size or number of years in existence. 4aymond;s and ot er companies, wit long period of service, appealing to t e customer t at t ey ad been serving t e customer for %uite a long time. Benefit positionin) * e product is positioned as t e leader in a certain benefit. Aarious automobile products like <ero <onda position t emselves as better in mileage. Use or app.ication positionin) Positioning t e product as best for some use or application. ! Lcold was positioned as a vapourub or adults. User positionin) Positioning t e product as best for some user group. $usiness *oday position itself as a business magazine used by t e top managers. Co*petitor positionin) * e product claims to be better in some way t an a named competitor. 3or example, Pepsodent position itself as being able to reduce t e number of germs in t e teet of t e users w en compared to t e ot er brands of toot paste. Product cate)or0 positionin) * e product is positioned, as t e leader in a certain product category. :%uafres position its dental paste not as toot paste but rat er a mout paste. @ua.it0 or price positionin) * e product is positioned as offering t e best value. $a>a> scooters position itself as a product t at offers value to t e customers; money. ,-ic- Differences to Pro*ote? #uppose a company as identified four alternative positioning platforms tec nology, cost %uality and service as s own in following table. )t as one ma>or competitor. $ot companies stand at 6 as tec nology ?& O low score, &8ig score@, w ic means t ey bot ave good tec nology. * e competitor as a better standing on cost ?6 instead of 5@. * e company offers ig er %uality t an its competitor ?6 compared to 5@. 3inally bot companies provide below average service.
)t would seem t at t e company s ould go after cost or same to improve its market appeal. <owever, ot er considerations arise. * e first is ow target consumers feel about improvements in eac of t ese attributes. 'olumn / indicates t at improvements in cost and service would be of ig performance to customers. $ut can t e company afford to make t e improvements in cost and service, and ow fast can it provide t emC 'olumn 1 s ows t at improving service would ave ig affordability and speed. $ut would t e competitor be able to matc t e improved serviceC 'olumn 5 s ows t at t e competitor;s ability to improve service is low. $ased on t is information, column " s ows t at t e appropriate actions to take wit respect to eac attribute. * e one t at makes t e most sense is for t e company to improve its service and promote t is improvement. ?&@ Co*petiti6e ad6anta)e ?,@ Co*p4an0 standin) ?.@ Co*petitor standin) ?/@ *portance of *pro6in) standin) ;4 M4L < < ?1@ Afforda1i.it0 and speed ;4M4L ?5@ Co*petitor=s a1i.it0 to i*pro6e standin) ;4 M4L + + < < ?"@ Reco**ended action
6 5 6 /
6 6 5 .
+ <
'ommunicating t e 'ompany;s Positioning 2nce t e company as developed a clear positioning strategy, it must communicate t at positioning effectively. #uppose a company c ooses t e Dbest in %ualityE strategy. Kuality is communicated by c oosing t ose p ysical signs and uses t at people normally use to >udge %uality. Kuality is also communicated t roug ot er marketing elements. : ig price usually signals a premium-%uality product to buyers. * e product;s %uality image is also afforded by packaging, distribution, advertising and promotion. : manufacturer;s reputation also contributes to t e perception of %uality. 'ertain companies are stickles for %uality, consumers expect Nestle and )$+ product to be well made. Ad6anta)es )t elps to focus t e product on a specific target customer. )t offers t e product a new appeal in t e market : distinctive place can be occupied in t e target market;s mind. #uccessful creating of t e market.
Disad6anta)es )t is not possible to offer a product w olly for a specific type of customers. * e wrong positioning as affected a number of products.
E+a*p.es/ T-e positionin) of )reat s-a3e I en 9reat s ake t e soya milk was launc ed, it was positioned as a ealt drink, and positioned against milk. * e manufacturers knew t at in )ndia milk is given a ig score as a complete nutrition food. #o anyt ing t at establis es a claim of e%uality to or superiority over milk, gains t e attractions and patronage of a big ealt conscious market. * e launc ing campaign of soya milk claimed: D:lt oug most of us grow up on daily milk, recent medical researc as s own t at soya milk could be a ealt ier alternative. *o start wit , dairy milk contains c olesterol, w ic we all know, as been linked to ypertension and ardening of t e
arteries. 2n t e ot er and, soya milk as absolutely no c olesterol and even t e low fat content in soya mils is almost entirely made up of polyunsaturated. * e beneficial effects of polyunsaturated fatty acids in protecting against eart disease are medically recognized.E * us soya milk was positioned against a universal product, milk, appealing to a ealt conscious market.
Positionin) of co*p.ain * e same was t e case wit t e positioning of 'omplan. )t was also positioned against milk and as a ealt builder. 'omplain claimed superiority over milk. * e promotion listed out t e additional nutritive agents it possessed over milk, and positioned it as a product superior to milk in ealt building.
A*u. *i.3 po9der :mul milk powder on t e ot er and, w ic was also positioned vis-R-vis milk, we positioned as a convenient and ready substitute to milk and not as one superior to milk. :mul milk powder, t e L+ilk man; for t ousands of ouse olds, was not positioned as a ealt builder eit er, w ere as 'omplan was positioned as a ealt builder.
Lesson A Product P.annin) )ntroduction Product planning may be defined as t e act of making out and supervising t e searc , screening, development and commercialization of new products, t e modification of existing linesG and e discountinuance of marginal or unprofitable items. * e product planning involves t ree important considerations namely, &. * e development and introduction of new products. ,. * e modification of existing lines as may be re%uired in terms of c anging customer needs and preference. .. * e discontinuance of elimination of marginal product or unprofitable products. * e ob>ective is to study t e process of product planning, t e steps involved in t e product planning and t e strategies followed. Product planning basically development as a marketing plan for a particular product. * e marketing plan is one of t e most important outputs of t e marketing process. +arketing planning procedure and content vary considerably among companies. t e plan is variously called as Dbusiness planE, Dmarketing planE and sometimes called as Dbottle planE. +ost marketing plan covers one year, t e plans vary in lengt from under 1 pages to over 18 pages. #ome companies take t eir plans very seriously w ereas ot er see t em as only a roug guide to action. * e most fre%uently cited s ortcomings of current marketing plans, according to marketing executives are lack of realism, insufficient competitive analysis and a s ort-run focus. Process )nvolved )n Product Planning 0ac product level wit in a business unit must develop a marketing plan for ac ieving its goals. * e marketing plan is one of t e most important outputs of t e marketing process, and it s ould contain t e following elements. 14 (xecuti/e !umm r, nd t b"e of content! * e marketing plan s ould open wit a brief summary of t e plan;s main goal and recommendations. * e executive summary permits senior management to grasp t e plan;s ma>or t rust. : table of contents s ould follow t e executive summary. 24 Current m r=eting !itu tion * is section presents relevant background data on sales, costs, profits, t e market competitors, distribution and t e macro environment. * e data are drawn from a product fact book maintained by t e product managers. @4 :pportunit, nd i!!ue! n ",!i! :fter summarizing t e current marketing situation t e product manager proceeds to indentify t e ma>or opportunities H t reats strengt s H weakness and issues facing t e product line. 94 :b'ecti/e! 2nce t e product managers as summarized t e issues, e or s e must decide on t e plan;s financial and marketing ob>ectives. 74 < r=eting !tr teg, * e product managers is responsible for t e broad marketing strategy or Dgame planE to accomplis t e plan;s ob>ectives. )n developing t e strategy, t e coordination of product manager, production manager and buyers are needed. * e product manager also needs to talk to t e sales manager to obtain sufficient sales force support and to t e financial officer to obtain sufficient funds for advertising and promotion.
A4 5ction progr m! * e marketing plans s ould specify t e broad marketing programs for s ac ieving t e business ob>ectives. 0ac marketing strategy s ould be focused in suc a way t at t e action to be done, w en and ow it is to be done s ould be planned. 64 &ro'ected profit nd "o!! !t tement :ction plans allow t e product manager to build a supporting budget. 2n t e revenue side, t is budget s ows t e forecasted sales volumes in units and t e average price. 2n t e expense side, it s ows t e cost of production, p ysical distribution, and marketing broken into finer categories. * e difference between revenue and sales is pro>ected profit. 2nce approved, t e budget is t e basis for developing plans and sc edules for material procurement, production sc edule, employee recruitment, and marketing operations. 84 Contro" * e last section of t e market plan outlines t e control for monito8ring t e plan. *ypically t e goals and budget are spelled out for eac mont or %uarter. #enior management can review t e results eac period. #ome control sections include 'ontingency plans. : 'ontingency plan outlines t e steps management would take in response to specific adverse developments, suc as price war or strikes. * e matrices used for planning #trategy is central t eme, w ic establis ed in effective and efficient matc between t e firm;s competencies and opportunities and risk create by environmental c anges. )t is a link between t e multiple goals and ob>ectives pursued by t e firm to satisfy it;s various constituents and t e plans and policies used by it to %uite its daily operations. Ai* 4esource development as an important component of strategy and emp asizes t at competitive advantages can stem not only from product or market positioning but also from uni%ue resources developments. * us, t e ultimate success of t e firm may not simply depends on scope but it can also be greatly influences by competitive advantages and resource development. * e four components of strategy can be seen as influences on t e firm;s effectiveness and efficiency. * e firm;s effectiveness is determined by t e combined influence of scope, distinctive competence and competitive advantages. O15ecti6e of resource de6e.op*ent *mp"ementing corpor te "e/e" !tr teg, 4esource development very elpful implements corporate level strategy. 'orporate level strategy is to determine w at business to go into and relative allocation of resource and management of synergies among t em. .irect inter ction with !cope nd re!ource! dep"o,ment * ey s ould t ere fore be considered at t e corporate level and s ould not be treated as functional area policy decisions to be decided at lower levels. $usiness level strategy focuses on ow to compete in a particular product H market segment or industry. 'ompetitive advent ages and distinctive competencies t us become dominant strategic concerns at t is level. :t functional level, t e primary focus of strategy is efficiency. $'9 :- $oston 'onsulting 9roup * e business policy portfolio models are most popular useful to understand t e firms strategic concerns and c oices. * ey defined t e firm;s scope or domain by ig lig ting t e inter relatedness of diverse factors suc as &. +arket growt ,. +arket s are .. 'as and 'as flow pattern /. 'apital intensity 1. Product maturity etc.
Re.ati6e *ar3et s-are +arket growt <ig -ow <ig #tar 'as flow -ow Kuestion mark !og
#tar #tar are ig growt <ig market s are business w ic may or may not be self sufficient in term of cas flow. * is cell corresponds closely to t e growt p ase or product life cycle. Cas-co9s :s t e term indicates, cas cows are business w ic generate large amounts of cas but t eir rate of growt is slow )n terms of P-', t ese are generally mature business w ic are reaping t e benefits of experience curve. * e cas generation exceeds t e reinvestment t at could profitably be made into Lcas cowsE @uestion *ar3s $usiness wit ig industry growt but low market s are for companies are %uestion marks or problem c ildren. * ey re%uired large amount of cas to maintain or gain market s are. Kuestion mark are usually new products or services w ic ave a good commercial potential. Do)s * ose businesses, w ic are related to slow growt industries and w ere a company as a low relative market s are, are termed as Ldogs;. * ey neit er generate nor re%uire large amounts of cas . )n terms of P-', t e Ldogs; are usually products in t e late maturity or declining stage. * e firm s ould old its dominant market position by reducing prices and t us keeping away t e ig cost competitors. 'as flows are likely to be negative during t e growt p ase in a dominant market since t e firm will ave to keep in investing to maintina its competitive edge. !ominant position generates positive cas flows, during t e mentioned stage of life cycle. * e $'9 matrix makes it very clear t at a firm for its ultimate success needs a balanced portfolio of products or businesses. * e individual businesses are analyzed to form a corporate portfolio w ic s ould act as a guide to commit t e firm;s resources. Portfolio s ould be balanced in terms of profit, cas flows, and overall corporate risk. 90 Nine 'ell +atrix :not er corporate portfolio analysis tec ni%ues are based on t e pioneering effort of general electric ?90@ company of t e united state supported by t e consulting firm of +ckinsey B 'ompany. * e vertical axis represents industry attractiveness, w ic is a weig ted composite rating based on eig t different factors. * ese factors are:&. +arket size and growt rate ,. )ndustry profit margins .. 'ompetitive intensity /. #easonably 1. 'yclicality 5. 0conomics of #cale ". *ec nology and 6. #ocial, environmental, legal and uman impacts.
* e orizontal axis represents business strengt competitive position, w ic is again a weig ted composite rating based on seven factors * ese factors are: &. 4elative market s are ,. Profit margins .. :bility to compete on price and %uality /. =nowledge of customer B market 1. 'ompetitive strengt and weakness 5. *ec nological capacity and ". 'aliber of management * e two composite values for industry attractiveness and business strengt H competitive position are plotted for eac business in a company;s portfolio. * e P)0 c arts ?'ircles@ denote t e proportional size of t e industry and t e dark segments represent t e company;s market s are.* e nine cells of t e 90 matrix are grouped on t e basis of low to ig industry attractiveness and were to t rown business strengt t ree zones of t ree calls eac are made denoting different conditions represented by green yellow and red colors for t is reason, t e matrix is also known as t e stoplig t strategy matrix. $ased on t e t ree zone, t e signal is go a ead to grow and build indicating expansion strategies business in t e green zone attract ma>or investment for t e yellow zone, t e signal LIait and #ee; indicate old and maintain type of strategies aimed at stability and consolidation for t e red zone t e signal is top indicate ac ievement strategies of divestment and li%uidation or rebuilding approac for adopting turnover strategies. Ad6anta)es &. )t compared to t e $'9 matrix it offers intermediate classification of medium and average rating. ,. )t incorporates a large variety of strategic variables like market t ere B )ndustry size. Dra9 1ac3 )t only provide broad strategic prescriptions rat er t an t e specific or business strategy. DP Matri+ BDirectiona. Po.ic0 Matri+C * e directional policy matrix ?!P+@ developed by s ell c emicals, (=, uses t e two parameters of D$usiness sector prospectsE and Dcompany;s competitive abilitiesE and a member of factors suc as:&. +arket growt ,. +arket %uality .. +arket supply etc. Ad6anta)es * e advantages of t e !P+ is t at one or its extension, Dsize matrixE provides an alternative way to analyze environmental size. )n a risk matrix, environmental size is taken as t e t ird dimension and is dividend into four categories from low risk to very ig risk. 0ac risk position is determined on t e basis of environmental t reats and t e probability of t eir occurrence. Tec-no.o)0 # Cur6e *ec nology performance improvements tend to progress over time in t e form of an D#E curve. I en first invented, tec nology performance improves slowly and incrementally. * en, as experience wit a new tec nology accrues, t e rate of performance increase grows and tec nology performance increases by leaps and bounds. 3inally, some of t e performance limits of a new tec nology start to be reac ed and performance growt slows. :t some point, t e limits of t e tec nology may be reac ed and furt er improvements are not made. 3re%uently, t e tec nology t en becomes vulnerable to a substitute tec nology t at is capable of making additional performance improvements. * e substitute tec nology is usually on t e lower, slower portion of its own D#E curve and %uickly overtakes t e original tec nology w en performance accelerates during t e middle ?vertical portion of t e D#E.
Lesson D Product Po.ic0 ntroduction Product policy is developed by an organisation keeping in mind t e various capabilities of t e firm, t e practices followed by t em and also t e uni%ue strategies followed for some of t e flags ip products of t e company. * ey can even decide based on t e new product development activities of t e company. Practices <o..o9ed +et ods, tools or tec ni%ues t at are associated wit improved performance. )n new product development, no one tool or tec ni%ue assures successG owever a number of t em are associated wit ig er probabilities of ac ieving success. $est practices likely are at least somew at context specific. #ometimes called Deffective practice.E $enc marking is a process of collecting process performance data, generally in a confidential, blinded fas ion, from a number of organizations to allow t em to assess t eir performance individually and as a w ole. : process of studying successful organizations and selecting t e best of t eir actions or processes for emulation is known as $est Practice #tudy. )n new product development it means finding t e best process practices, adapting t em and adopting t em for internal use. Co*petence of Or)ani:ations : forward-looking activity t at monitors t e skill sets and effective resource capacity of t e organization. 3or product development, t e ob>ective is to manage t e flow of pro>ects t roug development suc as none of t e functions ?skill sets@ creates a bottleneck to timely completion is done based on capacity planning. Necessary in optimizing t e pro>ect portfolio. 'ore 'ompetence is t at capability at w ic a company does better t an ot er firms, w ic provides t em wit a distinctive competitive advantage and contributes to ac%uiring and retaining customers. #omet ing t at a firm does better t an ot er firms. * e purest definition adds Dand is also t e lowest cost provider.E 'orporate 'ulture is * e DfeelE o fan organization. 'ulture arises from t e belief system t roug w ic an organization operates. 'orporate culture are variously described as being aut oritative, bureaucratic, and entrepreneurial. * e firm;s culture fre%uently impacts t e organizational appropriateness for getting t ings done. #ometimes t e organisation resorts to 2utsourcing w ic is t e process of procuring a good or service from someone else, rat er t an t e firm producing it t emselves. Product Po.ic0 De6e.op*ent * e most important activity of t e Product manager is out of t e vast number of products for w ic t ere is potential demand, t e company is producing t e particular types or varieties of products t at will make t e most profitable use of its resources. * is is a very important fundamental aspect in t e overall management of any business. Product policy in ence first concerned first wit t e type of product for example a two w eeler or a was ing mac ine and t en, wit in t at type, t e range and particular versions t at s ould be produced. <aving determined t e most suitable types and varieties of products it is, of course, e%ually important t at t ey s ould be designed and presented in t e most suitable way to win favorable buying decisions. * e ob>ective of t e product policy is to ensure t at, in t e lig t of t e ever-c anging conditions in t e market, t e company;s resources continue to be used in t e most profitable way. * e ac ievement of t is ob>ective re%uires not only a knowledge of w at is appening outside t e company in t e market, but also a complete understanding of t e precise nature and extent of t e company;s internal resources. : company was producing a wide variety of men;s and women;s footwear. * e range extended from women;s fas ion s oes at one extreme to eavy industrial and agricultural boots at t e ot er end. $ot t e market s are and profitability varied considerably for different varieties of footwear. * e company was one of t e larger producers in its ome market and as modest export sales. * e overall return on capital was low and a reorganization was carried in order to improve t e company;s financial position.
* e first step in examining a market is to divide it into its various sectors. )n t is case, t e first and most important division was between male and female purc asers. 0ac buys entirely different varieties from t e ot er and t ere is no overlapping. 0ac of t ese divisions was t en furt er sub-divided into types of purc aser and types of purc asers. * e particular factors t at were influencing t e purc asers; buying decisions were t en determined and defined. )t was found t at many of t ese were subconscious factors of w ic t e purc asers t emselves were %uite unaware and t at t ere were considerable differences between one sector and anot er. * e company;s resources were t en examined in relation to t e many different needs of t e market. )t was found t at t e company;s principal weaknesses were in t e field of women;s Lfas ion s oes;. )n t ese s oes, fre%uent c anges in design and style were necessary and sales depend largely upon t e extent to w ic t e designers ave been able to predict t e trend in fas ions and colors for t e ensuring season. Production skills were also weak on some of t e finer work re%uired for t is kind of footwear. <owever, one of t e company;s most important strengt s in relations to competitors was t e production efficiency. * e examination of t e market s owed t at, at t at time, t ere was a rapidly expanding demand for women;s casual footwear bot at ome and overseas. $ased on t is t e company took a decision to abandon many of t e fas ion s oes and concentrate on t e production of t is type of footwear. *wo new ranges were developed wit a variety of styles and designs respectively. : new brand name was accorded. #ales t en went ig in t e overseas market. : new range of men;s footwear designed based on t e market feedback, w ic eventually became a it. * e company is today producing less t an one-%uarter of t e number of varieties it ad previously been producing. :ll t e less profitable varieties ave been eliminated and t e company is making a more t an ade%uate return on its capital investment. )n many respects t e company is operating efficiently, all t is is lacking is a co-ordinate product policy and once cleared s owed t e most profitable way of functioning.
Lesson 1E Ne9 Product De6e.op*ent " An O6er6ie9 *ec nology eventually renders all developments ?no matter ow innovative t ey may be@ obsolete. :ccordingly, t e development of new products is essential to any organisation;s long-term profitability. I ilst investment is always needed to develop new products t e wit olding of t is investment, resulting in t e absence of new productsHmodels can be disastrous. N0I P42!('*# !4)A04# !030N#)A0 3)N:N'):#*4:*09)' P04324+:N'0 9:P 0P*04N:- *40:* 2330N#)A0 :''0-04:*0! 942I*< #*40N9*<0N0! P2#)*)2N P42:'*)A0 #*4:*09)0#
+ore specifically, new product initiatives are most often driven by financial targets ?to meet growt targets or steam deteriorating results@, competitive t reats ?e.g. a lower cost or more benefit-laden product@, emerging tec nologies ?t at may pose t reats or opportunities@, customer re%uests, or enacted legal re%uirements ?e.g. mandated safety re%uirements@. New product !evelopment is a marketing procedure in w ic new ideas are developed into viable new products or extensions to existing products or product ranges. New ideas, w ic are generated eit er internally ?e.g. by scientific researc @ or by feedback from consumers, are first screened for primal facie viabilityG t e few t at remain are furt er reduced by concept tests and detailed analysis of t eir potential profitability. :ny ideas t at survive t ese obstacles are sub>ected to extensive product development. Prototypes are made and tested wit in t e company and among consumers, and improvements made. * is cycle is repeated until satisfactory marketing researc results are obtained, w en t e new product will be launc ed ?possibly at first in a restricted area@. *ype of new products *ruly (ni%ue Products re%uires c anges in lifestyle, satisfies a need t at asn;t been satisfied before. 4eplacements products t at are significantly different from an existing product. )mitative products t at are new to a particular company, but may not be new to t e consumer. New and improved versions would also %ualify.
* ere are t ree overarc ing product management priorities: &. !eveloping a steady stream of value creating products for ig potential markets ,. :ggressively managing products t roug t eir life cycles to maximize long run .. :ssembling a strategically strong and financially viable portfolio of complementary products. * e first management priority is developing a steady stream of value creating products for ig potential markets. +ost companies invest substantial time and effort in new product development. )n general, t eir motivations may be strategic ?en ance competitive position@ or financial ?maximize profitability@, and may be reactively defensive ?protect current positions@ or proactively offensive ?establis better positions@. )n fact, t oug , effective new product development is a blend of creatively ?creating a new world@ and analysis ?fitting an existing world@ t at maximizes potential w ile containing risk.
