Unit-2: Unit-2 Product Decisions Topics of discussion: What is a Product? - Levels/Dimensions of product Classifications of Product Product Decisions - Individual P roduct D ecisions - Product-mix D ecisions - Product-Line Decisions Product Differentiation Topics of discussion What is a product?: A product is anything that can be offered to the market to satisfy a need or want. It includes physical goods, services, ideas, events, experiences, etc. What is a product? Levels/Dimensions of Product (Customer-Value Hierarchy): Core