NPD Process
)dea 'oncept
#creen Pro>ects
!esign Prototypes
*est 4evisions
-unc Products
New Product !evelopment in )ndian #cenario 3or corporate labs in searc of new products w ic will revolutionise t e market place, t e trut does not lie in between. )t lies at bot extremes. New product development is bot perspiration and inspiration. $ot work and play. )n :pril &777, +a indra B +a indra unveiled t e $i>lee, t e first ever commercially viable electrically operated . w eeler, a classic skunk work pro>ect, worked on by a &/ member team, wit out a deadline, budget or even assurance of success. * e pro>ect took exactly 5 mont s. *itan industries w ic develops between "8 and &88 new watc es every year every new model flows from . central strategic considerations. $oosting brand value -ifting market s are :dding to profits
I et er t e starting point is customer need mapping or a spark of genius, t e t ree fundamental re%uirements, *op %uality $est speed -owest cost must be met 'ost in particular as become a single most important consideration for new product development today. #teepling competition in every business is amking it imperative for companies to offer t e ig est value at t e lowest price, since it is at t e development stage t at 68J of t e cost of manufacturing a product is decided economizing must begin in t e labs. * at is w y for instance, *A# #uzuki and $a>a> :uto use t e tec ni%ue of target costing determining t e price of t e product and working backwards to fix t e maximum acceptable cost to develop new products. !esigning according to cost yokes product development firmly to strategy. )n Fanuary &77", t e ' ennai based *) cycles needed a new product to meet a dire need. 4eviving t e geared cycle segment exactly one year later, it ad put t e D<ercules top gear in s ops, a product t at as fuelled ,8 fold growt in t e segment. * e answer lay in understanding t e real impediment to t e acceptance of t e product so t at it didn;t waste its resources on abortive designs. I en t is was identified as t e lack of reliability of gears, *) cycle decided to use t e best and safest gears and design its product around its component. +anaging cost was a critical issue, because t e gears were being imported. * is was ac ieved by maintaining best control on material cost and c eaper outsourcing. $ot t e decision taken as a part of product development and not as a production process. #trategic 4ules for New Product !evelopment &. +anage new product development as any ot er process wit cost, %uality, time, targets. ,. !etermine t e manpower and money upfront to ensure t at resources are available .. )ntegrate t e process wit all t e ot er functions instead of running it as a black box. /. (se gateways along t e way to ensure t at all critical performance parameters are met.
ndian e+a*p.es I en !r. 4eddy;s laboratories started its drug discovery in &77., its priorities were clear. 3inding a breakt roug product wit least number of players. * e product s ould offer an opportunity for ac ieving critical mass. * e company;s resource s ould not be spread too t in if its effort ad to succeed. * ere was no point in pursuing alf a dozen ideas. * e resource ad to be focused w ere we ad a real c ance of ac ieving a stream of breakt roug s. )nspiration comes wit market feedback in +arico industries new product development. 3or example, Parac ute;s brand expansion, for instance began life as a realization t at t e consumer group believed w ole- eartedly t e brand;s coconut properties. * e product developed from t is discovery was t en sub>ected to a %uality function deployment exercise to c eck w et er its features corresponded to customer needs mapped earlier. * e brand may be global, but t e product is localized, extensively. * us it studied t e was ing abits of .888 customers in t e target segment for its middle market laundry brand. :riel 9ain #uper #oaker, to identify t e one critical need removing grease stains t at t e brand addresses. :t <-- it was t e s eer systematic approac to idea management t at ensured t e development of 'lose up toot paste sac et wit a nozzle. 3ollowing t e system, t e idea for t e product, originating wit a marketing team, was forwarded to t e relevant one of t e . innovation centres in <-- a cross functional team examined it, approved it and allotted t e re%uired resources. !abur developed new food products because it wants to. * e genesis of its -emoneez lemon >uice lay in its strategic plan to get into t e kitc en wit branded substitutes boug t as commodities. * e next step was use market researc to identify t e gaps felt most keenly by its target customer, as s e worked in t e kitc en. 3rom t is process t e idea for -emoneez, t e lemon substitute converted into a product by its labs. Operations ru.es of NPD &. (se cross functional development teams for simultaneous instead of serial processing. ,. $enc mark against t e best on different product and performance parameters .. (se infotec to facilitate real time collaboration of geograp ically dispersed team members. /. ' eck t e manufacturability of t e product continuously during t e development process. Creati6it0 ru.es of NPD &. Provide skunk work pro>ects, t e freedom to experiment and to make mistakes. ,. #et up system to ensure t at t e ideas keep flowing and are converted to product concepts. .. 0ncourage innovation initially, narrowing down t e focus as resource ungry stage occurs. /. $uild ierarc ies of decision making not reporting lines in development. : potent tec ni%ue for ensuring product %uality at t e development stage is benc marking. 3or instance +B+ is benc marking #corpio against #umo for passenger comfort against its own ve icle for fuel economy, against t e +aruti 9ypsy for comfort and ease of driving, against *ata #ierra for acceleration. P ilips applies t e fault mode effect analysis tec ni%ue to c eck t e various t ings t at could go wrong wit a specified product and c alk out an option solution. )llustrations for New Product !evelopment in )ndian #cenario ):FT(L-) <iner# 2new to the wor"d product3 +iner Ia, a miniature mineral water mac ine launc ed by #oftel was commercially launc ed almost t ree years after t e concept stage. * e launc of t e product was even selective at ' ennai and : medabad as t e Ltotal dissolved solids in case of ' ennai would be about ,188 .888 pp, w ile t at in : medabad would be &&88 ,888. * e andy mineral water manufacturer ad a capacity of 5 6 litresc per our. :s for t e water treatment procedure +iner Ia treated only ,1 litre out of every &88 litres of water. * e rest being flus ed out as various salts and ot er particles.
* e selection of franc isees was based on t e re%uirement t at t ey s ould be experts in t e field of water treatment and ave a scientific temperament. L4G4 e"ectronic!- new product! -9 0lectronics; was set to enter into t e )ndian kitc en wit products like dis was ers, cooking ranges, obs and rice cookers. * e ot er products included ig end +P. players, monitors and -'! pro>ectors. * e existing product lines too were spruced up. * ese included t e introduction of refurbis ed '*A range, -9 flatiron being repositioned to give t e company Labsolute leaders ip;. )n t e refrigerator segment -9 planned to introduce eig t new models in t e frost free segment. * ree front loading mac ines were being developed to c allenge )3$;s leaders ip. 3ive variants of vacuum cleaners were being rolled out. * e mid market '*A brand L #ampoorna;, directed at rural and semi urban consumers v, was repositioned to appeal to middle and lower middle income urban consumers too. * e #ampoorna brand alone was expected to ave t ree additional extensions. Birm -! new !o p / ri nt! Nrima launc ed a new carbolic soap, Nirma winner priced at par wit <--;s -ifebuoy, at 4s. 6.18 for a &18 gm bar in &777. * e ambition was to attack <--;s brand in t e value segment of t e 4s. /,51 crore soaps market. <-- took t e firsts ot wit Fai lime. Nirma retaliated wit Nima fres , it own lime variant. * is forced Fai to come back wit a new fragrance. Nirma broug t in a new rose variant to snatc volumes from <--;s ot er value brand, $reeze. Bew upgr ded /er!ion from *nte"1 &entium @ t reduced co!t Pentium . was launc ed at t e end of 3ebruary, &777 in two versions /18 +<z and 188 +<z clock speeds. )t was supposed to be t e new paradigm in computing based on P5 micro arc itecture wit many additional benefits. * e c ip;s internet steaming #)+! extensions. * ere were "8 new instructions w ic could en ance t e performance of advanced imaging, audio, video and speec recognition applications. 3or web surfers P-. significantly increased searc and navigation capabilities and animation and .! are entirely a new experience. 2n :pril &777, less t an two mont s after t eir launc )ntel cot t e price of t e /18 +<z P-. processor by ,8J and t e 188 +<z version by &8J. $randed P-. versions ranged from around 4s. 78,888 upwards to over 4s. & lak , w ile t e unbranded ones at about 4s. 51,888. * e difference in price between a P-, and P-. processor is >ust about 5-"J w ereas t e performance boost was about ,8J. * e tec nology also allowed for easy upgradability, >ust replace t e earlier c ipset wit a P-.. Ford-! *=on )ndia was considered to be t e lead market for )kon and as been designed keeping in mind t e )ndian motoring conditions, t oug 3ord itself was looking at exporting it to more mature markets as well. 3ord;s extensive study s owed t at customers want value for money. 4esearc indicated t at a t ree box design found favour t an a atc back. :part from more space for luggage, consumers felt t e boot also provided more safety t an a atc . )ndian customers also told 3ord t at rear seats used %uite a bit "8J of t e time, a learning also from t e 0scort experience. )n ot er markets t e rear sent is used less t an &8J of t e time, w ereas in )ndia it is used extensively to cram in people. #o, t e )kon was to ave a roomier rear seat wit full roll down windows, reading lig ts and comfortable centre seating as well. :nd t e rear door openings were claimed to be t e largest in t e industry w ile t e eig t of t e c asis was suc t at it will be easy to get in and out. * e car;s design, ad also taken care of t e flooed road conditions during t e monsoons in )ndia.
I ere t e )kon could make a radical departure form t e way t e 0scort was marketed was in its communications strategy. )n t e )kon, 3ord was looking to appeal a younger crowd, probably a .8 /8 year old customer;s w ose more outgoing as an active lifestyle and is a trend setting type of individuals. * is segment expects t eir cars to be
durable and safe and good value for money, yet stylis and contemporary. * is, for 3ord, is a distinct positioning statement from w at 0scort stood for. <aving defined its target audience, t e communication for t e )kon was fas ioned in a . stage manner. )ts initial advertising s owed sections of t e car, >ust a teaser to get recognition for t e )kon name. t e ob>ective was to reveal t e name in an interesting manner and also to create a sense of anticipation. * e . ad series revealed some of t e distinctive parts of t e car as a tear away in t e visual. * en came t e ads wit t e D)kon be ind t e faces and t e faces be ind t e )konE, lines, apartial reveal campaign w ic acted as teaser. * is campaign focused on t e mood of optimism, t e positive feeling among t e people involved in making t e car, t e 3ord employees, t e dealers and t e suppliers. * e car, partially idden p otograp s of appy people in a work scenario, was meant to express t is feeling of optimism. * is campaign was also to purely demonstrate t at 3ord is more t an >ust a corporation and it is made up of people and t eir efforts t at t ere are real actual people be ind t e corporation. * e exercise was also done to umanize 3ord )ndia and demonstrate t at we are uman t an >ust faceless corporation. )t also ad to do wit 3ord;s reputation of being conservative and stolid. )t needed an image makeover and t is t e )kon was expected to do. * e / #trategic rules of NP! +anage product development like any ot er process, wit cost-%uality time targets !etermine t e manpower and money up-front to ensure t t resources are available. )ntegrate t e process wit all t e ot er functions instead of running it as a black box. (se gateways along t e way to ensure t at all critical performance parameters are met.
0very attempt to develop a new product needs to be structured according to its needs. * at;s because t e linkages run across t e organisation. #ince strategy begins wit t e customer, working its way backwards to align t e organizations activities to meet er needs, t e connection between product development and strategy is a visible one. )n fact it is t e company;s strategic ob>ectives t at must necessarily determine its approac to new product development today.
ntroduction I ile t ere are a great number of new products every year, istory s ows t at less t an .8J of new products and services actually generate enoug sales to stay afloat. #o, t e %uestion of ow to design a new product or service as been one of t e most puzzling %uestions. *o untangle t is %uestion, and try to provide insig t into ow to understand w at customers really want, let;s consider a systematic approac to understanding customer needs. (sing a systematic approac will overt row t e trap of t inking t at customers don;t know w at t ey want. 'ompanies will come out wit product t at customers really want or need. $ut t ere is one more important benefit. $y using a systematic approac , companies are more likely to generate more ideas, more effective ideas, and increase t e c ance for success. T0pes Of Custo*er Needs *o find new product ideas one as to start by t inking about t e different types of customer needs. 3or example, we can t ink of at least four different types of needs. 'urrent Needs or t e needs already recognized by customers Potential Needs t e needs ot er t an current needs, but not recognized by customers yet. Problem Needs t e needs related to recognized problems ?t ese are typically t e ones t at improve existing products@ Potential Problem Needs or ow to add value to current product or usage.
:ll t e different types of needs arise at various points along a Dconsumption c ainE. 3or example, a customer may find it inconvenient to s pt around for a product, and t ey may also experience problems w en t ey try to dispose of a product. * erefore we need to understand w ere, in terms of time, t e need is coming from. 3or example needs can arise: $efore Purc ase !uring Purc ase !uring (se !uring !isposal !uring 4epurc ase
:not er way is to ask t e following 1 %uestions to really understand w at;s going on. I y w y did a customer buy a productC I en w en did t ey buy itC I ere w ere did t ey buy itC <ow ow did t ey buy it ?w at steps did t ey go t roug @C I o w o boug t itC )f we take t e ideas we >ust discussed, and put t em in a picture form, we could come up wit a way to visualize w ere customer needs come from. 2ne way is to ask people more insig tful %uestions t an Dw y did you buy my productCE instead, approac t e situation by focusing on various parts of t e cube. 3or example, start wit current customer needs and ask customers w y are t ey using t e product, w en are t ey sing it, w ere, etc. 2ne would also ask t em about, say, t e product
during purc ase, disposal and repurc ase. -et;s make t is more concrete by focusing on >ust & dimension of t is cube : 'urrent Needs, but asking t e type of >ournalist %uestions we talked about above. DI y are you using t is product and w at do you gain by itCE ?w y@ D2n w at occasions do you use t is productCE ?I en@ DI ere do you usually use t is productCE ?I ere@ D*ell me in detail exactly ow you use t is product, and are t ere ot er products you use wit t is productCE ?<ow@ DI o are t e usual users of t is productCE ?I o@
Ie >ust looked at one small dimension of t is . dimensional cubeG so imagine doing t is for all possible combinations. Now you can start to see w y we said t at t is process generates a lot of information about customer needs. : fundamental marketing principle is t at products must be benefits-based. * at is, t ey must deliver benefits w ic customers; desire ?and are willing and able to pay for@, and must do so at t e rig t cost ?i.e. utilizing cost-effective designs and met ods w ic enable profitable sales@. #o, from a strategic perspective, products can be considered benefit bundles. 'ustomers buy products not for t eir features ?e.g. Pentium / c ip@ or t eir specific functionalities ?e.g. pc processor speed@, but rat er for t e perceived benefits t at products deliver. : product;s features and functions w ic are often t e focus of design specifications are simply t e envelope for delivering t e benefits t at are desired by customers. * e classic example is t at people don;t buy a drill to ave a drill, but rat er to ave t e capability to make oles. #olutions to 'ustomer Needs I en we t ink about it, t ere are a reasonably limited number of ways to solve a customer;s problems. I erever t e need comes from, t e following different types of solutions can satisfy t em: 4eduction of *ime re%uired 4eduction of 0ffort re%uired ?including p ysical, mental, and emotional@ 4eduction of 3inancial ?including complementary products, maintenance and repair@ 0n ancement of sensory benefits ?including visual, taste, texture, sound etc.@
#o now, imagine ow we mig t solve t e various customer needs we talked about before, using all t e dimensions of t e cube, and satisfy7ing t ese needs t roug eit er reduction of time, effort, costs or en ancement of sensory benefits. * is is t e c allenge of new product ideas, a broader ways of t inking about t is problem and feel optimistic t at uncover t e need s of customers and build products t at don;t failf in t e market. * e N3! process starts wit t e generation of prsualbe ideas. * is initial p ase often referred to as t e Dfuzzy front endE is typically t e most frustrating for left brained managers w o self describe t emselves as long on analytical skills, but s ort on creativity. :N:-M*)':<ig $lue #ky 3ailure Neatcertain Practical $reakt ru )ncremental ' ange
'40:*)A0
* e inspiration for t e new product ideas can come form a driven leader ?top-down@ or can bubble up from trenc es ?bottom-up@.
:nd w ile ideas can occasionally emerge from near-divine spontaneous inspiration, most mere mortals ave to resort to systematic idea generation processes t at range from traditional market researc tec ni%ues ?surveys and observation@ t at tend to find t e Dw ite spacesE in t e existing world to mind stretc ing analyses and tec nological trends and scenarios t at provide for-reac ing directional visions of t e future. : few empirical observations t at are commonly drawn wit respect ideation are: )nternal company t inking tends to be very conservative, staying wit in a comfort zone by incremental zing past successes. #imilarly, most market researc tends to be understandably Dnear inE ?focusing on current dis-satisfiers and unmet needs@ since customers; t inking is contained by t eir bases of experience and tec nical knowledge. Pure marketing initiatives often re%uire invention or an impossible combination of features and costs *ec nology-driven ideas often lack a clear target market or re%uire an impractical level of market development. dea Generation nfor*ation 0xpressed desires of current customers !esires of lead and eavy users !esires of lead and eavy users (nrecognized desires of future users #cenarios of future markets #ource *raditional researc 4igorous customer interaction 0xpert observation 0mpat ic study 3utures visioning
* e most effective ideation is multi-disciplinary ?tec nology and marketing@, externally focused ?especially on competitors and ig impact customers@, and t oug t-stretc ing wit in practical boundaries.
Lesson 1% NPD % / dea #creenin) )ntroduction :s a general rule, DmoreE tends to be appropriate during t e ideation stage w en t e classic NP! %uestion is w et er success is built on t e %uantity of ideas goal is creativity bounded only by a modicum of practicality ?Dinnocent until proven guiltyE@. $ut, successful companies are reported to put &8 times fewer new product ideas into development per successful product as unsuccessful companies. #o, an effective NP! process is, in effect, a funnel wit a large number of initial ideas se%uentially pared down to t e c osen few wit t e ig est potential. * e screening stage is t e first tollgate in t e paring process. )n essence, t e process of screening and prioritizing NP! ideas is a function of t ree factors: )tr tegic ttr cti/e: !oes t e initiative en ance t e company;s competitive position by leveraging existing ?or prospective@ strengt s to capitalize on an opportunity, or neutralize a competitive or tec nological t reatC Fin nci " ttr cti/ene!!: :re profits ?long and s ort-run@ sufficiently investment ?42)@ w en pro>ect risk is consideredC ig relative to re%uired front-end
C p bi"it, to execute: !oes t e company ave t e re%uisite skills and necessary resources to compete t e pro>ect and support t e launc ed productC
* ese factors w ic are invariably blends of ard ?%uantitative, ob>ective@ and soft ?%ualitative, sub>ective@ inputs must be consolidated and critically assessed in absolute ?vis-R-vis pre-defined benc marks or urdle rates@ and relatively ?pro>ect to pro>ect rankings@. Pitfalls in #creening 'ompanies often fall for predictable traps during t e screening process: 3ocusing disproportionately on financial attractiveness, favoring incremental initiatives wit smaller investments and %uicker apparent paybacks ?and unfortunately ig vulnerability to cleverly DmanagedE pro>ections@. #tressing %uestionable strategic attractiveness ?e.g. Dmust matc competitionE, Dmust offer a full lineE@ w en financials are unacceptable. 2verestimating execution skills and underestimating re%uired time and resources, putting pro>ects in a vulnerable position from t e start. #uccumbing to organizational politics and managers; clout t at polarizes >udgments and biases pro>ect evaluations.
:gain, t e management key is to ave a structured screening process in place t at includes predefined evaluative criteria, rigorous fact-based scrutiny of inputs, and a formal met od tracking of results ?an Dinvisible andE t at may contain unwasrranted initial optimism@. )dea #creening in *itan )ndustries :t *itan )ndustries, w ic develops between "8 and &88 new model watc es every year, every new model flows from t ree central strategic considerations. $oosting brand value -ifting market s are :dding profits
)t was t e freedom to experiment t at led to t e development of *itan )ndustry;s metal plated 3astrack watc es. * e designers were trying out a gold plating process-named P ysical Aapour !eposition. )t involves vaporizing t e gold at
ig temperatures for even deposition wit ot er metals, and found, to t eir delig t, t at it could be made to work to produce coatings of ot er colours too. #o it was applied to create t e multi coloured 3astrack range. :t *itan, t e ideas originate wit t e marketing briefG on t e s op floor, as a spin off from a new material or processG in t e lab, as an 4B! idea, as was t e case wit an ultra slim movement t at led to t e design of new range of productsG or from t e design group. No matter w ere it comes from, every idea is made to pass t roug a stringent 1-point test, 'overing style 'osting #ourcing #c eduling 4esource re%uirements.
2nly t en does t e development process actually get underway. * e ideas t at come t roug t ese processes are t en filtered t roug discussions, w ere people from marketing design and manufacturing were present. * ey look at t e ideas, vet t em and decide w ic ones are immediately possible to implement, and w ic will take more time. 2nly t e best ideas will survive. 'ommon 3orms of )dea 9eneration * e most common met ods of idea generations in companies are: Brain stor*in) * e met od developed by :lex 2sborn uses t e recognition t at t e really new ides often mix several ideas to product somet ing t at is non-obvious and exciting. 9roup discussions are eld to generate as many new ideas as possible. * e group generally consists to six to ten people. * e group members are encouraged to be as wild as t ey want in suggesting solutions. No idea is criticized and ence n ideas are eld back. :s ideas start to flow, one leads to anot er. Iit in a s ort time, undreds of ideas can e on t e table. 2nly after ideas are generated freely, t e group can t en look forward to critically evaluate later on for t e purposes of practicability. : specific problem or goal is set at t e beginning of t e meeting, w ic is known as synectics. Mar3et researc'ompanies ave to identify t e needs of t e customers t roug t e use of market researc . +ost of t e companies rely on t is met od since t e customer analysis is t e best way of offering a product to t eir need. Nowadays, t ere are many consultants and agencies t at provide t e necessary support to companies. t e Persona toot paste from :mway uses acupressure point was developed based on market researc . * e researc revealed t at people tend to apply excessive pressure w ile brus ing. * is adversely impacts teet and gums. * e acupressure point in Persona toot brus es allows t e brus to bend, absorbing excess pressure. )n addition to t e (#P of acupressure point, t e Persona toot brus as an angular design, and a slender neck, w ic allow easy access to all regions of t e mout . * e toot brus also as rounded bristles, w ic prevent gums from being grazed. : non-s ip grip elps support t e t umb, providing for better control. Lon) ran)e p.annin) studies 2ften a long term forecasting by companies can yield t e re%uired results. * e customer life style c anges over t e years, t e c anging societal trend etc., can be forecasted and products broug t accordingly. !is was ers, +icrowave ovens are examples to t is category of researc . Mar3et )ap ana.0sis 9ap analysis is a tec ni%ue w ic plans maps of t e market and used to determine ow various products are perceived by ow t ey are positioned on t e market map. * is met od elps in understanding t e flaws in t e existing products and t e need for a new product. * e advent of #atellite television s owed t e need of nearly &88 c annels and ost of ot er attributes w ic was immediately worked upon by companies like $P-, 2nida etc. !abur developed -emoneez lemon >uice using market researc to identify t e gaps felt most keenly by its target customer, as t e lady
in a ouse worked in t e kitc en. 3rom t is process t e idea for -emoneez, t e lemon substitute converted into a product by its laboratories. T-in3 tan3 'ompanies are now employing t e use of t ink tanks t at assess t e company;s resources and ob>ectives and devise concepts. #ome times, top managers of t e companies often act as t e source of new product ideas by identifying t e consumer needs and c anging society. * ey also act as t e t ink tanks. Acti6it0 ana.0sis * is tec ni%ue is used by companies in ascertaining t e usage of a product. +aruti 2mni was intended as a cargo ve icle but owever, t e usage of t e product s owed t at it was more used as a passenger ve icle. <ence t e positioning and t e product itself was c anged to t e re%uirement. P B 9 studied t e was ing abits of .888 customers in t e target segment for its middle market laundry brand, :riel 9ain #uper #oaker, to identify t e one critical need removing grease stains t at t e brand address. <orei)n searc#ome times, many multi national companies translate t eir experience from anot er country. #ome )ndian companies searc t e various products, w ic are not available in )ndia and offer t is product after obtaining t e necessary agreements. )t is often found t at many products, w ic are successful in one country, may not succeed in anot er due to t e cultural and social differences. #oya bean milk was successful in (#: but w en in )ndia, it failed confirming t e above reasons. Morp-o.o)ica. ana.0sis * is met od analysis t e structural dimensions of t e product, w ic elps in getting to t e relations ips between t em. I en a writing instrument is analyzed, t e extent of its lengt , clarity and convenience become t e relations ip factors from w ere a new product can be found out. 4esearc on t e old 3ord 0scort indicated t at a t ree box design found favour t an a atc back. :part from more space for luggage, consumers felt t e boot also provided more safety t an a atc . )ndian customers also told 3ord t at rear seats used for "8J of t e time. )n ot er markets, t e rear seat is used less t an &8J of t e time, w ereas in )ndia it is used extensively to cram in people. #o, t e )kon was to ave a roomier rear seat wit full roll down windows, reading lig ts and comfortable centre seating as well. :nd t e rear door openings were claimed to be t e largest in t e industry w ile t e eig t of t e c assis was suc t at it will be easy to get in and out. * e new 3ord )kon car;s design ad also taken care of t e poor road conditions during t e monsoons in )ndia. #creenin) Process )t ge $ g te proce!! : : widely employed product development process t at divides t e effort in to distinct timese%uenced stages separated by management decision gates. +ultifunctional terms must successfully complete a prescribed set of related cross-functional tasks in eac stage prior to obtaining management approval to proceed to t e next stage of product development. * e framework of t e #tage-9ate process includes work-flow and decision flow pat s and defines t e supporting systems and practices necessary to ensure t e process;s on going smoot operation. G te : * e point at w ic a management decision is made to allow t e product development pro>ect to proceed to t e next stage, to recycle back into t e current stage to better complete some of t e tasks, or to terminate. * e number of gates varies by company. 3uzzy gates: 3uzzy gates are conditional or situational, rat er t an full DgoE decisions. * eir purpose is to try to balance timely decisions and risk management. 'onditional go decisions are DgoE, sub>ect to a task being successfully completed by a future, but specified date. #ituational gates ave some criteria t at must be met for all pro>ects, and ot ers t at are only re%uired for some pro>ects. 3or example, a new-to-t e world product may ave distribution feasibility criteria t at a line extension will not ave.
NPD &/ Concept De6e.op*ent and Mar3etin) #trate)0 De6e.op*ent ntroduction * e output of t e screening p ase is a reduced set of pro>ects passing t roug to a formal design process t at includes developing product specifications, selecting tec nologies, compiling drawings, and building prototypes. 4ecognizing t at customer perceptions are paramount and t at roug ly "1-68J of a product;s ultimate costs are D ard wiredE in during t e design p ase, t ere are four complementary concept t at frame t e design process: @ua.it0 function dep.o0*ent B@<DC K3! is a structured process for getting t e product Drig tE by translating customer benefits into engineering re%uirements and product specifications. * e essence of K3! is, first, to specify products in Dconsumer speakE t at reflect t e end benefits t at are most important to potential buyers, paying particular attention to %uality cues, t ose attributes t at most powerfully communicate a product;s overall level of %uality ?e.g. t e firmness of key on a laptop pc@. 0ngineers t en translate t ese consumer benefits into a more tec nical definition of re%uirements. 3inally, t e engineering definitions are translated into very precise specifications t at provide t e measurements for implementing and monitoring t e manufacturing process.2nce t e product is tec nically Drig tE, t e process is reversed and communications convey back to t e customers t at t e benefits ave been delivered in t e product. Tar)et costin) *arget costing is a formal process t at attempts to mes a propose product;s features ?benefits@ wit a viable market price t at ac ieves t e company;s profitability goals by: &. !etermining a price point ?or range of price@ for an approximate combination of features and benefits. ,. #ubtracting a desired profit from t e market price to determine t e maximum bearable level of costs. .. )terating t e product design eliminating or reducing unnecessary attributes wit recovered in ig er prices until t e cost target is met. /. 4evalidating t e viability of t e market price for t e redesigned product. Desi)n for *anufacturin) BD<MC !esign for manufacturing is t e concurrent considerations of w at a product is and ow it is made, in order to insure %uality, minimize costs and maximize flexibility. Narrowly defined, !3+ focuses on suc t ings as repeatable tolerance ?making sure t at parts are not so precisely designed t at t ey can;t be produced in mass %uantities@, ease of assembly ?e.g. efficient se%uencing of DdoableE operatins@, and adaptability to ig -speed automation ?w ic may improve bot cost and %uality at ig volumes@. +ore broadly, given a growing trend towards mass customization ?near infinite product variations for Dsegments of size oneE@, !3+ includes: 'ommon components and standardized part across products, enabling more stable forecasting ?t e pooling effect@ and efficient management of s ared inventories. +odular platforms t at include base models and a variety of add-ons t at can be pre-assembled and managed DvirtuallyE. Postponement of product differentiation until t e latest possible stage in t e manufacturing process ?end of line customization@, enabling bot a ig degree of standardized production and a ig ly customized product. costs t at can;t be
Rapid protot0pin) )n combination, K3!, target costing, !3+, and rapid prototyping matc product to market re%uirements, support t e firm;s profitability ob>ectives, and reduce t e risk of a subse%uent failure. 0xample of :mtrex
:t air conditioner marker <itac i :ppliances, it is difficult to pinpoint we re a new product life begins. 3or, in t e team of :ccelerated )nnovation ?*:)@ approac it uses, a cross-functional task force ensures t e constant involvement of every function in t e company in t e development process. * e *:) is split into t ree stages: ?*:)-&@ )dea -to-'oncept 3inalization ?*:)-,@ Prototype to lunc ?*:)-.@ -aunc -to-'ustomer #atisfaction
None of t ese stages is limited to any particular department alt oug t e responsibilities are, obviously, distributed differently at eac stage. #ays Ainay ' au an, <ead, ?)nnovation Process@, :mtrex <itac i, w o as overall responsibility for new product development. D* is way, we are a spider organization, focusing on teamwork and constant networking, steeped in t e belief t at creating a new product is a company-wide responsibilityE. )t;s called concurrent engineering. * e new product development is a continuous activity, working constantly in con>unction wit t e ot er functions to design, prototype, test, modify and improve t e product. * us t e marketing people will be test marketing a product on a sample customer base even before it as reac ed t e final prototype. 0ven before t at, t e vendors will be working on designing components for t e new product, and sending t eir feedback so t at t e developers can modify t eir design accordingly. )t;s said t at even t e packaging team at an early stage w et er t e product is too eavy given t e materials t ey want to use. :mtrex <itac i as a system of gateways at every stages of t e development of a new product. #ure, t is makes for some extra work to pass t e test, but it is crucial in order to avoid cost-and-time consuming downstream rework. 3or instance, c anges after t e prototyping stages can bleed t e company because t e dyes and moulds ave to be recut. :mtrex <itac i a s as many as 6 gates for eac new product. 9:*0 &: to consolidate all t e needs t at t e new product will serve, and decide if t ey merit spending time and money. 9:*0 ,: 4eviews t e design brief, based on studies of t e market, uses and competing products. 9:*0 . B / : 'oncept is developed and a detail design is created
9:*0 1: sees t e prototype going t roug it. 9:*0 5: Iorks at component sourcing and production 9:*0 ": *rial production, followed by field tests and design validation are t e key factors. 9:*0 6: 9ives t e go a ead, after reviewing t e final design, for mass production.
!epending on t e gate, one or more of t e key people suc as t e eads of marketing, manufacturing and %uality assurance or t e '02 sometimes, all of t em are present for t e clearance. Conc.usion )n order to be successful, companies ave to use t e following guidelines: Concept gener tion: <ow candidate concepts for new products are generated or ac%uired. New product concepts are generated >ointly by employees, customers and suppliers. New product concepts are based on anticipated industry tec nological capabilities. New product concepts are explored in an unconstrained manner
Concept !e"ection: <ow candidate product concepts are screened and concepts selected for furt er development. 'oncept are selected using multiple, explicit criteria. 'oncept selection is based on simultaneous evaluation of multiple concepts. 'oncept selection occurs after manufacturability issues ave been addressed. :greement on concept selection is in t e form of explicit ?documented@ buy in from all departments.
Lesson 14 NPD 4 / Business Ana.0sis )ntroduction )n business analysis, t e company decides w et er t e new product will fit well wit in t e company;s product line, distribution met ods, and promotion met ods. +arketers also furt er test t e potential for sales, profits, market growt , and competitiveness. <uman welfare is also considered in t e operations of t e company. * e ideas are made more specific in t is stage. 0xamples (niversal :ir *ec nology, an )ndian :merican firm is t e (#: as developed an innovative new tec nology called P ototec using t e concept it disinfects and cleans indoor air by p otocatalytic oxidation. )t is a revolutionary concept t at is effective against indoor air pollutants suc as bacteria, viruses, and molds, dust mite allergens and odors. *i won t e &777 New Product :ward in t e small business category by t e National #ociety of Professional 0ngineers. * is was made possible only after t e deluge of ideas were carefully screened and developed furt er into a business proposition. * is is t e stage w ere t e concept as to be furt er refined and made into business terms. * e aspects t at need to be formulated for making an idea into a concept are: *argets audience of t e new product * e primary benefit of t e new product * e usage pattern of t e new product
$ased on t ese, once t e concept as been developed, it as to be tested. 'onsumer reactions are obtained by using a verbal description or a picture of t e product and asking for unbiased opinions. )n t e ma>or manufacturing industry, t e products are broug t to business or industrial consumers at a designated test sites, and developers work closely wit t ese consumers to spot t e problems and refine t e designs. :fter t is, t e company as to pro>ect costs, profits, return on investment and cas flow if t e product is placed on t e market. Pro>ections of potential sales at various prices need to be made, as well as detailed cost pro>ection for different volumes of production. #tart-up and continuing costs, fixed and variable costs and t e impact of economies of scale need to be determined. *entative marketing plans need to be set, along wit t e costs associated wit t em. -astly, a set of full-blown budgets is re%uired to estimate t e potential return on t e product. * us business analysis must include an assessment of t e amount of risk t e company will face if t e new product is introduced. )f t e new product can be produced using existing production and marketing capabilities, t e risk is lower. -ess investment in new plant and e%uipment will be needed, and t e marketer can benefit from already ac%uired knowledge of t e market. *A# #uzuki and $a>a> :uto use t e tec ni%ue of target costing to determine t e price of t e product and working backwards to fix t e maximum acceptable cost to develop new products.
Lesson 1' NPD '/ Product De6e.op*ent and Test Mar3etin) )ntroduction Product development is vital for t e ealt of firms w ic want to grow by internal means. )t is, of course not t e only way for a business to grow market s are. )n recent years t e pace of product c ange as accelerated considerably in manufacturing. 2ften t e need for suc c ange as been forced on a previously sleepy domestic industry by foreign competition. I en t e ome-based firms ave failed to respond t ey ave been wiped out or very seriously damaged. * e effect of foreign competition forced restructuring across a wide range of manufacturing firms in )ndia including p armaceutical firms, in t e early &778s. Need for Product !evelopment &. * e traditional asset-based approac of simply building on existing product lines and tec nical know- ow is no longer sufficient. ,. #uccessful product developers look first at t eir actual potential markets. * is guide t em in determining appropriate product offering for selected customers rat er t an building simple product lines. .. #uccessful product developers look for an appropriate mix of competitive development strategies involving line extensions and new product developments, as well as careful cost reductions. /. #uccessful product developers ensure t ey understand and act on t ree ma>or business factors: * e benefits looked for by t eir target customers. * e economies of t eir own supply system and * e actual and potential reaction of t eir competitors. +arket $ased Product !evelopment +any business w ic are growing really fast of a new approac to product development. #uc business adopt more t an an internal or asset-based view of business opportunities. * ey consider not only t e newness of products and t e newness of markets. * e novelty of t eir approac lies in conceiving product development variants on t e basis of benefits offered to specific target markets. * is is %uite different from concentrating attention on traditional product development inputs ?suc as tec nology for example@. +arket $ased 'ompetitive #trategies 2perationally t e market based competitive approac uses one of four differing strategies s own in figure. *wo of t ese strategies rely eavily on product development for success. 3irst a strategy w ic differentiates product features above all ot er attributes. * is involves developing a better product offering ?&@. A *ar3et 1ased approac- to t-e *ain t0pes of product offerin)s Product &. Differentiated Product ?merc andise@ .. Undifferentiated Product ?merc andise@ <i). 1'.1 #ystem ,. Product #ystem 2ffering 2ffering /. #ervices 'ommodity 2ffering 2ffering
#ource: +at us, #.#. ?&766@ <ow firms compete: a new classification of generic strategies, Fournal of 9eneral +anagement, &/?&@, .8-1" * e second strategy involves offering customers a Ltailor-made uni%ue package; of product features plus special support. -ike ot ers, +at us refers to t is strategy as a #ystem offering ?,@, because it permits customers to benefit from a w ole customers are offered products wit support on ow t ey mig t be best installed, operated, or serviced. 2f t e ot er competitive strategies a commodity offering ?.@ rules first and foremost on price ?because t e product is offered wit out support and is undifferentiated from t at of ot er suppliers@. : service offering ?/@ relies first and foremost on advice concerning ow t e produce can be used best. C-ec34 .ist for option c-oices #ome ig ly successful product developer firms using c eck-lists to evaluate different product development options. * ese c eck-lists are usually made up to two sets of elements, as is s own in figure. 3irst t ere is a consideration of t e offering system, w ic is concerned wit attributes of importance to specific customer groups. * is represents t e start of t e option c oice process. * e offering system considers features t at are likely to be important to customers in selecting one brand or product above anot er. * ese will commonly include performance features as well as ot er features w ic predispose buyers towards a particular brand. * e next step in using a c eck-list is to consider one;s own supply system. * is is undertaken to searc for economies of scale w ic can be built on as far as one;s own operations are concerned, as well as Dgoodness of fit; wit existing capabilities and resources. 3or eac product development option it will t en be possible to estimate likely resulting profits. )t as already been stressed t at a manufacturer;s supply system is of secondary importance to t e bundle of benefits demanded by target customers. !espite t is, many manufacturing still mistakenly start t e product option c oice process by considering t eir own value c ain. * e c eck-list s ows sc ematically ow option c oices can be determined. Ie say suc c eck-list met ods being applied successfully in several ig ac ieving firms. C-ec34.ist for product de6e.op*ent c-oices 2ffering looked for by target customers #upply-side %uestions for manufacturing Product development decision
erformance and design features !elivery features Pricing features Pre-sale features :fter-sale service Promoted image
)n ouse manufacture or subcontract !irect supply or use distributorsC )nvest in stockC !ifferentiated by market segmentC 2t er tec nical adviceC #ubcontractC +edia budgetC !irect salesC Product improvement or a New product !evelopment
4eally successful product development does not >ust lead to extra sales, volume, or to a temporary improvement in competitive position. #uccessful product development provides a manufacturer wit defensible competitive advantage. 'areful analysis of t e competitive situation, t erefore, provides anot er essential input for framing successful product development options, as is s own in figure. 3irst, t ey reflect explicitly on t e sort of existing and emerging customer benefits w ic present opportunities for product development. * e purpose of t is is to clarify t e way in w ic products will need to be offered to meet t e preferences of customers in particular target groups. #econd, t ey undertake a careful analysis of t ree value c ains: ?&@ t ose of t eir target customers, ?,@ t eir own and ?.@ t ose of t eir suppliers. * e purpose of t is is to identify and build on possible synergies between t ese t ree sets of value c ains. * ird, t ey undertake a careful analysis of t e capabilities and preferred combative modes of competitors. !oing t is allow t em to gauge t e likeli ood of counter attacks by competitors, bot from wit in an establis ed industry set, and also form a potential new set of competitors. :n explicit Product !evelopment #trategy 5n exp"icit !tr teg,: Product improvement efforts are under pinned by an explicit strategy, formulated by t e eads of t e firm;s key functions and spear eaded by top management. #uc detailed strategy provides t e focus for idea generation in selected markets and elps to prioritize pro>ects. )pon!oring top m n gement: an explicit strategy enables top management to relin%uis day-to-day control of particular pro>ects. )nstead, top management exerts control via t e clear strategies ob>ectives against w ic progress is c ecked. *op management t ereby becomes t e sponsor of development, unknotting any ma>or problems. )h red owner!hip : :n explicit strategy and a supportive top management lays t e groundwork for generating t e s ared valued necessary to pus development pro>ects t roug operational urdles. Te mwor=: *eams of functional specialists are broug t toget er to work on development pro>ects. #uc teamwork cater for t e iterative and problem-solving process of product improvement, in w ic a w ole series of options and solutions need to be discussed %uickly. < r=eting nd technic " !=i"" input!: Product improvement demands a detailed understanding of current markets to maximize synergies between existing and upgraded product offerings. ),!tem tic f"exibi"it,: Procedures ensure t at key issues are addressed formally during development, but nevert eless allow development teams t e freedom to solve problems in t eir own way.
Product De6e.op*ent at P-i.ips !CR P ilips, t e giant !utc consumer electronics company, marketed t e first practical videocassette recorder in &7",, gaining a t ree-year lead on its Fapanese competitors. $ut in t e seven years t at it tool P ilips to develop its second generation of A'4 models, Fapanese manufactures ad launc ed at least t ree generations of new products. : victim of its own creaky product-development process, P ilips never recovered from t e Fapanese onslaug t. )n today;s fast c anging, fiercely competitive world, turning out new products too slowly can result in product failures, lost sales and profits, and crumbling market positions. *oday many companies are moving from a se%uential to a simultaneous product-development approac . *op management establis es a cross-functional team and c allenges it wit stiff and seemingly contradictory goals-Dturn out carefully planned and superior new products, but do it %uickly.E * e team becomes a driving force t at pus es t e product forward. )n t e se%uential process, a bottleneck at one p ase can seriously slow or even alt t e entire pro>ect. )n t e simultaneous approac , if one functional areas its t e snags, it works to resolve t em w ile t e team moves on.
* e Fapanese are masters at t is team approac . )n an industry t at as typically taken five or six years to turn our a new model, +azda now brags about two-to-t ree year product development cycles-a-feat t at would be impossible wit out simultaneous development. 3u>i Perox cut its development time of t e 3P.188 copier from t e .6 mont s re%uired using t e se%uential process to ,/ mont s under a parallel development met od termed t e Dsas imi approac E. 2t er companies employing similar approac es include <onda ?'ity automobile@, N0' ?P' 6888 personal computer@, +atsus ita ?:utomatic <ome $akery@, 0pson ?0P&8& printer@, and 'anon ?:0-& camera and +ini copier@. * e team approac allows more ideas to be generated. !ifferent perspectives can be broug t to bear on market analysis, competitor analysis, market targeting, pricing and so on. # ared division of labour and s ared information also makes t e approac more sensitive to market c anges. )n fact, suppliers may also be broug t into t e development process to form part of t e team. +embers can also participate in t e pro>ect from inception to completion, allowing for a smoot er flow of development activity. )ntense interaction wit t e team can also en ance problem-solving effectiveness and innovation process, making its steps visible to all involved, and clarifying t e pro>ect leader;s and team;s responsibilities at eac point.
Lesson 1( NPD (/ Test Mar3etin) for Ne9 Product )ntroduction Prior to full-scale product launc es, many companies put new products and t eir supporting marketing programs t roug validating test. 3or example, packaged goods companies, suc as P B9, traditionally test market new products in isolated geograp ic areas t at are considered broadly representative ?i.e. ave c aracteristics common wit ot er markets@. )n concept, t e test markets provide a Ds ake outE of t e actual product, allow experimentation wit alternative marketing programs ?e.g. different prices or different levels of advertising support@, and provide results t at may be pro>ected to ot er markets. $ut, test marketing per se as become less common for t ree fundamental reasons: 3ront-end market researc and design met odologies ave tig tened t e link wit customers, making market responses somew at more predictable. 'ompetitors; market surveillance as become more sop isticated, alerting t em to test market activity and allowing t em to influence ?i.e. contaminate@ test market result. 'ompetitors benefit from a D eads upE t at may signal t e need to launc a fast-follow product of t eir own.
Nonet eless, for ig tec nology products, it is common to beta test radically new products. * e beta tests put nearcomplete products ?suc as software@ in t e ands of impact users to surface any remaining bugs and establis a reference base for t e product. *est marketing is a tool for new product launc and new product development. * e company can develop new product is own laboratories and independent researc er develops a new product. * ere a above facets can develop t e product. *est marketing ave many alternative forever like advertisement wit coupon and samples. -aunc ing t e new product in t e market is risky one, $ecause t e product development are variable to c anging customer needs and taste, New tec nology, s ortage product life cycle, and lastly t e increased domestic and foreign competition. #event aspect of product development is launc ing t e market product. 2b>ectives of *est +arketing 3ind out t e consumer needs of buying 0valuate impact of local advertising and promotion during t e test. 0valuate t e market potential for ot er competition product 3ind out t e coverage for sales 3ind t e consumer ability to buy t e product based on price.
+eaning of *est +arket *est marketing is t e process of introducing a new product or service to a small Dtest marketE ?i.e..@ considered to be representative of t e large target market. *est marketing gives t e firm t e c ange to train a small sales for develop local advertising and sales presentations and measures consumer reactions. * e market testing means t e survey t e market position of product and competitions positions so <ow to introduced t e product decision, $ut in t e case of test marketing is select t e few slops and gives t e product or samples on t e old ways of product. )f t e survey fails t e product launc s owed stopped or c anging t e met ods of product and distributions. Process of *est +arketing &. 'ity selection ,. #elect t e sales representatives
.. !uration of t e test /. #elect suitable data 1. )mplementation $ased on t e some factors s ould select t e cities in testing t e market. * e tested market ave some advantages, diversified industry, 9ood media, coverage, co-operative c ain stores, :verage competitive activity, based on factors may considered w ile selecting t e cities for testing. -aunc t e product in selected market after t at t ey survey w et er t e product moves success fully to. 4epurc ase fre%uency are more +ore Profit t en ot er product * e consumer satisfaction :ppreciation by t e customer, leaders, w ole seller and t e sales representatives.
Contro..in) t-e test *ar3et * e controlled test marketing allows t e company to t e insure factors ?i.e.@ :lp a testing w ic means t e testing for wit in t e company@ and limited advertising on buying be aviour. : sample of consumer can tested or interviewed later to give t eir impression of t e product. <owever, t e controlled test marketing provides no information on ow to sell t e trade on carrying t e new product t ese tec ni%ues also exposes t e product and product features to competition specify of t e companies product. 0ven t e company does not ave to use its own sales force, give trade allowances and buying distributions. #i*u.ated test *ar3etin) I en means .8 and /8 %ualified s oppers ave to select and %uestioning t en about brand familiarity and preferences in specified consumer of product. I ic means t e product simultaneous s oppers ave to interviewed about w ic product is moves fast and ow to issued to new product in t e market. 'onsumers receive a small amount of money and are invited in to a store w ere t ey may buy t e product or any item of product. #ome weeks later, t ey are interviewed by p one to determined product attribute usage, satisfaction and repurc ase fre%uently and are offered a opportunity for repurc asing of t e product, results are incorporated in fare casting to t e sells levels. )f its not satisfied t e D+anagementE can discontinued t e distribution and alternative source may follow like. :gain we tested t e market +ore samples )ncrease t e local advertising and Personal demonstration of t e new product,
E+a*p.es * e 'olgate Palmolive used a different marketing mix in eac four cities like. :n average amount of adevertising coupled are samples <eavy advertising wit free samples :verage amount of advertising linked wit redemagic samples :n average advertising wit no t e ot er special offer.
E+a*p.es * e 'olgate Palmolive used a different marketing mix in eac four cities like. :n average amount of advertising coupled free samples. <eavy advertising wit free samples
:verage amount of advertising linked wit redemagic samples :n average advertising wit no t e ot er special offer.
'olgate Palmolive offer launc ing a new product in set of small Dlead cornersE and keeps rolling it out if t e proves successful, and general mills ave launc ed new product area too large for rivals to distribute. Na1isco foods co*pan0 case :ctually t e Nabisco 3oods company it a marketing ome run wit its *eddy gra ams *eddy-bear-s opped gra orn cracker is several difference flavours, so t e company as decided to external teddy gra ams in to a new area, $ut in &767 t ey ave introduced c ocolate, c ina non and oney As of break fast bears gra am cereal. Pepsi Ltd * e Pepsi *ested t e mountain !ue sport drink in monopoly a trade centre attract famously wit advertisement. Conc.usion * ere are many advantages and disadvantages of t e test marketing be aviourist t e expensive and non-unavailable one. * e product developments of new from t e idea generation to t e launc ing t e product in to t e market are risky one. $ut t e test marketing is lively one, many companies are skipping test marketing and reac ing on faster and more economical market testing met od. I en t e product once out * e consumer did not like t e taste enoug so t e manager and product developers went beak to t e kitc en and modified t e formula. $ut did not test is. * e final reset users Nabisco product was disaster, but t e cereat may ave tasted better t eir ot er, * e super market manager soon refused to re stock and lastly t e Nabisco excurives as decided it was to late to re-formula t e product again. * e new product s ould full fill t e consumer needs and re%uirements. :t t e industrial goods we may adopt t e two ways or testing t roug t e data testing and Lalp a; testingE. * e beta testing dales about Dsurvey and identify t e product performance wit in t e company but alp a testing needs to testing to out side of t e company like 'ompetitional product and market Potential for some product ?bill launc produce@ t oug finally t e manufactures come close to using full test marketing w en t ey give a limited supply of t e product to t e sales force to sell in t e limited numbers of areas and t at can receive t e catalogue s eet. )n t is way management can make t e commercial of product launc and Dw en and w ereE to be launc t e product. coupon and
Lesson 1> NPD >/ Co**ercia.i:ation and Launc- #trate)ies )ntroduction :t t is stage, complete final plans for production and marketing as to be done. * e product team if necessary needs to be expanded to cover all t e departments of t e company. * is is t e stage w ere t e rig t individuals are identified w o would take over t e successful marketing of t e product and w o ave t e capacity to coordinate wit ot er departments of t e company. : complete activity sc edule as to be prepared. 3eed back mec anism as to be developed for effective control. * e product as to be ready for meeting any competitive pressures and c anging internal problems. )n terms of launc ing or commercializing t e product, t ere are two main alternatives. !uring t e launc p ase, t ere are two dominating ob>ectives: #ecure an ade%uate distribution base ?i.e. get intermediaries to carry t e product@ $uild and convert purc ase intention across potential buyers.
)ntermediaries are gatekeepers for new product. 3or upstart or unproven brands, signing up intermediaries may be a formidable c allenge. 3or large national brands ?e.g. $lack B !ecker@, broad scale distribution support is relatively assured based on prior performance ?reputation@ and establis ed account relations ips. +any companies solicit intermediaries; input early-on in design process to benefit from t eir perspective and induce eventual Dbuy inE. 'reating and converting purc ase intention typically follows t e ierarc ical se%uence of building brand and product awareness among potential customers, communicating t e product;s distinctive benefits and value proposition, and informing customers w en and w ere t e product can be boug t. * e level of resources ?time, money, people@ re%uired to launc a product can be substantial, including dedicated sales people ?to secure distribution@, advertising ?to build awareness and purc ase intentions@, promotional incentives ?e.g. introductory allowances to create urgency@, and merc andising support ?product displays or in-store demonstrators@. :ccordingly, product launc es can range from a Dbig bangE release into all markets, or se%uential p asing by geograp ic market, c annel of distribution, or customer segment. 3or example, a product may be launc ed in a confined region and t en rolled out to ot er areas, or select intermediaries ?like Ial-mart@ may get initial exclusive rig ts to t e product, or current customers may be given an early opportunity to upgrade legacy versions of t e product. P ased 4oll 2ut *ypically, a p ased rollout is most appropriate w en: 4e%uired launc resources ?e.g. ad budgets or dedicated sales people@ are substantial * e Dramping upE of production and distribution capacity is progressive, but slow time is not of t e essence ?e.g. competitors are not likely to be first-in to deferred markets@ * e product must be DprovenE for widespread acceptance by intermediaries and end-users.
* e line between p ased and big bank launc es is blurring. I ile product may be launc ed in strategic p ases, t e time between p ases is typically getting s orter ?i.e. t e launc cycle is faster@. DNewE products can be minor incremental refinements to existing products ?cost reductions, features en ancements@, imitative products t at are new to t e company, or bold concepts t at are new to t e world.
T0pes of Ne9 Products )mprovements B revisions -ine extensions New to t e company 'ost reductions New to t e world 4epositioning ,5J ,5J ,8J &&J &8J "J
+any studies conclude t at less t an & in . new products are truly Dnew to t e companyE, let alone Dnew to t e worldE, prompting experts like * eodore -evitt to observe t at: D$reakt roug innovation receives more attention in t e press t an it deserves. * e greatest flow of newness comes from imitation, not innovation, and most progress results from imitating somet ing t at already exists.E * e bias to incrementalize is understandable since, by some estimates, almost alf of all resource allocated to product development and commercialization by (.#. firms is spent on products t at are cancelled or fail to yield an ade%uate financial return. #o, companies often favor pro>ects t at offer %uicker, more certain paybacks and avert t e risk incumbent to bold strokes. * ese risks are significant since t at failure rate on new products is very ig : for every / to 1 pro>ects t at enter development, only & gets launc ed in t e market. 3or an average consumer goods company, only &1J of t e new product concepts t at make it to t e design p ase end up as marketplace successes. Ne9 Products #uccess Ra)e !evelopment #tage !esign +arket *est )ntroduction O6era.. Probability of #uccess 'onsumer 18J /1J "8J 1'G )ndustrial 58J 51J "1J &EG
* ese ig failure rates can typically be traced to a few recurring reasons: *ec nology, rat er t an customer-oriented marketing, drives t e new product process resulting in Dbetter mousetraps t at nobody wantsE or Dproducts in searc of marketsE. (nambitious Dme tooE products ?incremental c anges@ lack distinguis ing advantage versus entrenc ed competitive products, or competitors %uickly follow wit Done upE products t at cannibalize t e innovation. Products miss performance specifications ?t at may be c anged excessively during t e pro>ect@, or are overengineered, missing cost targets ?resulting in unsatisfactory margins, or unacceptably ig DrecoveryE prices@. Pro>ects are under planned, under funded, understaffed ?too few people, too muc Dc urningE of t e pro>ect team@, or unrealistic wit respect to timing or tec nical feasibility.
* e key to overcoming t e traditional failure rate is following a structured new product development process t at blends creativity and systematic rigor to increase t e odds of success.
:de%uate market demand #atisfy a return on investment 'ompatible wit environmental standards 3its wit company;s marketing :n effective NP! process is c aracterized by:
*op management commitment: willingness to assume prudent risk and drive t e organization to demanding NP! ob>ectives. !isciplined process, fast pace: sensitive to bot t e need for t oroug ness ?all critical steps taken@ and t e need for speed ?s ortened development and life cycles@. Practical creativity, rigorous analysis: stretc to find t e Dw ile spacesE but cull out in erently bad initiatives. Proven or predictable tec nology: avoiding t e need for ig cost, ig risk Dinvention on demandE. 0xplicit multifunctional coordination: recognizing t e product is uni%ue among t e Ps in t at it touc es most organization functions. 4ealistic time sc edules and budgets: drive for eroic performance, but don;t stretc to breaking point. Predetermined milestones B decision criteria: avoid setting Dgo H no goE criteria in t e eat of battle w en t e natural bias is to continue on course. #ufficient B scaleable launc resources: providing t e critical mass of initial support, and w erewit al to ramp-up if successful. aving t e
*eam continuity before B after launc : avoiding t e temptation to s ift t e key players and t eir accumulated knowledge prematurely
4elentless attention to detail, t e difference between success and failure lies in execution, w ic is in erently detailed oriented.
Lesson 1A Diffusion of nno6ation ntroduction )n product management new product is a main concept. )n )ndian companies are concentrating t e new products developments. )nnovation is way for introducing new products in t e market. 9ood researc and development facilities and ideas are t e important elements for a new product. 'ompanies are set up separate base for 4B! and spend more amount of money for new product development. Product nno6ations * e innovativeness of t e products is considered wit reference to t e company and t e market. +arket perception of t e buyers is t e ultimate test of t e innovativeness. : new product becomes an existing product after some time, e.g. cellular p ones are common abroad. : company as a mix of t e six categories. 4eally )nnovativeness is restricted to t e product rat er t an creating new products. )t is large a process of improving t e existing product rat er t an creating new products. *ruly )nnovativeness products involve t e greatest risk and cost. * eir )nnovativeness is yet to be accepted by t e market. )nnovativeness can be considered wit reference to t e company. * ey can be considered wit reference to t e product. Product innovations w en t ey disturb t e existing pattern t e least-t ey are >ust modifications. Product )nnovativeness are dynamical continuous w en t e disrupt a continuous innovations some w at but still do not c ange t e establis ed be avior pattern. 0.g. #ony <andy cam. '! players, !isposable !iapers. Product )nnovativeness can be discontinuous w en t e consumers reference to t e market means eit er it as been purc ased by a small percentage of t e total potential market as been on t e market relatively s ort period of time. )nnovativeness is more appropriate defined wit reference to consumers perceptions. )n order to survive in a competitive environment, a company must innovate. )t;s a c oice between innovate or peris . +any companies get t eir substantial sales volume and profits t roug products t at did not exist a decade ago. 9rowt industries are t ose t at are oriented to new products. )nstead of developing new products by itself, t e company can ac%uire existing business for adding new products. 0.g. PB9 ac%uires Aicks. #ome times, instead of a w ole business a patent for a product is ac%uired. #till t ere is one more option-be a license or franc ise of an existing company. Business nno6ations )nnovation is not limited to products and markets. * ere are ot er dimensions like process )nnovativeness, strategy )nnovativeness and structure )nnovativeness. )f companies decide not to innovate in t ese competitive times, t ey are exposing t emselves to a great risk. * e existing product range needs to keep pace consumer needs, c anging tec nology, t e competitive pressure and ever s ortening product life cycle. * oug )nnovativeness is necessary, it is not wit out it is risks. * e failure rate of new products of new products introduced is very ig . Barriers to t-e #uccessfu. NPD -ack of ideas #ocial and government constraints Pro ibitive costs of developments Nic e and fragmented marketing # ortened P-'
nno6ation P0ra*id
* e diffusion process describe ow an innovation spreads among potential buyers and users. I et er diffusion proceeds %uickly or slowly is governed y t e patterns of usage. * ere fore t e diffusion of an )nnovativeness bears a strong affinity for t e product life cycle. )nnovativeness in consumer product can be in be bot goods as well as services t eir adoption usually refers to trial and continued usage by individual consumers. <owever t eir adoption is t e results of t e )nnovativeness itself may astern t e diffusion process. #ome products are almost immediately accepted e.g. +aggi noodles w ere as ot ers take longer e.g. $rylcream. * ere for it s ows t e c aracteristics of t e new products effect its rate of adoption. Characteristics of innovativeness 4elative advantage 'ompatibility 'omplexity !ivisibility 'ommunicability
#ome ot er c aracteristics are price, tec nology, credibility and social approves. ndustria. nno6ation )ndustrial innovation is two types: product and process. * ese new products and process are %uite sensitive to factors of price and %uality, and potential returns. * erefore t e rate of diffusion varies widely depending upon t e industry and particular )nnovativeness: in %uestion. <owever, diffusion of industrial )nnovativeness is a relatively slow process in general. 3or example studies reveal t at )nnovativeness of )ron and #teel, coal, petroleum and rail road took twentiet or more years; process. <actors Deter*inin) t-e ndustria. nno6ati6eness 0conomic advantage 'ommitment (ncertainty 4isk reduction
:doption of industrial )nnovativeness is also influenced by t e buyer organizations c aracteristics, suc economic strengt G age, education, values and attitudes of its administrators. Diffusion of nno6ation
as size,
4ogers as suggested t e use of diffusion of innovation met od for launc ing a new product. Not-all-potential users of a new product or a new generation of a tec nology adopt t e new product at t e same time. 'onse%uently, on t e basis of t e stage at w ic t ey adopt t e new product, adopters traditionally are classified into five categoriesG innovators, early adopters, early ma>ority, late ma>ority and laggards. :ssuming t at t e adopter distribution over t e time follows a normal distribution as in 3igure &, 4ogers as suggested t at for every new product, ,.1J of t e adopters are innovators, &..1J are early adopters, ./J are early ma>ority, ./J are late ma>ority and &5J are laggards. <owever, a later study done by +a a>an et al reveals t at t e relative size of t e various segments depends on t e product type and ranges. <ence t e same categories will ave ,J to .J of innovators, 7J to ,8J of early adopters, ,7J to .,J of early ma>ority, ,7J to .,J of late ma>ority and ,&J to ,.J for laggards. )nnovators tend to be t e smallest segment of t e five-adopter categories. <owever, despite its small size, it is often t e main target of t e marketing efforts of firms t at wis to sell a new product. * e reason is t at not only are innovators, even a small fraction of early adopters are ready to take risks and are not price sensitive. * ey also influence t e early ma>ority and late ma>ority in purc asing t e new product. )t is ence optimal in a new product launc to allocate relatively more marketing efforts and resources to t e innovators and early adopters. <owever, as per +a a>an et al. t e results suggests t at if t e intensity of influence of t e innovators on t e ma>ority does not decrease as more consumers adopt t e product, despite t e small size of t e innovator group, it is always optimal for a company to allocate relatively more of its marketing efforts and resources to t e innovators t an to t e ma>ority. 0ven in t e presence of competition, it is better to target t e innovators. 2nly w en t e intensity of t e influence of t e innovators on t e ma>ority decreases as penetration increases s ould a company consider targeting t e ma>ority t an t e innovators. 'ompany targeted t e ma>ority in &77/ in (#:, wit t e /65s w en t e Pentium c ip was already available. * is product sold partly as an industrial product to companies and partly as a consumer product to omes and individuals. )nnovators really like to be t e first to try new products. * ey tend to be better educated and are ready to risk buying an innovative product. * e early adopters are very sociable and t ey influence t e people. * e key to diffusion of innovations is to find t e innovators and early adopters.
<i). 1A.% ) )nnovators 0: 0arly adopters 0+ 0arly +a>ority -+ -ate +a>ority - -aggards - +ean of t e adopter normal distribution - #tandard deviation
4ogers suggests t at t e rate of ease of adoption of a new idea depends on t e following elements:
;e" ti/e d/ nt ge: * e degree to w ic t e idea is perceived as better t an t e one it supersedes. * e grater t e relative advantage an idea as, t e faster it will be adopted. Iindows 71 was more user friendly t an Iord#tar and ence t e relative advantage made t e adoption faster. Comp tibi"it,: * e degree to w ic t e idea is perceived a being consistent wit existing values, past experiences, and needs of potential adopters. * e more compatible a new idea is, t e faster t e rate of adoption. =elloggs; answered t e needs of t e )ndian customers by offering t e varieties in $asmati rice and like w ic immediately got t e attention of t e customer. Comp"exit,: * e degree ot w ic t e )dea is perceived as difficult to understand andHor use. * e less complex a new idea is, t e faster t e rate of adoption. +ac ))) wit its easy maneuverability makes t e product less complex. * e fax modems are less complex s compared to t e cable modems in )ndia. Tri " bi"it,: * e degree to w ic t e idea can be tested. * e easier it is to experimentally test a new idea, t e faster it will be adopted. +any of t e 3+'9 goods offered in sac ets and packets ave made t e trialabilty easier. 0ven t e car manufacturers are offering demonstration cars for trial. :b!er/ bi"it,: * e degree to w ic t e results of an innovation are visible to ot ers. * e more observable t ese results, t e faster t e idea will be adopted. Providing t e free samples, trial packs make t e product visible. <ig decibel advertising also elps in observability. :doption curve * e p ases t roug w ic consumers or a market proceed in deciding to adopt a new product or tec nology. :t t e individual level, eac consumer must more from a cognitive state ?becoming aware of an knowledge about@, to an emotional state ?liking and t en preferring t e product@ and into a conative, or be avioural state ?deciding and t en purc asing t e product@. :t t e market level, t e new product is first purc ased by t e innovators in t e marketplace, w ic are generally t oug t to constitute about ,.1J of t e market. 0arly adopters ?&..1J of t e market@ are t e next to purc ase, followed by t e early ma>ority ?./J@, late ma>ority ?./J@ and finally, t e laggards ?&5J@.
Lesson 1D Tea*s in NPD )ntroduction )nnovation is t e key for organizational growt and survival. )nnovation occurs incrementally, aving a cumulative effect over time. * e early fax mac ines were single-copy feed and ad t e capability to store fax numbers. *oday;s fax mac ines are multifunction and go beyond faxing to include copying and scanning facilities. 9illette;s commitment to researc , development and tec nical supremacy results in new products t at cannibalize current product successG like t at of +ac . in t e place of +ac , s aving blades. * e level of innovation wit in a market can be categorized as: 'ontinuous innovation w ere, no new be aviour is really re%uired of t e customer and does not involve in serious decision making. * e developments in t e 3+'9 goods are an example. !ynamically continuous innovations are significant innovations and re%uire some adaptation in consumer be aviour. * e ome P' and electric rice cookers are some examples of t is type. !iscontinuous innovations are totally new innovation. * ere is a complete c ange in t e be aviour of t e consumer is expected. :ll t at tec nology driven products w en introduced first ad undergone t is innovation only. 2rganizational innovation according to $arton *ret eway is a six-step progrmme. Aision leads to ob>ectives, w ic yields to strategy, and t at leads to implementations support and en ancement of t e original idea. :n individual w o recognizes t e power of innovation mig t build support for c ange wit in t e firm. *ret eway identified t e following as t e innovation best practices: #enior management commitment 3unding t e programme +otivation and rewards 'ross-functional teams !edicated resources 4eturn on innovation measures 'ustomer value added #ystematic processes )nnovation goals, ob>ectives and strategies and )nnovations roles and screens
#abine =uester et al., in t eir study on retaliatory be aviour to new product entry cited t at t e degree of innovation plays a vital role in t e extent to competitive activity for market s are. +arket growt as a positive effect on bot product retaliation and reaction speed. * is signifies t at t e market growt rate signals potential profitability and ence provides industry players wit an incentive to defend t eir position in t e market. * reatening moves, suc s new product introductions and price decreases, ave a potentially negative impact on profitability of ot er players in t e industry and ence countermoves must be expected. * e significant effects of market growt on product retaliation and reaction speed ig lig t t ose firms competing in a ig ly competitive environment must focus on creative innovation and organizational responsiveness. 2rganising t e New Product +anagement )n many companies, responsibility for new products takes one of four basic met ods. Product manager approac 0ac manager as complete responsibility for one product or brand determining ob>ectives, developing strategies, setting prices and advertising budgets and working wit t e sales force. * e manager is also responsible for creating new-product concepts and putting t em across t e development process. #ome companies understanding t e
eac
as been successfully
* ese committees comprise of top managers from several departments. * ese committees meet to develop new ideasG once t e task is complete, t eir members return to t eir regular positions. * is approac some time takes valuable executive time and committee members ave a tendency to put t eir own interests above t ose of ot er members. <u.. ti*e ne9 product depart*ent * is departments usually is set up comprising top managers and ave a ig er ierarc y in companies. some times, it works in con>unction wit a temporary new product committee. 9enerally t is department plans and coordinates all t e activities involved in new product department from generating ideas to supervising t e development process. !enture tea*s : group of managers w o are specialists in a certain area are given t e task of t e new product development activities. * e team combines needed resources and expertise, suc as product design, engineering, capital management, market analysis, accounting and marketing. * is team disbands once t e new product is anded over to t e marketing and production department. Autono*ous tea* : completely self-sufficient pro>ect team wit very little, if any link to t e funding organization. 3re%uently used as an organizational model to bring a radical innovation to t e marketplace. #ometimes called a DtigerE team. Co..a1orati6e product de6e.op*ent I en w o firms work toget er to develop and commercialize a specialized product. * e smaller firm may contribute tec nical or creative expertise, w ile t e larger firm may be more likely to contribute capital, marketing, and distribution capabilities. I en two firms of more e%ual size collaborate, t ey may eac bring some specialized tec nology capability to t e table in developing some ig ly complex product or system re%uiring expertise in bot tec nologies. 'ollaborative product development a s several variations. )n customer collaboration, a supplier reac es out and partners wit a key or lead customer. )n supplier collaboration, a company partners wit t e provider?s@ of tec nologies, components, or services to create an integrated solution. )n collaborative contract manufacturing, a company contracts wit a manufacturing partner to produce t e intended product. 'ollaborative development ?also known as co-development@ differs from simple outsourcing in its levels of dept of partners ip in t at t e collaborative firms are linked in t e process of delivering t e final solution to t e intended customer. Cross4functiona. tea* : team constisting of representatives from t e various functions involved in product development, usually including members from all key functions re%uired to deliver a successful product, typically including marketing, engineering, manufacturing operations, finance, purc asing, customer support, and %uality. * e team is empowered by t e departments to represent eac function;s perspective in t e development process. nte)rated product de6e.op*ent B PDC : p ilosop y t at systematically employs an integrated team effort from multiple functional disciplines to develop effectively and efficiently new products t at satisfy customer needs.
Lesson %E Top Mana)e*ent Contri1ution )ntroduction :ccording to =evin F. !ooley, t ere are t ree key concepts t at directly impact NP! improvement: &. I at is done a Dbest practiceE is a tactic or met od t at as been s own t roug real-life implementation to be successful. ,. <ow well t e organization does w at it does .. <ow widely and often t e organization performs t e best practice. * is s ows clearly t at t e success of NP! lies solely on t e commitment and vision of t e top management. I ile examining successful and unsuccessful NP! practices at (# Iest, t e regional $ell telep one operating company in (#:, Fo n +ullins et al identified five key practices t at can guide managers as t ey struggle wit t e c allenges of uncertain and rapidly c anging markets. 3ocus on probing and not measuring t e process -imit large scale, %uantitative researc and emp asis %ualititative met ods +ake a little and sell a little #tage t e firm;s resource commitment over t e life of t e NP! process $uild distribution c annels appropriate for eac new product, including direct marketing strategies
' arlie 3ine suggested t at strategic t inking around partnering is a leading factor in a company;s success. Professor 3ine presented an analysis of ow market pressures are c anging t e way companies must t ink about t eir supply c ains. 'ompressed cycle times, markets t at rise and mature in mont s, and smaller first mover advantages are all contributing to s orten t e rign of competitive advantageC $ecause competitive advantage is fleeting, a nimble supply c ain becomes an absolute necessity and can be competitive differentiation in itself. $ecause of t is dynamic supply c ain configuration, t e product development process must incorporate t ree-dimensional engineering t e concurrent, development of product, process, and supply c ain design. * e ability to execute t ree-dimensional engineering, to forecast demand, and to anticipate opportunity will determine t e victors in t e evolving business landscape. Iays of New Product !evelopment :' company can add new products t roug ac%uisition andHor new product development. * e ac%uisition route can take t ree forms t e company can buy ot er companies, it can ac%uire patents from companies or it can buy a license or franc ise from anot er company. * e new product development route can take tow forms t e company can develop in its own laboratories or it can contract wit independent researc ers or new product developers firms to develop specific products for t e company. :c%uisition as a 4oute to New Products :s t e )ndian companies try to gear up for competition in t e wake of t e government signing t e I*2 accord and subse%uent liberalization process, traditional growt from organic expansion is no longer enoug , and as opted for ac%uisition as a route to consolidation. * e benefits of ac%uisitions are: 4ationalizing istorical portfolios and modernize 0arlier successes of t e ac%uisition route :c%uisitions provide a great entry strategy w ic ot erwise would ave ad entry barriers. )mmediate access to infrastructure and increase in capacity
0asy to buy loss-making companies for tax reasons )n related, t e products will add to t e existing portfolio :c%uisitions allow for increased presence on a global level
: ma>or problem t at is expected in t is process is t e management of uman resource. )f it is andled well, t en alf t e problems t at could arise will be solved. #uccessful ac%uisitions re%uire an all-round approac . Aoltas took over <yderabad :llwyn during :pril &77/. * e company overcame problems on every front. : A4# reduced t e workforce from 1,888 to /,888. Production was increased and costs were cutG re>ection rates were slas ed from &1 to & percent, w ile a c ange to a more efficient design broug t about a 5 per cent cost saving. : backlog of ,/,888 complaints was andled in t e first mont , and t e dealer network was increased from 688 to ,,188. * e company grew 18 per cent against an industry rate of &1 per cent and increased market s are from 6.1 per cent to && per cent by &771-75. Aoltas took t is issue as new product for t e company. #trategy led ac%uisitions are anot er areas for new product focus. * e : madabad based *orrent group is a classic example. *orrent being a p armaceutical company took over )ndia )nfusions -imited, as related ac%uisition. <owever over t e years, *orrent ac%uired companies like +a aras tra 0lectricals -td. and renamed it *orrent 'ables and also 9u>arat -ease 3inancing -td. <industan -ever -imited ac%uired *ata group company *obacco, took 68J s are in ice cream market by ac%uiring =wality. +ilkfood and !ollops. )n foods, it as taken over t e ($ group;s =issan, =ot ari 9eneral foods; instant coffee unit and 'aption 'ook salt. #un P arma also as recently ac%uired brands from t e <yderabad based Natco P arma. * e brands ac%uired by #un P arma include some of t e leaders in t eir respective segments, like #uminat ?antimigraine@, #planz ?lansoprazole@, 'oldact ?coug and cold@, Natamox ?anti-infective@. #un ad also ac%uired some cardio logical products, 'ardicap *4 and $etacap *4 along wit t e anti-emetic leader Sofer. * e ac%uisition includes minor overlap of products, owever, it offers new markets wit a ig growt potential in t e ig er realization segment. Iit t ese brands ac%uisitions t e company will move its 249 ranking from &7 t to t e &,t position. 3urt er, t e ac%uisition will also result in t e number of production top ,17 products increasing from two to t ree. * e poor performance of t e formulations division is a cause for concern, but t e restructuring planned to bring back lost market s are and t e new product launc es and ac%uisition of brands by #un P arma ensures t at t e company will ave a good medium to long term growt .
Lesson %1 McHinse0=s ># <ra*e9or3 and NPD +c=insey;s "# framework +c=insey B 'o;s "# framework provides a useful framework for anyalysing t e strategic attributes of an organisation. * e +c=insey 'onsulting 3irm identified strategy as only one of seven elements ex ibited by t e best managed companies. strategy, structure and system s can be considered t e D ardwareE of success w ilst style, staff, skills and s ared values can be seen as t e DsoftwareE. 'ompanies, in w ic t ese soft elements are present, are usually more successful at t e implementation of strategy. * e "-#s are: # ared values #tructure #ystems #tyle #taff #kills and #trategy
* ere is no particular order to t e "#s. 0ac of t e "#s is elaborated on below: #-ared !a.ues # ared values means t at t e employees s are t e same guiding values. Aalues are t ings t at you would strive for even if t ey were demonstrably not profitable. ?0xample: * e ' ristians being fed to t e -ions.@ Aalues act as in organization;s conscience, providing guidance in times of crisis. E+a*p.e/ * e DfamousE Fo nson B Fo nson *ylenol case is an example w ere a credo elped provide guidelines for practical decision making. I en tainted *ylenol was discovered FBF leaders could %uickly make a decision to immediately, publicly, remove all *ylenol from t e nation;s s elves, because t ey were following t e organization;s credo w ic said t at FBF;s first responsibility was to provide %uality products to doctors, nurses and patients. * is dramatic action elped unsure a reinstatement of bot public trust and employee pride in t e integrity of t e company, and led to ig er long term sales. #trate)0 * e integrated vision and direction of t e company, as well as t e manner in w ic communicates and implements t at vision and direction. #tructure * e policies and procedures w ic govern t e way in w ic t e organisation acts wit in itself and wit in its environment. * e organigram ?e.g. ierarc ical or flat@ as well as t e group and owners ip structure are included ere. :lso note Porter;s categorization of group structures: 0fficient allocators of 'apitalG :llocation of 4esources, etc. #0ste*s it derives, articulates,
* e decision making systems wit in t e organisation can range from management intuition, to structure computer systems to complex expert systems and artificial intelligence. )t includes #t0.e #tyle refers to t e employees s ared and common way of t inking and be aving unwritten norms of be aviour and t oug t: #3i..s #kills refers to t e fact t at employees ave t e skills needed to carry out t e company;s strategy. *raining and !evelopment ensuring people know ow to do t eir >obs and stay up to date wit t e latest tec ni%ues. #taff #taff means t at t e company as ired able people, trained t em well and assigned t em to t e rig t >obs. #election, training, reward and recognition, retention, motivation and assignment to appropriate work are all key issues. #trate)0 and NPD :n act of imaging, guided by bot foresig t and informed discernment, t at reveals t e possibilities as well as t e practical limits in new product development is known as vision of an organisation. )t depicts t e most desirable, future state of a product or organization. -eading innovators in t eir industries, t ey rank first or second in market s are, profitability, growt , and s are older performance are t e visionary companies. : substantial portion ?e.g., .8J or more@ of t eir sales are from products introduced in t e last t ree years. +any firms want to benc mark t ese firms. $ased on strategy, a firm;s operation across multiple levels of t e value c ain. )n t e early &788;s, 3ord +otor 'ompany extremely vertically integrated, as it owned forests and operated logging and wood finis ing and glassmaking businesses. * ey made all of t e components t at went into automobiles, as well as most of t e raw materials used in t ose components. 'ompanies follow *otal Kuality +anagement w ic is a business improvement p ilosop y t at compre ensively and continuously involves all of an organization;s functions in improvement activities. #ometimes t ey resort to #trategic Partnering w ere an alliance or partners ip between two firms ?fre%uently one large corporation and one smaller, entrepreneurial firm@ to create a specialized new product. *ypically, t e large firm supplies capital, and t e necessary product development, marketing, manufacturing, and distribution capabilities, w ile t e small firm supplies specialized tec nical or creative expertise. #ystems and NP! * e aspects t at are important for a company w ile following "# framework are: ),!tem! Cier rch, .i gr m: * e diagram used to represent product arc itectures. * is diagram illustrates ow t e product is broken into its c unks. ),!tem! nd &r ctice!: 0stablis ed met ods, procedures, and activities t at eit er drive or inder product development. * ese may relate to t e firm;s day-to-day business or may be specific to product development. ),!tem! nd &r ctice! Te m: #enior managers representing all functions w o work toget er to identify and c ange t ose systems and practices indering product development and w o establis new tools, systems, and practices for improving product development. =eys to )mproving New Product #uccess * roug +arket )nsig t -eaders ip #tyle 2rganizational 'ulture 'omputer #ystems 2perational #ystems <4 #ystems, etc.
&. #enior management must demonstrate a commitment to creating a learning organization and promote t e idea t at customer knowledge drives innovation. 3urt ermore, product developers re%uire a clear understanding of t e connection between corporate strategy and product development initiatives. ,. 'ross-functional teams are t e best way to create market insig t because of t e diverse viewpoints of team members. :t a minimum, a marketer and a tec nology expert s ould >oin t e process of exploring customer needs. #uccessful teams spend time interacting wit customers in t eir environments in order to identify unarticulated needs. .. +arket insig t influences t e entire product development process, not >ust idea generation. )ntegrating market knowledge wit tec nology competencies ensures t at new product are designed, produced, and launc ed wit a sound understanding of t e market. <owever, because markets are dynamic, insig t must be refres ed during t e process from concept to launc . /. * e role of t e corporate market researc department is amplified beyond providing data. :s team members and facilitators, market researc ers prepare ot er members for immersion into t e customer environment and guide team members by interpreting t eir experiences. $est-practice market researc departments approac t eir work from more of a consultative t an analytical perspective. 1. *raining cross-functional teams on market insig t met ods is crucial to success. $est practice in t is area is to re%uire basic education on market researc tec ni%ues, wit additional training and facilitation for product developers on an as-needed basis. 5. No single tec ni%ue is best to create market insig t. * e results of t is study suggest t at using a combination of %ualitative and %uantitative met ods yields maximum knowledge. +arket insig t comes as part of a process of exploring and defining opportunities by t e product development team. 2t er types of information gat ered in t is process are tec nology landscapes, competitive analyses, and trends analyses. ". * e knowledge created by t e various team efforts is a valuable resource of t e corporation and s ould be managed accordingly. $est practice organizations ave knowledge management systems in place to access bot t e tacit knowledge of team members and t eir documented findings. 6. $est-practice organizations believe t at market insig t improves productivity and profitability, elps bring t e best ideas forward, and makes it easier to recognize ig -potential concepts. :s suc , market insig t can increase speed to profit and improve t e probability of a successful product introduction. $enefits in #uccess * roug NP! :$est-practice organizations s are t e following beliefs about creating and sustaining a successful market insig t process: &. 'ulturally, t e organization must be committed at t e ig est levels to gat ering and using market information for guiding 4B! and product development. ,. )nnovation is one of t e organization;s clearly stated strategic ob>ectives. .. * e organization;s values include customer focus. /. * ere is a clearly defined and widely communicated set of processes for creating market insig t and using it in new product development. 1. +arket insig t and ot er knowledge about competitors, tec nologies, and t e business environment are managed and s ared. 5. * e cross-functional team is t e basic unit of organization for a market insig t initiative. ". Product developers; performance is measured in part on t eir skills in, and use of, market information is t e product development process. 6. Product development initiative in general, and market insig t pro>ects in specific must be ade%uately funded to succeed. 7. +arket researc ers must be e%ual participants in cross-functional product development teams and must be ig ly skilled in bot market researc and facilitation.
&8. Proven product development successes t at used market insig t are widely communicated t roug organizations.
t e
&&. * e organization as partners ips wit outside organizations, including market researc suppliers, vendors, and strategic partners for creating and s aring information.
Lesson %% Ne9 Product #uccesses )ntroduction )n today;s fast-paced, tec nology-driven environment, firms must %uickly envision, develop and deliver new products, is being first to market often determines a firm;s ultimate success. I en operating at t is breakneck pace, firms cannot afford to take t e time to complete t e traditional forms of %ualitative and %uantitative market researc activities aimed at reducing a firms risk of failure. *aking 7 to &6 mont s to define and deliver a product is no longer an option. )n many of today;s industries products must be conceived and delivered wit in 5 mont s or less to give a company a first-to-market position. :s a result, firms often eliminate or cut back on t eir customer researc , taking on more risk t an desired w en rolling out t eir new products. Iit t is added risk, firms are often forced to wait until t e product is introduced to gain an accurate assessment as to ow customers will respond. * is is often a dangerous proposition. )n t e days and weeks t at follow a product;s introduction, evaluations are publis ed or reported by trade magazines, user groups, industry watc ers, newsmagazines and ot er customer groups t at ave an interest in t e product. <ere-often for t e first time companies are learning ow potential customers perceive t eir products. (nfortunately, t e news is rarely pleasant. :ccording to statistics publis ed by =uczimarski B :ssociates, a ' icago-based consulting firm, organizations are experiencing &, product failures for every & success. * is failure rate is costing 3ortune &888 companies alone over N58 billion per year in wasted development effort. )n addition, firms put in t is position are burdened wit inventory and ot er costs and must decide off t e market or take ot er undesirable or costly courses of action. 2nce a product is introduced, customers and t e media re %uick to note any product deficiencies often to t e different of product sales. : firm;s inability to predict t e success of its products is often a costly liability. 4easons for t e NP! #uccesses )magine t e benefits t at would be realized if a company could successfully predict w ic product concepts will succeed and fail in t e marketplace. Iit suc power, a firm would possess t e ability to pursue only t ose product and tec nologies t at deliver great levels of customer value and forego t ose t at will fail to produce t e desired results. Product failure rates would declineG resources would be focused only on successful products dramatically improving productivity. 4evenues would increase, as expenses are reduced all resulting in greater company profitability and increased levels of customer satisfaction. 2btaining suc power s ould be t e goal of any firm. #o, w at is preventing an organisation from predicting t e success or failure of its productsC 2f course, t e typical answer is a lack of psyc ic ability or a crystal ball. 3ortunately, t ere is anot er explanation t at is muc less et ereal. * e trut is most companies simply do not ave t e information t ey need at t e time t e information is needed to determine w et er or not a product concept will ultimately succeed or fail in t e marketplace. +any firms believe t e information needed to make suc a determination eit er does not exist or cannot be captured and t erefore do not attempt to obtain it. *o make matters worse, traditional met ods of market researc w ic ave been used for years ave essentially failed to elp firms effectively predict t e success of t eir products. Iit a typical &, to & failure to success rate, leading companies ave concluded t at current met ods of researc are not all t at elpful and t at a ig failure rate is simply a cost of business t at cannot be overcome. $ecause t e future cannot be predicted, most firms ave concluded wit seemingly infallible logic, t at t e ultimate success or failure of a product cannot be accurately predicted. * is is a common, but unwarranted conclusion. :lt oug t e future cannot be predicted, it can be s aped and moulded by well-planned actions all geared toward ac ieving t e criteria t at define w at is desired in t e future. -ikewise, a product can be s aped and created to meet t e criteria t at customers are going to use to >udge its future value, t ereby enabling a firm to predict a product;s relative success or failure. 'onsider t e following. 'ustomers use certain criteria to >udge t e value of a product. : product;s ability to meet t ese criteria reflects its relative value. if an organisatoin knew in advance w at criteria customers were going to use to >udge t e value of its products, it could design its products to meet t e stated criteria effect ensuring t e success of t e product.
Newly released product are often declared failures because of t eir inability to meet t e criteria t at define value in t e eyes of t e customer. )t is at t is point t at companies often find out w at criteria customers are using to >udge t e value of t eir products. 2ne must ask, if t ese criteria can surface and be used to >udge t e value of a product s ortly after its introduction, w y can;t t ey be uncovered and used to evaluate a product;s potential t e day before it is introducedC #ix mont s beforeC +ore to t e point, w y can;t t ey be uncovered before a product is conceptualized and used to elp define t e concept itselfC )ndeed, t is c allenge is at t e eart of t e dilemma facing organizations attempting to successfully manage product innovations. )ncredibly, t ese criteria can be uncovered w en needed and used to define successful, even breakt roug products. I en a developer of music media, for example, knew its products were going to be >udged for t eir ability to provide access to a large number of songs, play wit out distortion, re%uire minimal storage space and reproduce sound as if it were live, t en designing t em to meet t ese criteria ensured success along eac of t ese important dimensions. * e criteria t at customers will use to >udge t e value of any product can be captured before a company sets out to define a next generation concept or create a product for a new market. <aving access to t is information at t e rig t time opens t e door to many new possibilities. 2nce obtained, a company can use t is information to immediately determine ow well a newly conceived product will ac ieve a customer;s desired outcomes. Ieak product concepts are exposed, enabling firms to avoid t e allocation of resources to concepts t at would ultimately fail. Aalued products are systematically identified or created. Iit t is information in and, a company can accurately measure t e amount of value t at will be delivered by a proposed product at t e time it is conceptualized in advance of its introductionG in advance of deploying any resourcesG in advance of investing t e first dollar in development. * e music media manufacturer, for example, evaluated t e potential of several concepts to provide access to a large number of songs, play wit out distortion, re%uire minimal storage space and reproduce sound as if it were live giving t e firm insig t into w ic concepts would create t e most value. organizations possessing t is information can c oose to pursue only t ose concepts t at will create tremendous value and forego t ose t at will deliver less t an stellar results. (sing t ese criteria, a company can, in effect, predict t e success of t e products it pursues by investing only in t e most promising opportunities. 2rganizations typically develop products and services wit out knowing t eir customers desired outcomes, ence t ey are developed wit out knowing w at criteria will be sued to >udge t e creation of value until it is too late. :s a result, firms ave no way of predicting t e success or failure of t eir proposed products and are forced to live wit costly and wasteful product failure rates. * is inability is tied to involvement in an old paradigm. )nnovation is no longer an art. )t is a predictable, repeatable process an art evolved to a science. * e ability to create value as become, and will continue to be, t e primary source of sustainable competitive strengt . 2rganizations possessing t e ability to predict w ic products will succeed and w ic will fail in t e marketplace are wll positioned to win today;s battle for intellectual leaders ip and tomorrow;s battle for market dominance. 4ecognizing t at a product;s ultimate success or failure can be predicted is an important step on t e road to mastering t e process of innovation. 4eliance on luck, intuition and gut feel may ave worked in t e past but continued success will be dependent on out smarting old and new competitors wit speed and precision. New t inking is paramount to success in a marketplace w ere t e old rules no longer apply. +easuring #uccess of New Products 2nce you;ve introduced a new product or service or developed significant improvements existing ones, you;ll naturally want to do some follow-up to measure t e success of t e pro>ect. I et er t e introduction is ultimately successful or not, you need to be able to learn from t e process to ac ieve more success down t e line. +ost small companies cannot afford t e complex and costly consumer tracking studied used by larger, more sop isticated competitors: (sage and attitude studies t at examine consumer usage and attitude about products, advertising, brand awareness, and brand image at a given point in time.
*rial and repeat purc ase tracking studies t at record weekly purc ases of similar products by target consumers, as well as t e reasons for buying or not buying t e products ?t is type of study is sometimes called a diary panel@ #imulated test marketing called Dexperimental primary lab researc E, w ic is usually conducted in store malls under controlled conditions. 'ontrolled field testing called Dexperimental primary field researc E, w ic is usually conducted in a controlled group of stores :dvertising awareness and recall studies t at examine t e efficiency of print and electronic advertising on target buyers, often conducted by t e market researc companies. $ut small companies can conduct low-cost or free %ualitative researc .
*alk to buyers and consumers about product satisfaction and purc ases. 3rom a marketing researc standpoint, t is is biased, %ualitative researc wit out standard interview controls. $ut it is timely information and may be actionable. :nd it places you at point of purc ase, close to your buyers ?e.g. retailers@ and end users. 'onduct a test of advertising spending levels in different test markets or, wit a single business in one location, over different time periods. )t is relatively easy to vary introductory spending in eac market, if you are testing a number of geograp ical markets. <owever, one s ould ave significant spending differences of a least TH- 18 percent in eac market for eac spending variable. #mall companies ?e.g. one store@ may ave to vary spending levels over matc ed periods of time and compare sales results. 3or example, try increasing your local newspaper advertising spending 18 percent over t e same %uarter of t e previous year. 0xamine weekly company sales receipts for new account sales,. 'ompared to receipts for reorders. * is is in indirect, but free, way to measure initial purc ase vs. reorder sales.
#uccessful N+P!;s in t e )ndian 'ontext : few successful products are mentioned below: COMPAN$ " T TAN NDU#TR E# P42!('* 30:*(40# P4)'0 4s. 771H- to 4s. &718H$rand Name *itan D3astrackE Product #tyles ,8 nos.
P2#)*)2N)N9: *elevision Print Mout 4elated Promotions :d $udget 4s. &.1 'rores
COMPAN$ " ;E,LETT4PACHARD P42!('* 30:*(40#: $rand Name 3eature - D=-68E - 3ax #can Printing 'opy *elecommunication P4)'0 4s. //,777H-
*:490* :(!)0N'0 #2<2 ?)m "" :ffice1 Come :ffice@ nd )m "" D <edium %u!ine!! Cou!e!
P2#)*)2N)N9: :ll-in-one
P42+2*)2N: $uy and *ry 2ffer *elevision Print Mout 4elated Promotions :d $udget 4s. &.1 'rores
COMPAN$ " #,ATC; GROUP P42!('* 30:*(40# P4)'0 4s. &,188H- to 4s. 1,888H$rand Name D#watc E +odels ,88 nos.
*:490* :(!)0N'0: *rend 'onscious Mout , *rendy and Product 'onscious women Iorking +en <ouse old wit mont ly )ncome more t an 4s. 18,888H-
P2#)*)2N)N9:
Iatc Iardrobe
COMPAN$ " TO$OTA H RLO#HAR MOTOR# P42!('* 30:*(40# P4)'0 4s. 1,88,888H- to 4s. 7,88,888H$rand Name D*oyota KualisE 3eature ,,/55 '' !iesel 0ngine "1 b p
P2#)*)2N)N9: +ulti (tility Ae icleG : Premium 'ar : ve icle w ic L*ouc and *ry; ad comfort and reliability and a -ow cost of 2peration
!)#*4)$(*)2N: -,1 4etailers in )ndia. 'riteria for selecting retai7lers .# ?#ales, #ervices and #pares@
COMPAN$ " ;ERO ;ONDA MOTOR# P42!('* 30:*(40#: P4)'0 4s. /5,888H$rand Name DPassionE 3eature ".1 b p &&1 kg. - &88 ''
*:490* :(!)0N'0:
P2#)*)2N)N9: 3uel efficient 4eliable 0nvironment 3riendly I en #tyle +atters ...go for Passion;
COMPAN$ " ND AN #;A! NG PRODUCT# LTD. P42!('* 30:*(40#: P4)'0 4s. /7H- to 4s. &58H- for 9el variants $rand Name D9illette # aving 9elE 3eatures * ick -at er +akes #kin more #upple
P2#)*)2N)N9: :imed at c anging t e )ndian consumers conventional # aving abits 3or a $etter # ave
*oilet #oap +arket #uccesses -et us consider t e success strategies of . soaps w ic are t e undisputed leaders in t is market. Lifebuo,: -ifebuoy is t e largest selling soap in )ndia. )t is t e most successful toilet soap brand in t e country. )t is a recruiting brand and any nonuser of soap w o gets converted is first likely to buy -ifebuoy. )t is priced low and ence in t e reac of e common man. )t is &18 gm soap and t erefore offers value for money.
$esides being ardworking, it is long lasting w ic is anot er issue important from t e target a Iinner as an important role to play in its success. )t also as successfully made itself contemporary wit out losing its core values. #ince t e 58s its D*andurst i ki 4aks aE pitc as not c anged. Lux: -ux;s success is by and large attributed to its positioning. )ts positioning in t e )ndian and international markets is t e same. * e t eme is basically t at -ux olds Dt e secret to t e beauty of films star.E )t is difficult to get a more attractive proposition in a category w ere brands sell because of w at t ey stand for rat er t an w at t ey are. &e r!: Pears is a success basically because it is a distinctive, uni%ue product. $esides t e product being good, it delivers a relevant benefit. * e positioning is single mindedly medicinal and it does not offer any cosmetic benefit. )t protects t e skin because of its glycerin content. 3or t is reason consumers switc to Pears in winter. )t as tradition on its side being a very old soap in t e market. )t is ig priced and ence is a profitable brand. * us its uni%ue product and distinct positioning are responsible for its success. 'onclusion : marketer to ensure product success may use t e following guidelines: &. !istinguis your product from t e competition in a consumer relevant way. ,. 'apitalise on key corporate competencies and brand strengt . .. !evelop and market products to people;s needs and abits. /. +arket to long-term trends, not fads 1. !on;t ignore researc , but don;t be paralysed by it. 5. +ake sure your timing is rig t ". $e a marketing leader, not a distant follower. 6. 2ffer a real value to customers 7. !etermine a products s ort-term and long-term sales potential &8. 9ain legitimacy and momentum for t e brand &&. 9ive t e trade as good a deal as t e customer &,. 'learly define, understand, and talk to your target. &.. !evelop and communicate a distinctive and appealing brand c aracter.... and stick to it. &/. #pend competitively and efficiently, be ind a relevant proposition. +ake sure t e consumer is satisfied... and stays t at way.
Lesson %& Ne9 Product <ai.ures )ntroduction : product is a failure w en t ere is: Iit drawal of t e product from t e market )nability of a product to Ltake-off; toward anticipated market s are )nability of a product to fulfill anticipated life cycle 3ailure of a product to ac ieve profitability ?due to cost overruns@
#tudies ave s own t at in a many industries .1-/8J of new product effort fail. /5J of new product funding is wasted on failed or canceled pro>ects. 3ailures are different from 3:!# ?w ic ave a naturally s ort life cycle@. 3ailures are not necessarily financial failures, alt oug bankruptey may be a subse%uent event. 3ailure is t roug a flaw in t e designHselection process, suc as not enoug or misdirected product researc or market researc . 3ailures include, but are not limited to, products and services w ic pose ealt and safety azards. 3ailures are not necessarily Lbad; tec nical ideas. * e study of failures is important in t at it can elp us prevent future failures. -ooking at a variety of past product failures may generate some insig t into w at aspects of t e design process mig t warrant special attention in failure prevention. I at went wrong wit product PC was t ere somet ing t at t e manufacturerHdesigner s ould ave foreseen t at would ave avoided t e failureC # ould t e manufacturer ave discovered t at failure was inevitable and abandoned t e product, not spending any more money on itC 4easons for t e Product 3ailure &. * e relations ip of t e company or its brands on t e consumers will decide w et er a product will be successful or not. Ponds decided to enter t e toot paste market because t e consumer;s perception of Ponds as a talcum powder, not as a toot paste. ,. *oo small a target market, w ic is too specialized for t e volumes originally planned. .. *oo many new products in %uick succession. $a>a> auto, t e biggest scooter maker during &776 launc ed / models and 1 product upgrades. $ut none of t em succeeded. /. )nsufficient differentiation from existing offerings, leading to anot er Lme-too; product. +ac )ndustries diversified into papad business but lost out due to t e grey market Ponds toot paste was similar as 'olgate. 1. Poor or inconsistent product %uality. 9rundig w ic onslaug t of t e competition came to )ndia wit &, c annels could not face t e
5. No access to t e market due to faults in t e company;s policies ". Poor timing in terms of t e industry life cycle 6. -aunc ing t e product too early. :>anta !;tec toot brus es were launc ed during t e late eig ties w en t e concept was not known. =inetic +erlin w ic ad bot *A and A'4 failed since it was launc ed during t e late eig ties w en t e )ndian *A market was >ust growing. 7. -aunc ing t e product too late. *ide as a new product was launc ed in )ndia oly during ,888 w en ot er as offered better differentiation. 9eneral 0lectric came to )ndia wit t eir lig ting products late after P ilips ad establis ed. &8. Poor marketing and not enoug attention was paid to t e main competitive alternatives, leading to t e marketing strategy t at was unable to cut t roug competitor;s activities. #ince rural people make c utney at ome so <--;s *om Pudina, a mint based *omato ketc gup paints in sac ets broug t in, as alternative to c utney did not succeed. P ilip-+orris brand of powdered drink *ank initially failed w en launc ed in &76. due to lack of marketing vision.
Lesson %4 Product Researc)ntroduction 4esearc s ould be done continuously to identify t e lacunae in t e existing products, t e c anging demand pattern of t e consumers and t e packaging trend etc. <ence it is mandatory t at t e company as all available reports in t eir and before taking a crucial decisions. 3actors )nfluencing !emand in Ias ing +ac ine )ndustry * ere are two basic parameters t at influence demand in t e was ing mac ine industry. * ey are affordability and price. Afforda1i.it0 .i!po! b"e income of the popu" tion * e disposable income of t e average )ndian ouse old as been growing at a ig rate on account of t e sustained growt in 9!P. :s a result of rising disposable incomes, t ere as been a growing favourable attitude towards consumption as well as towards credit purc ases. * is will proper t e growt of was ing mac ine. 5/ i" bi"it, of con!umer fin nce 'onsumer finance as picked up substantially in )ndia. 'onsumers are not longer averse to t e concept of buying now and paying late was ing mac ine sales t roug consumer financing sc emes ave been increasing from &77175. )n )ndia, t e availability of consumer credit as also increased over t e last few years. : few banks in t e public as well as private sectors ave introduced various consumer-financing sc emes. Non-banking finance companies and even dome dealers ave floated t eir own financing sc emes. <!3', in >oint venture wit 9eneral 0lectric of (#: as promoted country wide consumer 3inancial services w ose main line of business is retail financing of consumer durables. I irlpool )ndia -td. as entered into a >oint venture wit :pple industries -td. 3or extending credit to its consumers. )n future also, consumer finance is expected to be a ma>or demand propellant for was ing mac ine. Price Ch nge in exci!e dut, !tructure 0xcise duties along wit sales tax constitute around ,8J of t e price of a was ing mac ine conse%uently, any increase or decrease in t e duty structure as a significant impact on prices and ence, on demand. Ch nge in perception * e entire range of w ite goods was perceived as luxury by t e government and accordingly, it levied ig duties on was ing mac ine. * e market was, t en, largely restricted to t e upper B upper middle classes. <owever, wit t e increase in t e number of urban ouse olds and working women, was ing mac ine ave come to be recognized today as a necessary item in most middle class ouse. * e government as accordingly reduced t e excise duty applicable on it. *ncre !e in competition with the entr, on <BC-! * e entry of global w ite goods player like I irlpool 0lectrolux, -9 electronics -td., and #amsung along wit t e introduction of new models wit additional features by t e domestic players ad increased t e range of models available to t e domestic consumer. * us t e availability of better options is expected to induce ig er purc ases from t e replacement market. $esides, intense competition in t is sector will lead to ig er discounts, gifts, attractive exc ange offers and even lower prices. * is is expected to propel t e demand for was ing mac ine.
3actors )nfluencing !emand in Passenger 'ar )ndustry )n t e case of passenger cars, t e twin factors of rising income and finance sc emes ave made it all t e easier to buy a car and try to estimate likely demand levels in t e future. 3irst take income levels for instance. *en years back, t e country embarked on a policy of economic liberalization. #ince t en it as been seen t at ouse olds ave moved up t e income ladder wit t e number of ouse olds in t e lower income groups actually declining. :ssuming t at ouse old will save .1J of its income to pay for annual loan installments, fuel and maintenance c arges, t en t e following table suggests t at t e annual income will ave to be around 4s. ,58,888 for a new car and 4s. &18,888 for a second- and car. :s and w en t e prices of second and passenger cars drop, a larger number of ouse olds will become eligible for owning a car. 3or example, if prices come down to around 4s. "1,888 levels, t en a furt er one million ouse olds will become potential customers. #ales in &777-,888 were "5,,,." units. :nd marketers remain bullis on t e market. * e ,88/-81 pro>ection: over &.. million units. * e )ndian industry;s production capacity is already close to t is figure, so marketers may want to urry t ings along. :lso, crossing t e & million mark is crucial for any industry to support so many carmakers. :cross t e world, t e cares market is known to start booming after a country reac es a 9!P-per- ead figure of N&,888 ?)ndia is currently at aroundN/&1 per ead@. <owever, it;s not clear w et er )ndia will follow t e same pattern. $esides, marketers are aware t at t ey ave to start building t eir brands a ead-of-t e-curve. * e segment of midsize sedans is expected to grow as a proportion of t e total, as replacement purc ases see better-off families s ift from subcompacts to Lfamily cars;. +eanw ile, t e segment of multi-utility-ve icles ?+(As@ and sports-utility-ve icles ?#(As@ is likely to grow faster t an t e average. :n interesting market is t at of two-w eelers. :t ..6 million units in &777-,888, t is market overs ot t e pro>ection by 188,888 units. * e current compound annual growt rate ?':94@ is &,.1 per cent. )f t is rate is used to extrapolate t e market, it s ould reac 5.1 million units in ,88/-81. <owever, t e pace will probably slow. #till, even 1.1 million is large by global standards affording )ndian twow eeler manufacturers t e sort of economies of scale t at only global players ave. * e main trend in t e )ndian twow eelers market as been t e s ift from scooters to motorcycles, as an image-conscious generation grows up. * e mobike segment as grown at a ':94 of ,. per cent, almost twice t e category rate. * e emergence of several ybrid products and sub-segments ?scooterettes, step-t ru;s and so on@ as been t e ot er interesting feature, )ndia;s market is uni%uely placed to support indigenous innovations. * e future is likely to see more automatic transmission products. New Product Prototypes #uccessfully creating a real-life product t at mirrors your new product concept and meets your company;s cost parameters is difficult. )t takes mont s and years, even for smaller companies to accomplis . +any low-and ig -tec products lend t emselves to measurable %uantitative instrument testing to see ow well t e product really works and to Dbenc markingE against current competitor;s products already in t e marketplace. 0ven informal taste-tests of prototype products in food businesses can be done in- ouse prior to real consumer exposure. #tirring t e magic kettle of product development re%uires dedication, commitment, and often courage to find ways to meet t e promises of a good concept. I at;s more, you may find t at your re%uirements for t e new product c ange as you move along. Preliminary ' ecklist for Product Prototype !evelopment =ey target consumers or buyers can validate t at product features and benefits in your prototype confirm to t e original concept and meet t e customer;s needs as well. Mou;ll need to be sure t at: &. Packaging, pricing, and brand positioning meet t e accepted concept targets. ,. +anufacturing, sales and distribution are ac ievable and manageable wit your company;s resources. .. Mour company as at least t e minimum resources needed to successfully introduce t e new product into t e competitive environment and targeted market segment. /. New product features and benefits can be accurately communicated to t e target buyer group.
1. Mour company can en>oy new product exclusively long enoug to recoup development investment and ac ieve company growt , sales and profit ob>ectives for t e new product. I en testing new products, don;t forget to te!t p c= ging1 pricing1 nd d/erti!ing4 *esting Packaging and Pricing +any companies, large and small, spend years successfully developing a new product wit great market promise but do not ade%uately test t eir packaging, pricing, and advertising prior to introduction. & c= ge te!ting: New products and t eir p c= ging s ould be tested under real-life conditions for: #torage under varying temperature, lig ting, and umidity # ipping t roug all distribution c annels, wit roug est andling 4etail environment tests under sun and fluorescent lig ting conditions # elf life studies for age deterioration
&rice te!ting: New product pricing s ould be examined for: &. 'ompetitive advantage ?i.e. ow is your product a better value t an t e competitor;sC@ ,. Parity vs. competitors ?i.e. are you getting as muc for your product as your competitorH@ .. Premiums vs. competitors wit similar products or substitutes ?i.e. are your customers paying more for t e extra value t ey receiveC@ /. :de%uate margins for: !istributor and w olesaler pricing +arketing spending support Profits
1. 'onsistency wit brand positioning ?i.e. products positioned as DupscaleE s ould be more expensive t an similar products positioned as Dmass market.E@ Product (sage :nalysis People often believe t at consumers can;t tell w at t ey want. 3or t is reason, firsm tend to t ink its of to >ust go a ead and manufacturer products or launc web sites wit out any researc . * is is go fundamental t at t e idea forms t e basis w y people t ink marketing is about creating needs, rat er t an fulfilling needs. +ost of t is flawed t inking is due to a misunderstanding of ow to conduct researc on consumers. *o understand t is, consider t at you asked consumers, say back in &771, w et er t ey wanted to buy books over t e )nternet. 2f course t ey would ave said Dprobably not.E 'ompanies interpret t eir response as evidence t at people don;t want t e )nternet as a s opping ve icle, but t en couldn;t it also be t at consumers didn;t know w at t e )nternet was so ow could t ey respond in any positive wayC 2ften people believe t at consumers could never ave said in any marketing researc study t at t ey wanted a computer. $ut again, t is is due to a flawed way t at people tend to t ink about marketing researc . $y t e way, if you asked people long ago w et er t ey wanted some way to correct typing mistakes or more easily conduct Dw at ifE scenarios on t eir andwritten spreads eets t ey response would be different. 'onsumers can;t tell w at t ey want if you focus on your product. $ut if t e company focus on t e benefits of your solution, any consumer can be able to make a t oug tful and meaningful response. )f a company sells somet ing t at businesses would use, watc people in t eir officers or in t eir manufacturing plant or w erever t ey mig t use your product. 'ompanies w o sell medical e%uipment, for example, often ave t eir salespeople spend time in t e operating room >ust to observe surgeons as t ey work. 'ompanies sometimes watc customers w en t ey are Dbeta testingE t eir product, but t is is often too late. 0ven wit out a product in and, one
can obtain muc better information about t e value of t eir idea by watc ing prospective customers in t eir normal situation. Tips to Understand Product Usa)e #ome of t e important tips on understanding t e product usage of t e customers: .o more "i!tening th n t "=ing :ct like you;re from a foreign country, or better yet, from a different plannet. #ee t e world for t e first time. )n t is way, you;ll get past your selective perceptions and biases and >ust see customers t e way t ey are. Mou;ll also ask better and more open %uestions and focus less on your solution and more on customer;s problems Tr, / riet, of re!e rch method!
4at er t an focusing on one way of conducting researc , try a variety of met ods. 3or example, instead of >ust surveying customers, conduct in-dept interviews, ave t em draw pictures, tell ypot etical stories, or use observation tec ni%ues. (ng ge cu!tomer-! im gin tion Potential customers eit er ave t e ability to solve many of t eir problems of t e imagination to identify ways of solving t ese problems. 9et t em to solve t eir problems by asking t em ow t ey would do it. Ie;ve done t is in focus groups by asking participants for t eir solutions to a current business problem and t ey are able to do t is %uite well. 0ven more engaging is to tap into customer;s imagination. Mou mig t ask t em to form visual images ?pictures in t e mind@ of ow to solve a problem. 3or example, say you;re t inking about a new business w ere people can buy groceries on t e web. :sk t em to delve into t eir memory about grocery s opping experiences t ey;ve ad, andHor ave t em picture t e various ways t ey interact wit a grocery store. Probing t is level of a customer;s mind will point you in t e direction of ow to create not only original, but more importantly, useful productHservice ideas. * ese tec ni%ues will elp uncover t e problems t at customer;s face. * is is t e so-called DpainE t at form t e basis of w at solutions customers may look for. :s you mig t know, recently t ere as been talk t at companies s ould not focus on current paid, but on t e paid t at customers will face in t e future. $ut, again, t ese writers are not t inking correctly about t e needs of customers t e tec ni%ues we;re discussing, w ic ave long been used y solid marketing companies, are looking for enduring customer;s pain, not t e little transient problems t at are easily erased wit a trivial solution. :ll of t ese tec ni%ues will get you closer to understanding w at customers really want, and give you a w ole new perspective on marketing. Mou won;t say any longer t at marketing is about creating needs. )nstead you;ll see t at customers ave profound and enduring needs, and good researc can uncover t em. Product usa)e situations )t refers to t ose setting w ere consumption occurs. )n many instances, purc ase and usage situations are vitally t e same. $ut product consumption often occurs in settings t at are %uite removed, bot p ysically and temporarily, from t e setting in w ic t e product is ac%uired. 0ven w en t e purc ase and usage situations are distinct, t e latter can still ave a powerful influence as consumers take into account t e intended usage situations during decision making. * e social surroundings t at c aracterize a usage situation can ave an important influence on consumer be aviour. * e time at w ic usage occurs may also affect consumer be aviour. )n order to understand w y be aviour is affected by usage situations, it is useful to examine ow t e importance consumers attac to product attributes and t eir beliefs about a product;s performance may c ange across various settings. Morp-o.o)ica. ana.0sis * is met od analysis t e structural dimensions of t e product, w ic elps in getting to t e relationsips between t em. I en a writing instruments is analyzed, t e extent of its lengt , clarity and convenience become t e relations ip factors from w ere a new product can be found out. 4esearc on t e old 3ord 0scort indicated t at a t ree box design found favour t an a atc back. :part from more space for luggage, consumers felt t e boot also provided more safety t an a atc . )ndian customers also told 3ord t at rear seats used for "8J of t e time. )n ot er
markets, t e rear seat is used less t an &8J of t e time, w ereas in )ndia it is used extensively to cram in people. #o, t e )kon was to ave a roomier rear seat wit full roll down windows, reading lig ts and comfortable centre seating as well. :nd t e rear door openings were claimed to be t e largest in t e industry w ile t e eig t of t e c assis was suc t at it will be easy to get in and out. * e new 3ord )kon car;s design and also taken care of t e poor road conditions during t e monsoons in )ndia. ,-at do Custo*ers Rea..0 Bu0? 2ne of t e most fundamental %uestions in marketing is Dw at do customers buyCE I en t inking about a product or service, we can c aracterize t e answer to t is %uestion in essentially two different ways: Product attributes ?also called DfeaturesE@ and benefits. )n marketing, we first focus on t e benefits t at customer desire ?since t is is w at really motivates purc ase decisions@, and later, as a tactical issue, we focus on t e product or service attributes t at provide t ose benefits. )n my experience, people ave trouble understanding t e difference between t ese various ideas, so t e discussion below is my attempt to elp. 'oncrete and :bstract Product :ttributes vs. 'ustomer $enefits * e first t ing to note is t at product attributes reside in t e product, w ile benefits reside in t e customer. 3or example, a car can ave /-w eel drive ?a concrete attribute@ and provide a benefit to a customer of being able to go various places. : computer can ave a microprocessor wit a fast clock speed ?a concrete attribute@ and provide t e benefit of being ale to get your >ob done faster. Mou will note t at product attributes tend to be concrete, but t ey can also be abstract. * ink, for example, of a fast microprocessor. * ere is a more abstract way of t inking of t is attribute by using t e term DperformanceE. $enefits are always abstract, and t ey are often t e result of a cluster of product attributes, some of w ic may be abstract attributes. 3or example, t ink of safety ?say in a car@. * ere is a cluster of concrete product attributes ?e.g., air bags, brakes,. :nd body construction@ t at give rise to t e more abstract concept of t e benefit of safety. $ut note t at DsafetyE can also be applied to t e car ?so it;s an abstract product attribute@. +any times, abstract product attributes are closely related to benefits. I en t ey are, you do not get muc benefit out of making a distinction between attributes and benefits. )t is often easier to t ink about w at a customer buys by t inking along t e continuum of concrete versus abstract ideas, regardless of w et er we label it an attribute or a benefit. #ince w at customers buy are abstract concepts, it is easy to t ink in terms of concepts t at are simply at too ig a level of abstraction. #everal of t ese concepts are well known. *ake for example t e generic words DvalueE and D%ualityE. I at do t ese meanC Iell, in fact, if you ask people to define t ese concepts you will likely find several answers, since t ey are so general t at t ey are often meaningless. $ut are t ese useful to marketing a productC Iit t is tec ni%ue in mind, you mig t now consider t e ot er ma>or ideas t at typically follow under t e eading of customer benefits ?but are simply too ig @. * ese include: DreputationE, or t e ultimately useless idea ?t at ) often ear@ Dit works t e way ) expect it to work.E Iall #treet Fournal studies s ows t at people consider reputation to ave many aspects, including a reputation for visionHleaders ip, social responsibility, emotional appeal, and products. * at is, benefits t at are useful to marketing decisions are t ose w ic vary along a dimension. * is is because an important aspect of marketing is understanding ow firms or brands stand in t eir perceived delivery of benefits. * e point is t at t e benefits t at customers use to >udge products and services vary along relevant dimensions, and t us we need to identify not >ust t e general dimension, but t e endpoints as well. 3inally, note t at t ese endpoints can usually be discovered by again asking t e %uestion DI at do you mean by t atCE
Lesson %' ntroduction to Brandin) )ntroduction $rand is a name term, sign, symbol, or design or a combination of t eme intended to identify t e goods or service of one seller or group of sellers and to differentiate t em from t ose of competitors. )n essence t e brand identifies t e seller ?or@ maker. $randing is a ma>or issue in product strategy on t e one and, developing a branded product re%uires a great del of long term investments especially for promotion, advertising and packaging. 2n t e ot er and manufacturers eventually learn market power lies wit building t eir own brand. 0ven w en t e companies can no longer afford to manufacture t eir products in t eir omelands, t e brand name continues to command customer loyalty. : brand is essentially a seller;s promise to deliver a specific set of featuresG benefits services consistently to t e buyers. * e best brand conveys warranty of %uality. $rands convey even more meanings up to six levels. :ttributes $enefits to t e customer Producer;s values 'ulture Personality (ser
#teps and 2perational )ssues in $randing * e steps in branding consists of t e making t e following decisions, w ic also form c allenges to t e marketers. $randing decisions-w et er to or not to brand. $rand sponsor decision-w o is to brand t e product $rand names decision-w at type of brand name $rand strategy decision $rand repositioning decision
Brandin) decision * e first decision is w et er t e company s ould develop a brand name for its product. $randing is suc a strong force t at ardly anyt ing goes unbranded. )n some cases owever t ere as been Dno brandingE of certain staple consumer goods and p armaceuticals Lgenerics; are unbranded, plainly packaged, less expensive versions of common products. * ey offer standard or low %uality at a price t at may be as muc as ,8 percent to /8 percent lower t an nationally advertised brands and &8 percent to ,8 percent lower t an retailer private label brands. * e lower price is made possible by lower %uality ingredients, lower cost labeling and packaging, minimal advertising. Brand sponsor decision * ere are several options wit respect to brand sponsors ip. * e product can be launc ed as any of t e following types of brands. +anufacturer brand-called sometimes as a national brand like t e $lowplast )ndustries; A)P. !istributor brand-also called reseller, store, ouse ?or@ private brand
-icensed rand name. alt oug manufacturer brands dominate, large retailers ave been developing t eir own brands by contracting production from willing manufacturers.
)n year past, customers viewed brands in a category arranged in a Lbrand ladder; wit t eir favorite brand at t e top and remaining brands in descending order of preference. Now t e Lbrand ladder; concept is being replaced by Lbrand parity; t at many brands are e%uivalent. Kualities of a brand name are as follows # ould suggest somet ing about products benefits like Lfairever; or Lfair B lovely; # ould suggest product %ualities suc as action or color like Lsunsilk;, L ead and s oulders; # ould be easy to pronounce like L*ide surf; # ould be distinctive like 4in, -ux # ould not carry poor meanings in ot er countries and language.
Brand strate)0 decision : company as five c oices wit regards to brand strategy. * ey are, Lime exten!ion!: existing brand name extended to new sizes of flavors in t e existing product category t e 'int ol Lcologne;, 'int ol Llime;. 0xtensions may lead to t e brand name losing in specific meaning ig er c ance of survival t an brand new products.
%r nd exten!ion!: w ere a company may use its existing brand name to launc new products in ot er categories like t e brand L4in; being extended to bot detergent powders, detergent cakes. * e new product may disappoint buyers and damage t eir report for t e company;s ot er products. * e brand name may be in appropriate to t e new product. * e brand name may also lose it;s special positioning in consumers; mind t roug over extension. IBrand di.ution= occurs w en consumers no longer associate a brand wit products. a specific product or ig ly similar
<u"ti-br nd!: : company will often introduce additional brands in t e same product category. #ometimes t e company is trying to establis different features or appeal to different buying motives. : multi-branding strategy also enables t e company to lock up more distributor s elf space and to protect its ma>or brand by setting up Lflanker brand;. <industan lever limited produces t ree different brands of detergent powders. 'ompany in erits different brand name in t e process of ac%uiring competitors.H smit =line $eec am consumer ealt care owns t e ac%uired brand names like LAita;, L+oltova;. <industan -ever -td. owns ac%uired brand names like $rook $ond, <amam =issan. : ma>or pitfall introducing multi-brand entries is t at eac mig t obtain only a small market s are and none may be particularly profitable. * e company will ave dissipated its resources over several brands instead of building a few ig ly profitable brands. Bew %r nd!: New $rands are created w en company launc es products in a new category it may find t at none of its current brand names are appropriate. Met, t e cost of establis ing a new brand name in t e market place is costly. Co-%r nd!: : co-brand is a combination of two or more well-known brands in an offer like t e combination of #$) and 90 'apital in t e issue of #$) credit cards. Brand repositionin)
<owever well a brand is currently positioned, t e company may ave to reposition it later w en facing new competitors or c anging customer preferences. * e ($ groups +c!owell;s L+era no.&; brand was once positioned for people wit ecstatic moods but not it as been repositioned as a drink for socially responsible individuals.
'o-branding 'o-$randing is an emerging p enomenon. )t is also called Lduel branding;. <ere two or more well-known brands are combined in an offer. 0ac brand sponsor expects t at t e ot er brand same will strengt en preference or purc ase intention. )n case of co-packaged products, eac brand opes it mig t be reac ing a new audience by associating wit ot er brand. *ypes of co-branding: 'o branding takes a variety of forms. #ome are, &. )ngredient co-branding is w ere one of t e combining brands advertising t at it uses t e ot er brand?s@ as its ingredient ?s@, like )$+ ?or@ 'ompa% advertising t at it uses t e )ntel c ip by displaying D)ntel )nsideE. ,. #ame company co-branding w ere two or more brands of t e same company will combine in an offer like 9odre> #ara -ee;s D9ood =nig tE mos%uito repellent li%uid and 9odre> soaps D3airglowE combining on a free offer. .. Foint venture co-branding w ere two or more brands will combine for a specific cause like Pun>ab National $ank combining wit <#$' for t e issue of )nternational credit cards. /. +ultiple sponsor co-branding w ere more t an two brands combine for a specific cause, like 'itibank combining wit )ndian 2il corporation and +*N- in t e issue of 'itibank card w ereby t e bills of +*N- can be paid at )2' outlets using 'itibank card. $enefits of $randing &. $randing makes it causes for t e seller to process orders and track down problem. ,. * e seller;s brand name and trademark provide legal protection of uni%ue product features. .. $randing gives t e seller t e opportunity to attract a loyal profitable set of customers. /. $randing elps t e seller segment markets 1. #trong brands elp build t e corporate image, making it easier to launc new brands and gain acceptance by distributors and consumers $rand 0xtension : well establis ed brand is a ma>or asset. $rands exist for t e long-term. * ey establis trust in consumers; minds. * ey are a company;s most valuable assets and t ey s ould be treated very carefully. 0very c ange to t e brand s ould be viewed in terms of its long-term impact on consumers. : well-managed brand will still be t ere long after its DguardiansE ave moved on. $rand extension is certainly a way in w ic t e brand can be made muc stronger but it also as t e potential to dilute t e brand e%uity or cannibalize sales of t e parent brand. *oo muc brand extension t at we se nowadays could be viewed as indicative or poor brand practice. 'learly brand extension is an area t at as to be approac ed wit a degree of caution. * e maintenance of long-term brand ealt is of paramount importance and s ould never be sacrificed for s ort-term advantage w en t ere is pressure to deliver. 2ne of t e ways in w ic t is may be ac ieved is to analyze t e reasons w y brands are extended. #ometimes brands are extended for t e wrong reasons suc as tec nology enabling new forms of product delivery or simply to create a story for t e trade or press. : successful brand extension will address genuine consumer needs and s ould be developed from t e consumer demand side not t e supply side. !evelopments suc as tec nology s ould enable consumer needs to be fulfilled rat er t an simply tying to sell a new product into t e market. (ffecti/e br nd exten!ion !trengthen! the br nd fr nchi!e
$rand extensions s ould be able to take t e existing brand and make it stronger. * is could be t roug addressing additional consumer opportunities or finding new uses. $ringing new users to t e brand is one of t e benefits of brand extension but it is important t at existing consumers are not disenfranc ised by t e extension.
The re/er!e effect- di"ution 2ne of t e principal dangers of brand extension is t at t e parent brand e%uity may be diluted. )f t ere is a misunderstanding of consumers; perception of t e brand, it could be moved into a sector t at consumers view as Dinappropriate.E Kuite often t e parent brand will ave been available for some time, enabling it to build a level of e%uity and trust wit consumers. )t will ave strong credentials. 2ver time, its marketing as soug t to build and secure t ese credentials wit in its target market. :n irrelevant positioning as t e ability to undermine t e parent;s credentials. Cre ting c tegor,
* is may be one of t e ways in w ic brand extension can be successful. : brand t at is moved into an existing product or service category may end up as a me-too unless it is able to ac ieve significant differentiation from t e competitors. * e new variant must be able to promise somet ing different suc as simplicity or sustained added value compared wit existing brands in t e sector. *ypes of $rand 0xtension $rand extensions are of two types: &. 0xtension into related categories ,. 0xtension into unrelated categories Re.ated e+tensions could furt er take two routes: &. 0xtension into t e same product category. * is could be called category related extension ,. 0xtension into a category t at is different but similar in benefits, association and appeal to t e parent brand. * is could be called image related extension. Need for $rand 0xtension * e cost of establis ing a new brand especially in t e international markets is enormous. )t is also a known fact t at about one in ten product launc es meet wit success. * is makes t e proposition of launc ing a new brand risky. 2ften marketers tend to play safe by extending t e brand to eit er t e same category or a different category t at is in $4:N! line wit t e parent brand promise.
0P*0N*)2N
4elated
(nrelated
'ategory related
)mage related
Parent and brand extension different ?*ata steel@ Product different ?*ata tea@ $enefit ?Products unrelated@
Parent brand ?'int ol@ #ame product ?*oilet soaps@ New variant ?cint ol cologne@
Parent brand ?'int ol@ !ifferent product ?'int ol talcum powder@ 'omparable benefit ?bot
<i). %'.1 * e following could also be t e reasons for brand extension: (nergi!ing br nd
: brand want to increase visibility. )t extends into more variants. ?e.g. Ponds !ream 3lower *alc extends to Ponds +agic@ (xp nding core promi!e to new u!er! : brand name mig t means a salient idea or a core promise. 9odre> s aving cream was extended into a s aving cake to accommodate t e price sensitive buyers.
%"oc=ing or inhibiting competition #ometimes w en competition is intense it becomes necessary to cover every nic e. * is can be seen in t e detergent powder market. 0.g. #urf as been extended to #urf 0asy was and #urf ultra and :riel into :riel supersoaker. < n ging d,n mic en/ironment
: new trend broug t in by competition, if ignored, mig t fundamentally alter t e market. I en suc an outcome is feared, a product similar to t e competitors is launc ed as a brand extension. 'lose-up created a new segment in t e toot paste market namely t e gel segment. 'olgate ad to launc 'olgate gel to protect its turf. I en Palmolive soap was launc ed in t ree variants for t ree different types of skin, -ux struck back wit t e same t ree variants. I en a consumer considers an extension like Nirma detergent cake after t e successful acceptance of t e parent Nirma detergent powder, t e product similarity dimension induces acceptance. 2n t e ot er and, w en t e same Nirma tried to become beauty soap, t e market took several years to accept t e offering because of t e perceived mismatc in t e concept consistency dimension. )t is for t is very reason 'olgate toot brus is acceptable as a brand extension of 'olgate toot paste. * ere is perceived concept consistency in t e extension. Pros and 'ons of $rand 0xtension * e most important benefit form consumes side and producers side due to brand extension is t at t e risk is minimized. * e second advantage is t e cost of t e extension involved. * is is muc less in case of extension t an in new brands. <owever t ere are contrary viewpoints as well. 0xtensions rarely expand category demand and retailers cannot provide more s elf space to a category >ust because t ere are more variants. * e costs of over extension can remain idden. * ere are many doubts about w at to extend to. )t mig t seem t at t e best t ing to do is to go for category related extension. )f t at doesn;t find favour t en an image related and after t at an unrelated extension. #ome time t is vew may not be always correct. )f t is were true, it would be difficult to explain t e success of *ata and 9odre> w ose brand names appear on so many successful but unrelated products. * e same is true for internationally true brand names like <onda, #ony, Mama a and Panasonic. * us t e most important t ing for t e success of a brand extension is t at t e consumers s ould see some t ing good in it and somet ing common wit its parent. !ifferent *ypes of $rand 0xtensions &. C tegor, re" ted $ * ese types of products ave a same use wit H slig tly different benefit, for some or different set of customers. ,. *m ge re" ted $ * is is a relations ip t at transfers t e emotional benefits and image of t e parent to t e extension. .. Unre" ted br nd! $ 3or t is types of products t ere is no relations ips except brand name. Brand Cate)or0 re.ated *a)e re.ated Unre.ated
& rent exten!ion im ge fit )n t is category t e customer looks for in t e parent w en eHs e compares it wit t e brand extension. )n some cases t ere is some cases, t e consumer is ready to accept brand extension into any product category because of t e credibility of t e parent brand. Brand na*e $ata *itan -ux Preferred e+tension product cate)or0 -eat er clot ing, and bag Iall clock, refrigerator # ampoo, nail polis
C tegor, re" ted exten!ion 'ategory related extension is t e ot er name for a variant. 3or instance, Pond;s talcum powder launc ing t e sandalwood variant. * is is done w en. &. * e brand is seen to ave lost some of its luster. ,. * e brand volumes are slipping and t e organisatoin suspects t at it is lack of variety in t e brand t at causes t is. .. 'ompetition as come too close or launc ed a brand similar to t e parent. E+a*p.e/ Birm powder to nirm detergent c =e $ot ave been ugely successful, t e cake being t e less expensive one. * e reason for t e powder;s success was t e price difference between t e leading t e t en leading brand Lsurf; and Nirma * e cake found ready acceptance in price-sensitive ouse olds, t oug t ey too are increasingly switc ing over to was ing powder not;. * e main reason for t e success of t e extension are product form, credible brand name and affordable price. *m ge re" ted exten!ion )n image related extension it is true t at t e image of t e extension s ould matc wit t e parent, at w at level of abstraction it s ould matc is somet ing t at can only be guessed. * is elps in saving costs. it is easy to promote. * ere is a ig probability of success for t is kind of product. E+a*p.e/ Cintho" !o p to t "cum powder 'int ol as a soap as been a successful brand. <owever its talcum powder is far be ind t e leader Pond;s. cint ol talc is seen more in league wit smaller players in t e talcum powder market like -iril, 'uticura etc. owever t e brand image fits t e extension and t at is most important consideration in any brand extension exercise. )ndications are t at t is extension is supported ade%uately t roug advertising, product development etc. Unre" ted exten!ion! * is it t e most difficult extension to andle eit er in terms of predicting success or in terms of imaging t e possible brand extension category. * e name *ata or +itsubis i is acceptable in a ost of unrelated products. * e name *ata as been extended from steel to salt to c emicals to cement.
* ere are several reasons. 3irst *ata and 9odre> are age old brands. * e fact t at t ey ave survived long gives t e brand name an image of %uality. 3urt er w en *ata;s branded sales t ere was no ot er company t at nationally did t e same and succeeded. )n ot er words *atas were one of t e very first to brand sale nationally. * is is a case of branding a it erto unbranded product and besides t e *ata name ad t e advantage of being unidentified wit %uality. * is came in andy and t e combination was a success. : %uick look at t e )ndian brands suggest t at umbrella branding in its most compre ensive sense ?t at is branding consumer softs, durables and industrial products wit t e same name@ is best done using t e names of D$(#)N0## <2(#0#E or D249:N)S:*)2N#E. E+a*p.es & rr,! 2cer mic!1 te 1 choco" te!3 Parrys as an organisation as been successful in almost all areas of operation. )t is difficult to assess t e role of brand image in t e string of successes. 3or instance t e customer for c ocolate is different from t e one for sanitaryware or tea. Nevert eless, t e basket of products as made Parrys a respected name. $rand extensions mig t be successful more because products ave managed well rat er t an on account of commonality of brand name. reasons for success mig t lie in better management at t e individual product level rat er t an at t e brand level.
Lesson %( Brand E2uit0 )ntroduction $rands ave been a ma>or aspect of marketing reality not for over a undred years. * e t eory of branding came some time later. !avid 2gilvy was talking about t e importance of brand image as early as &71&. )t was first fully articulated, by $urleig 9ardner B #idney -evy in t eir classic <arvard $usiness 4eview paper of &711. $ut despite suc distinguis ed origins, t e concept of Lbrand image; remained until recently perip eral to t e mainstream of advertising t eory and evaluation. :lt oug it was endorsed from t e &758s onward by t e $ritis :ccount Planning movement, it was also seen by many advertisers and researc ers ?especially in t e (nited #tates@ as a rat er wooly t eory t e sort of t ing advertising agency people talked airily abut w en t ey failed to Lget a ard product massage across or to convert prospects; or to Lmake sales;, as t ey were supposed to be doing. L$rand image; was associated wit expressions like t e Lsoft sell; and t e Lweak t eory of advertising;, w ic gave it, for many, t e air of a w imsical luxury t at a businesslike advertiser could ardly afford. * en, in t e &768;s t e ardnosed business people began to notice t at brands appeared to be c anging ands for uge sums of moneyU :s take-over fever spread, t e difference between balance s eet valuations and t e prices paid by predators was substantially attributed to Lt e value of brands;. #uddenly, t e brand stopped being an obscure metap ysical concept of dubious relevance. )t was somet ing t at was wort money. * is s ift of perception was reflected in t e way t at t e traditional expression Lbrand; image; ?wit its suggestion of a g ostly illusion@, was increasgingly displace by its solid financial e%uivalent, Lbrand e%uity;. )t is not clear w o invented t e expression, but few uses of it ave been traced before t e mid-68s. it ac ieved respectability w en it was taken up by t e prestigious +arketing #cience )nstitute, w ic eld a ma>or seminar on t e sub>ect in &766, and as been going strong ever since. )n fact, t e last few years ave seen brand e%uity become one of t e ottest topics in business. )n :merica, t ere is a now an influential body called t e 'oalition for $rand 0%uity ?founded &77&@, w ic evangelises for t e importance of building brand relations ips and brand loyalty. 0xcellent ?and very different@ books ave been publis ed on t e sub>ect. )t as spawned numerous conferences and seminars. )t as attracted a lot of interest from academic researc ers, alt oug t e greatest part of t eir work as been connected wit brand e%uity as applied to brand extensions. +eanw ile commercial researc ers ave been busily designing and selling met ods for measuring, tracking, and optimizing brand e%uity. :ll of t is is fundamentally a good t ing. )t represents a long overdue s ift in business and advertising t inking: from focus on making a sale, to creating and keeping a customerG from a purely s ort-terms perspective to one t at includes t e longer term profitability of t e businessG away from volume alone to recognize t e importance of price and loyalty. ?* e brand e%uity movement, especially in t e #tates, comes as a necessary reaction to a decade of ever-greater dependence on sales promotion@ it as legitimized t e idea t at t e consumer;s perceptions are more important t an ob>ective reality. :nd it raises serious %uestions about t e ade%uacy of ways of evaluating advertising t at focuses purely on message communications, conversion, or s ort-term incremental sales response. * ere are %uestions in brand e%uity t at ave still not been answered: I at exactly do we mean by t e term brand e%uity and do we all mean t e same t ingC <ow far can we expect to measure brand e%uity in an ob>ective wayC
Need for $rand 0%uity =arl Popper warned against a common mistake made by p ilosop ers, w ic e called Lnominalism;. * e mistake is supposing t at you will find t e trut by starting wit a word and arguing about w at it Lreally; means. $ut words mean >ust w at t eir users want t em to mean. * ey can gave various different meanings, and it is pointless to argue about w ic is Lrig t; or Lwrong;. I en a common expression does ave distinct meanings, owever, it is as well to be aware of t e fact so as to avoid unnecessary confusion. * is is true of t e expression Lbrand e%uity;, w ic seems to be used in t ree %uite distinct senses ?and eac of t ese t ree as several furt er nuances of meaning@.
* ese are: aO bO cO t e total value of a brand as a separable asset w en it is sold, or included on a balance s eet a measure of t e strengt of consumers; attac ment to a brand. a description of t e associations and beliefs t e consumer as about t e brand.
2f t ese t ree concepts, t e firs could less ambiguously be called Lbrand valuation; ?and often is@. 3or t e present it s all be referred to it as Lbrand value;. * e concept of measuring t e consumer;s level of attac ment to a brand can be called Lbrand loyalty; alt oug t is p rase is almost as ambiguous as Lbrand e%uity; itself. L$rand strengt ; is preferable for t is sense, and alt oug t is is also potentially confusing. * e t ird could be called by t e traditional name of Lbrand image;, but for clarity it may be referred to as Lbrand description;. * is reflects its fundamental difference from t e ot er two senses of Lbrand e%uity;. $rand value could also be seen as t e old one out in anot er way, as it refers to an actual or notional business transaction w ile t e ot er two focus on t e consumer. )n fact, brand strengt and brand description are sometimes referred to as Lconsumer brand e%uity; to distinguis t em from t e asset valuation meaning. 2ne concept expect t ese t ree concepts to be completely independent of eac ot er. $rand strengt s ould be one of t e factors affecting t e overall brand valueG brand description mig t be expected to affect, or at least to explain, some of t e brand strengt . (nderlying muc of t e talk about brand e%uity, and some of t e more elaborate proposals for measuring it, suc as t e Mankelovic met odology. )t is necessary to treat t ese t ree meaning of Lbrand e%uity; as distinct concepts, w ic re%uire separate discussion. 3or eac one, t e %uestions of definition and measurement are closely linkedG an Loperational definition;, after all, means >ust knowing ?or at least agreeing@ on ow somet ing is to be measured. $rand strengt will be t e one examined at t e greatest lengt because it is t e central meaning of Lbrand e%uity; Foel :xelrod defines brand e%uity as Lt e incremental amount you customer will pay to obtain your brand rat er t an a p ysically comparable product wit out your brand name;. in order to measure t is, customers are divided into different cells and s own different combinations of t e test brand and competitors at different price levels and express preference using a constant sum tec ni%ue. Fim 'rimmins of !!$ Need am ?&77,@ as a somew at similar approac to measuring Lt e amount of value added by a brand name; ?to is credit, e avoids t e dreaded 0 wordU@ * e interviewing approac sound similar to :xelord;s. t e output is an estimation of t e price at w ic t e test brand and eac competitor are e%ually likely to be c osen. Notice t at t is measure of Lbrand value added; is not absolute, but varies according to w ic competitor is taken as t e comparison. 'rimmins reports t at t e value added by t e number one brand in a market averages at /8J compared wit store brands, but only average &8J compared wit t e number two brandG in bot cases t ere is a wide variation around t is median figure. #teve 4ot describes t e use of $rand Price *rade-off analysis to estimate brand e%uity. )n t is approac respondents c oose t eir preferred brand at various different sets of price levels. $y pooling all t e respondents; individual decision processes t e computer can simulate market outcomes at any set of prices. 3rom a brand e%uity viewpoint, t is micro modeling approac s ows t at a brand can ave different Le%uity for different respondents. )n looking at be avioral or attitudinal loyalty measures, any serious investigator into %uantifying consumers; degree of Lattac ment; to a brand is likely to discover t is unsurprising trut t at some customers will be far more attac ed to t e brand t an ot ers. )t follows from t is t at figures w ic average all customers to provide a total brand score may be misleading. 'onversely, t e process of decomposing a brand;s user base into more or less loyal users may be valuable in itself in planning marketing strategy. )t may be t at one of t e main benefits of some Lbrand e%uity researc ; lies in t is area, rat er t an t e %uest for a single yardstick for measuring brand strengt .
$rand 0%uity
<i). %'.%
$rand -oyalty
2ne of t e desired associations a firm seeks for its brand is customer;s perception of ig %uality. 3or, if t e brand is perceive to be or premium %uality, t e customer will be willing to pay a premium for it. * e firm will ave greater trade leverage and c annel members are going to ave greater interest in dealing in suc brands. : ig %uality brand also provides and ade%uate reason for t e customer to buy it. )t is important to note t at perceived %uality is not necessarily t e same as manufacturing %uality or product based %uality. Perceived %uality is ow t e customers evaluate different brands on %uality and ence need not be as ob>ectives as t e ot er two are. <ig perceived means ig er return on investment. Brand a9areness $rand awareness is key strategic asset. )n some industries w ere t ere is product parity, awareness provides a sustainable competitive difference. $rand awareness can provide a ost of competitive advantages. 3irst, awareness provides t e brand wit a sense of familiarity, and people like t e familiar ones. 3or low involvement products suc as soap or soft drinks, familiarity can drive t e buying decision. #econd, name awareness can be a signal of presence, commitment, and substance, attributes t at can be very important even to industrial buyers of big items and consumer buyers of durable. * is logic is in large part be ind t e successful efforts to brand companies suc as <onda and )ntel inside. * ird, t e salience of a brand will determine if it is recalled at a key time in t e purc asing process. 3or instance, t e initial step in selecting an advertising agency, a car to test drive or a computer system is to decide on w ic brands to consider. * e extreme case is name dominance, w ere t e brand is t e only one recalled w en a product class is t oug t of. :t one stage :mbassador in cars, $a>a> in scooters, #cissors in cigarettes were only recalled. $rand awareness is an asset t at can be remarkable durable and t us sustainable. )t can be very difficult to dislodge a brand t at as ac ieved a dominant awareness level. Brand identit0 : key enduring business asset can be its identityG t e associations attac ed to a firm and its brands. : brand association is anyt ing t at is directly or indirectly linked in memory to t e brand. 'onsumers associate a brand wit certain tangible and intangible attributes. +ost of t ese associations are derived from brand identity and brand image. 0ac company as to carve a brand identity and develop it furt er to build strong brands. : brand;s associations are assets t at can differentiate, provide reasons to buy, instill confidence and trust, affect feelings toward a product and t e use experience, and provide t e basis for t e brand extensions. * e most common association is t at of product attributes or customer benefits !enim as masculine, Pepsi is for yout , P ilips for tec nology and innovation etc. in addition to product attribute and customer benefit and associations, brands gain strategic position by association wit : (ser or application ?Nestle +ilo wit sports activities@ Product class ?+aggi as instant noodles@ Product user ?-ifebuoy for t e working class@ -ife style and feelings ?t e Pepsi generation@
Personality ?#urf for %uality conscious, upmarket ladies@ #ymbol ?Penguin of =elvinator fame@
2t er associations stimulate positive feelings t at are t en transferred to a brand and to its use experience. 'elebrities like #ac in *endulkar, symbols suc as t e 9attu, or slogans like D'ome s are t e experienceE can stimulate positive feelings. * e associations and t eir companion feelings t en become linked to t e brand. :ssociations can create positive feelings during t e use experience, serving to transform a product into somet ing different from w at it mig t ot erwise be. :dvertising, for example, can make t e experience of drinking Pepsi seem more fun and driving a $olero more adventure some t an wit out t e advertising. :n association can provide t e basis for t e extension. <onda;s experience in small motors makes extensions from motorcycles to outboard motors and lawn mowers plausible. Brand .o0a.t0 : customer orientation will lead to concern for existing customers and programs to generate brand loyalty. : prime enduring asset for some businesses is t e loyalty of t e installed customer base. 'ompetitors may duplicate or surpass a product or service, but t ey still face t e task of making customers switc brands. #witc ing costs would be a consideration for a software user, for example, w en a substantial investment as already been made in training employees to learn a particular software system. $rand loyalty can develop in many ways. * e consumer may try a brand and on being satisfied wit t e use experience, repeat t e purc ase. )n ot er cases, e may compare t e attributes of different brands available in terms of t eir ability to render t e desired service, c oose one and repeatedly purc ase it. 2t er factors like image of t e manufacturer, price of t e brand, perceived %uality and packaging mig t also influence t e c oice of t e brand. :bsolute brand loyalty is rare but every marketer tries to approac it. * ree levels of brand loyalty are identified: brand loyal, brand insisters and brand referrers. 'ustomers w o will not buy anot er brand if t eir brand is not available are brand loyal. I en a customer looks for is brand at ot er outlets if it is not available at one s op before eventually purc asing anot er brand of t e product is a brand insister. $rand preference is w ere t e customer asks for is brand and on its non-availability purc ases some ot er brand from t e same s op.$rand loyalty provides t e time to competitive moves-it gives a firm some breat ing room. )f a competitor develops a superior product, a loyal following will allow t e firm t e time needed to respond by matc ing or neutralizing. 3or example, some newly developed ig -tec markets ave customers w o are attracted by t e most advanced product of t e momentG t ere is little brand loyalty in t is group. )n contract, ot er markets ave loyal, satisfied customers w o will not be looking for new products and t us may not learn of advancement. 3urt ermore, t ey will ave little incentive to c ange even of brand loyaltyG a firm can allow itself t e luxury of pursuing a less risky follower strategy.* e management of brand loyalty is a key to ac ieving strategic success. )t involves placing a value on t e future purc ases expected from a customer so t ose existing customers receive appropriate resources. +easurement of brand loyalty s ould include not only sensitive indicators of customer satisfaction but also measures of t e relations ip between t e customers and t e brand. $rand loyal customers could still derive ig er satisfaction w en t e marketing strategies of t e brand managers provide more benefits t an expected, leading to customer delig t, and to t e contentment stage of satisfaction. * ere is a minimum t res old of satisfaction before any brand loyalty sets in. once t is t res old is ac ieved, t e brand loyalty increases wit t e increase in t e satisfaction level. )t t us become increasingly difficult to take away satisfied customers from t eir brands as satisfaction increases. -oyalty is a core dimension of brand e%uity and is a way to gauge t e strengt of a brand. )t represents a barrier to entry, a basis for a price premium, and time to respond to competitive innovations. * e advantages of brand loyalty are: &. 4educes t e marketing costs. ,. 'reates substantial entry barriers .. Provides for trade leverage /. :ugments customer;s retailer c oice 1. -arge satisfied customer base boosts t e image and acceptance 5. *ime to respond to competitive t reats ?$P- used advertising to counter -9@
Lesson %> Brand Positionin) Perceptual +apping *o position t e brand a tec ni%ue called perceptual mapping is commonly used. * is tec ni%ue involves studying t e consumers perception of t e product and competitors brands and based on it identifying vacant slots : specifically t is involves t e following: &. #tudying t e ideal product perception t is involves studying bot tangible and intangible attributes t at a customer looks for w ile buying a product. :mong t e tangibles are product features, performance levels, style and aest etics of t e product packaging, product components and even price and distribution. * e intangibles will include t e services t at a customer looks for, like after sales service, training on ow to use t e product, financing assistance etc. ,. 9et t e customers to rank t ese attributes in t e order of importance to t em .. 'ustomers knowledge of t e competitors brands. /. <ow do t e competitors brand favour in t e ideal product map. <ere t e customers are asked to assess competitors brands and specify ow close or far t ey are on eac attribute to t e ideal product. 1. $ased on t e assessment of competitors brands on t e ideal product map, product managers identify vacant slots and t en build t e positioning strategy by filling t ese up. )t is important to note ere t at if an attribute soug t by a customer is not ig on isH er priority and t e firm feels it as t e strengt in it and s ould be considered by t e customers, t e firm can adopt a strategy to elp c ange t is perception. $ut t e customer perceptions s ould be continued for, c anging customer perceptions in a long drawn out strategy involving substantial resources. :fter t is perceptual mapping is done, t e marketer uses statistical tec ni%ues to arrive at a position. Positionin) in re.ation to product cate)ories 0ac product category attempts on different positioning strategies. * e case of positioning could be continued wit taking t e consumer durable sector as t e category. Positionin) in consu*er dura1.e sectorProducts like refrigerators, was ing mac ines, television sets are by and large infre%uently purc ased by most customers, w o invariably gat er a fair amount of information prior to t e purc ase. Positioning tries to win over t e consumer by pro>ecting t e brands superiority over ot ers on certain selected dimensions. +ost 'ommon Positioning #trategies in t e 'onsumer !urable #ector Li=ing to u!e! * is strategy is based on identifying t e possible uses to w ic t e firm;s brand can be put to. )n a way it may appear same as use situations but differs from it because t is talks on all t e possible uses of a product or brand. 3or e.g. since video cassette recorders ?A'4s@ could be used in playing, recording and regulating t e pace at w ic t e different scenes can be watc ed ?like pause, forward etc@ most customers saw it as a distinct development over t e video cassette player and t e demand for A'4 boomed. Ce d on competiti/e po!itioning * is is t e strategy of placing a firm;s brand next to t e leader in t e market and trying to uproot it on a specific tangible variable. 3or eg. 2nida was positioned against t e giants in television industry t roug t is strategy. 3or 2nida colour *A was laumnc ed on t e message t at all ot ers were clones and only 2nida was t e leader and t e message said Dt e boss wasn;t lateG it was ot ers w o arrived in a urryE and later followed it wit t e envy concept. *oday, 2nida as been able to uproot all t e yesteryears leaders in t e *A market.
Life !t,"e po!itioning : firm may even position t e brand as a lifestyle contemporary of futuristic. +any of todays new kitc en appliances like microwave ovens are positioned accordingly. &o!itioning b, corpor te identit, * is type of positioning is seen very muc wit consumer durables w en a tried and trusted corporate identity or source w ic as become a ouse old name for products like P ilips for radios and lamps is used to imply t e competitive superiority of newer products bearing t at name: P ilips mixies, P ilips electric irons, P ilips refrigerator. 9odre> company also often uses t is strategy in positioning t eir product. $y stressing on t e D9odre> productE. $Ptoo uses t is corporate identity. )t says D3rom $P-E. &o!itioning b, /er! ti"it, of u! ge +any consumer durables are positioned on t e basis of t e versatility of usage. 3or eg:- Prestige pressure pan is positioned in suc a way t at t e product is designed specifically to give t e benefit of versatile usage to t e consumer. )urrog te po!itioning )n t is kind of positioning t e product can;t be positioned differently on t e basis of attributes but differentiated by positioning t em on t e surrogates for t e attributes. * e claim would be t at our product is better or different from ot ers. 3or eg. * e 3utura pressure cooker is advertised based on t is surrogate ideas. )t uses two kinds of surrogate ideas Lpredecessor; t e popular and trusted <awkins association and L0ndorsement; because )ndians admire Iestern designs and are impressed by t e western names. * e positioning strategies adopted by consumer durables depend a lot on Lusage;, Leconomy; and Lcorporate identity; of w ic a well establis ed brand surely pro>ects t e identity of t e product in terms of w ic corporate ouse t e product is from;. $enefit or usage is t e next positioning strategy used. 3or eg. $P- 'onverti pro>ects out t e multistage of t e product. $rand Positioning in *A #ector * e )ndian colour television industry actually developed in &76, during t e asian games w en a large number of '*As got imported due to t e concessional duties allowed during t e duration of t e games. :fter t is a number of companies entered t e market. )n mid eig ties t e '*A sector was dominated by companies like Ieston, *exla, !ynaro and Nelco. Aideocon and 2nida gained acceptance after some time. )n t e late eig ties ade%uate attention was paid by serious manufacturers like $P-, Aideocon and 2nida to logistics, economies of scale and brand e%uity. BPL $P- -imited operates in t e areas of consumer electronics viz colour and $HI *As, audio e%uipments, A'4s etc. $Pl #anyo <ome :ppliances -td is a >oint venture between t e $P- and #anyo of Fapan and it operates in t e ome appliances and refrigeration segments viz refrigerators, was ing mac ines, vacuum cleaners, microwave ovens etc. currently $P- -td is t e leader in t e colour *A and second in t e $HI market. #trate)ies used $P- as pro>ected itself as a tec nology leader wit emp asis on %uality. *ec noloy leaders ip does not mean premium products for t e different sectors of t e society only. )t means giving t e tec nology and %uality to t e consumer in t e entire range of products, bot i-end and or low-end. *o ac ieve t is $P- launc ed t e most advanced and contemporary models in t e i-end market to demonstrate its tec nological superiority. * e premium image t us as an impact on all t e models of t e company in t e lower price segments also and elps $P- to gain volumes t ere, $P- uses t is strategy not only for '*As but for all its products w ic resulted in tremendous brand e%uity for $P-. * us by introducing newer and newer models $P- as adopted P:'0 as a ma>or strategy for battling competition and t is as furt er reinforced its image as a Dtec nology leaderE eg. * e latest $P- ome t eater.
$y t eory durables are boug t mainly on rational ground but emotional involvement is found to ave assumed importance in recent years. )t was possible t at consumer say $P- as a smaller brand t an its rivals, simply because t ey made more noise in t e media. +arket researc by $P- s owed t at despite its efficient marketing and its image as a D%uality brandE, it was perceived as an unemotive and umorless brand especially among t e yout . )n contrast Aideocon as constantly been perceived more as an amenable and ome brand because of its warm advertising. $P- t us c anged its positioning strategies into more of a D ome brandE in &77/, along wit t is $P- as also been wooing t e yout by sponsoring music s ows. )t also sponsored programmes on *A like D$P- 2yeE and flas ed t e logo across movie alls screening t e mega it speed everyw ere in )ndia. * is gave a fas ionable image to $Pw ic is drawing t e yout to it. P-i.ips P ilips is now s aking off its old image of a let argic )ndian company and is pro>ecting itself as an aggressive tec nology oriented multinational. * e *A is not only soug t to be pro>ected as reliable ?w ic wsa t e earlier image@ but also t e trendy and a %uality product at competitive price. #o t e slogan sems to be D$est value for moneyE wit out compromising on %uality. P ilips is also launc ing new models from its world wide stable to give a variety of latest products. * e company is also using its new ig value premium products to build its brand image. * e (#P of t e P ilips 'rown *A is its sound fidelity and effects. * us t e company point apart form its ot er features. * us t e company advertises on t is sound %uality as a strong point apart from its ot er features. 0ven today Aideocon stick to its Dvalue for moneyE slogan. )t is t is image t at Aideocon wants to develop and make it a ouse old name. it introduced t e concept of surround sound, $azooka and 'lear !efinition *A ?'!*A@ to cater to t e premium segment. Onida )f $P- stands for tec nology leaders ip, and Aideocon for value for money, 2nida stands for snobbery i.e., it as pro>ected itself as a premium brand for t e premium end of t e market. 9oing on wit its image, 2nida is known for t e %uality and aest etics of its products and as become a status symbol. <owever 2nida;s exclusive image is now facing competition from $P-;s image of tec nology leaders ip bot of w ic seem to be similar ?especially wit bot launc ing ig priced feature ric models@ as opposed to Aideocon;s value for money image. 2nida;s image as been spectacular and is most vividly recalled. )ts advertising campaign featuring t e !evil consistently wit t e now legendary p ase DNeig bour;s envy, owner;s prideE as been effective in arnessing t e concept of snobbery in t e consumer;s mind.
Lesson %A
Pac3a)in) )ntroduction )n recent times, packaging as become a vey important part of product management. Iit competition increasing, marketers are turning to innovative packaging to establis a distinctive edge. +arketers are providing value addition to products and greater benefits to consumers t roug packaging, t ereby attempting to increase brand value. Packaging as an industry as two sectors t ose w o make packaging material and t ose w o convert t ese materials into packages. : package is bot a medium of communication and a message. Iit t e advent of selfservicing in retail outlets across t e country, it is now important t at t e companies concentrate on pulling t e consumer to t eir brands t roug t e use of effective packaging. )mportance of Packaging Packaging performs variety of functions and ence it is inevitable t at a manufacturer concentrates on t is aspect. Packaging not only give protection to t e product, but also adds value t roug tits aest etic appeal. 9ood packaging covers an ideal of t e %uality of t e productG it as a value, w ic is distinct from t e value of t e product. * e widespread use of self-service and automatic vending mac ines as made packaging to do t e selling >ob at t e point of purc ase. * e increase in t e lifestyles of t e people as forced t em to pay a little more for convenience, appearance, dependability and prestige. Packaging gains importance in t ose products w ere t ere can be a possibility of interactions or create an odour etc. Packaging aids in positioning and differentiations of t e particular brand. Packaging can also be sued to avoid direct price comparison wit t e competing products. 3or t ose products, w ic extensively rely on t e sales promotional efforts, importance of packaging is instrumental in t e success of t e sales promotion. :dvantage of Packaging &. Packaging is t e one, w ic conveys t e brand message at t e time of ultimate purc ase. )t is found t at over 18J of all purc ases are impulse purc ases. * ese impulse purc ases are ig ly affected by well-designed packaging t at as impact and creates a favorable appeal. 2ne of t e important considerations at t is stage is t at t e brand s ould complete wit ot er brands for attention. )t is at t is point t at packaging plays a vital role. ,. 3or t ose consumers w o are specifically looking for a brand or type of product, packaging is important. * is self-selection makes t e package audience t e most valuable group of people a marketer can target. .. Iell-designed packages elp consumers %uickly identify a brand;s uni%ue selling points wit various p rases like :+oreE, D'leans ard stainsE, D' emicals freeE, D(sed * roug recycled materialE etc. /. $rand identity is communicated better and c eaply for some products. +arketing researc as found t at consumers often cannot remember t e brand name of products t ey use, but t ey can describe t e package. 1. 3or eavily advertised brands, packaging provides t e link between advertising and t e product. :dvertising informs t e product;s benefits, but t e packaging s ows customers w at to look for to get t ese benefits. 5. * e visual impact provided t roug packaging is an important form of persuasive non-verbal communication. ". * e package can add value to t e product it contains. Nescafe; bottles are being reused in omes w ereby it provides value to t e consumer over and above t e premium attac ed to t e brand. 3actors to be 'onsidered in Packaging I enever a company plans a new product, once in t e product development stage, packaging is discussed. 0ac company tends to develop a somew at uni%ue approac to packaging. $ut t ere are common steps. 3irst, a packaging person is put on a new product team. 3ield trips are mandatory. * e process for package development resembles t at for t e product itself. *ests include dummy packages, in-store displays, color tests, visual tests, psyc ograp ic tests, p ysical tests etc. * e packaging involves mainly t ree areas, w ic need to be given importance, or care s ould be taken. * ey are : Pac3a)e *ateria.s
Iood is t e earliest form of packaging. )t slowly gave way to paper and paper boards and is t e most popular packaging material in )ndia now. Paper board cartons, paper bags and corrugated boards are t e soug t after forms of packaging for a variety of products from groceries to garments. +etal container and >ute are also preferred as t e packaging material. +etal containers constitute an excellent packaging medium for processed foods, fruits, vegetables, meant products, oil paints etc. <owever acute s ortage of *in makes t is material more costly. :luminum based packaging as entered t e markets. +ost of t e fruit >uice come in t is material. 3ilms of low density and ig density polyet ylene, metalized polyester film, metalized polyester laminates and polypropylene ave become preferred packaging medium for several products. +any of t ese synt etic package materials ave several merits like waterproof, moisture proof, attractiveness and transparency, alkali and acid proof and lig tweig t and t ermal stability. Pac3a)in) aest-etics Iit t e advent of super markets and retail c ains w ere t e role of t e seller is limited and t e decisions are taken only by t e consumers, packaging aest etics are inevitable. Packaging serves as a potent tool for sales appeal in terms of brand identification, product differentiation and merc andising. * us using t is aest etics, t e package acts as a silent salesperson. I en t e s ape of t e product is integral to appeal, innovative packaging can greatly elp in generating trials. * e recently launc ed soap, +axim ad a very flexible packaging t at a consumer can actually feel t e product. :not er brand, Palmolive introduced a transparent package for a consumer to see t e product. -e #ancy soap was packaged in a transparent polyet ene wit its uni%ue bean s ape and got t e attention of t e customers. * e size t e s ape of t e package, t e material used, t e finis , t e color, t e labeling, t e branding followed on t e package are all influential in t e total sales appeal of t e product. Pac3a)e desi)n : good package design must be attractive and eye catc ing. Packaging design is critical to t e success of a brand and wit out giving it t e rig t investment in time, money and resources, companies will miss t e potential for t e brand;s success. )t s ould not be a strain for t e consumers w o look at it and examine. : bad package design may arm t e total product message. Package design and colour ave to be blend optimally to make package communications effective. -ogo, pictures, labels and ot er illustrious on t e package increases its communication value. t e fiercely competitive detergent cake market is an example. * e packaging is simple and of lower %uality material keeping in mind t e price wars. * ey ig lig t t e brand name in larger sizes t an usual and brig t colors like yellow are used. * e inside of t e +edimix soap wrapper clearly depicts t e information on ow to use t e soap for t e purpose of removing dandruff. * e colours used in t e toot paste market is predominantly red and w ite. Normally w ite lettering is used. 4ed denotes excitement and yperactive. * e packaging of 'int ol as a glossy look. * e packaging may not include flas y colour and eye catc ing designs, but t ose designed for t e ig life style groups are usually elegant, stylis and simple. 'olor is a factor, w ic is used in packaging to augment t e appeal t at t e product as. * e 3air and -ovely soap and fairness cream ave pink color. * is ig lig ts t e base concept of fair skin. 'olors must be c osen in a way t at t ey are attractive and catc t e attention of t e consumer. * ere are several legal aspects, w ic needs to be incorporated in t e packages, w ic are enforced from time to time. * ey need to be s own on a secondary package at least.
Lesson %D <uture Trends in Product Mana)e*ent 3uture *rends in +arketing +arket researc ers, ad agencies and many ot ers ave been tying to figure out w at consumers want since t e opening of t e first store. Aaluable as traditional %ualitative tec ni%ues suc as focus groups and in-dept interviews are, t ere is anot er way to study consumer be aviour t at can get at ot erwise unobtainable trut s. 2n-site observations, or researc by watc ing people, gives researc ers t e c ance to observe and learn about consumers purc asing decisions as t ey are being made. * is is most effective if done in a supermarket situation w ere consumers can walk around and decide on t eir purc ases. * e best approac is for t e resear1c er or manager or w oever, to be in, say, a supermarket at t at moment and present imself or erself as a s opper w o needs advice for making a decision. * e consumer identifies t e researc er as someone w o deserves assistance, and no long introductions are re%uired. )f t e trained researc er asks t e rig t %uestions about t e product, t e answers will come naturally. # oppers tell about prices, taste, %uality, ealt , ingredients, packaging and so on >ust w at researc ers want to know. +oreover, unlike focus groups, consumers will tell spontaneously wit out feeling t at t ey must give an acceptable response because t ey are being paid or because t ey like to s ow off. Nor will t ere by any problems wit t eir recall about a product or ow often t ey ave really used it. 3inally, if an interview is unproductive e, moving on is easy. Fust take your s opping cart and approac someone else. : skilled researc e can do about .1 interviews a day in several supermarkets wit minimal over ead costs, an excellent yield for %ualitative work. 2f course, w en it comes to testing a new product, exploring certain concept sin dept and aving members of a group bounce ideas off eac ot er, t ere is no substitute for focus groups. $ut on site observation as many benefits and s ould be used far more often. !oing so, owever, is not t at easy. * is type of researc re%uires intensive training in interviewing and observational tec ni%ues. * e researc er only as about t ree seconds in w ic to make eye contact, introduce imself and pop t e %uestion t at will determine receptiveness. <e must know, by sizing up t e s opper according to dress, demeanor, contents of t eir cart, t e neig bor ood t e store is in, age, gender etc. * e marketing scenario as c anged today wit an increasing emp asis on customer delig t rat er t an >us customer satisfaction. *oday, companies need to put in additional effort to learn t e likes H dislikes of t eir customers. )n an age w ere product differentiation is tending to zero and brand promiscuity is a marketer;s recurring nig tmare, it is t e customer;s relations ip wit t e brand t at is becoming increasingly important. 'ompanies are looking at ways and means of entering into a regular dialogue wit t eir customers, to build t is ever-so-important relations ip. 2ne way of entering into a dialogue wit customer is by running loyalty programmes. * ese are essentially marketing exercises carried out by a company to provide value added services to its customers for being loyal to t e brand. * e value-added services can be in t e form of discount coupons, loyalty points for repeat purc ases t at can be redeemed against gifts, providing information updates to consumers based on t eir re%uirements, invitations to special promotional events, trade-up sc emes, customer-get-customer sc emes and so on. -oyalty programmes normally manifest t emselves as loyalty cards, special mailers and t e like. * e underlying reason in all t e effort is to be in constant touc wit t e customer, t ereby ensuring top-of-t e-mind recall and also moving t e brand to t e next level of relations ip wit t e customer, beyond >ust t e product attributes and benefits, (ntil today, loyalty programmes ave been t e forte of companies dealing wit ig value premium products and services suc as otels, airlines and credit cards. * ese companies service a relatively small, nic e and upwardly mobile target audience wit ig purc asing power. I ile t ere could be any number of stated reasons, t e one logical reason most own up to is costs. offline loyalty programmes are extremely expensive to run and maintain, especially in terms of cost per contact.
)nternet Prognosis for t e Product +anager :s a product manager. * e future primary responsibilities are: )tr teg, de/e"opment: <e will oversee t e long-term strategy for t e product category, like specific competitive strategies for different market segments as well as develop product line extensions and pro>ect demand. Con!umer under!t nding: e will maintain close contact wit t e consumer and develop and intimate knowledge of consumer attitudes and be avior. <e will c ampion t e cause of t e consumer in t e business. &roduct inno/ tion: <is awareness of consumer needs gaps and appreciation of tec nological possibilities will impact t e product development team and elp bring about innovations wit tangible benefits to t e consumer. %r nd e?uit, m n gement nd communic tion: :s a custodian of t e brand, e will build t e image and personality of t e brand and communicate it consistently t roug advertising over different media. <e will be responsible for optimizing advertising spends and t e selection of t e rig t media mix to reac t e specific target audience. Te m "e der!hip: :n excellent team leader and team player, e will co-ordinate wit development teams to facilitate and implement business initiatives ) t ese areas. t e sales and product
MODEL @UE#T ON PAPER Paper 4.11 PRODUCT MANAGEMENT Ti*e / & -ours Part " A :nswer any <i6e %uestions Bote: 5"" ?ue!tion! c rr, e?u " m r=! :ll %uestions carries e%ual marks &. ,. .. /. 1. 5. ". 6. I at are t e duties of t e product managerC I y product modification is resorted to by companiesC I at is product policyC +ention some of t e idea generating met ods. I at are t e launc mistakesC I at is "# frameworkC I at are venture teamsC I at are t e various areas of product researc C Part " B :nswer any <our %uestions Bote : 5"" ?ue!tion! c rr, e?u " m r=! Kuestion No. &1 is 'ompulsory 7. &8. &&. &,. &.. &/. &1. 0xplain t e reasons and implications of product deletion. !escribe product life cycle as a potent tool. 0xplain ow product planning can be undertakenC !escribe t e various test marketing strategies. *race t e new product successes and failure in t e )ndian context. I y *op management as to consider NP! seriouslyC Fustify. :nalyse t e give case and answer t e %uestions given below. B4 + 1' J (EC Ma+i*u* Mar3s / 1EE B' + A J 4EC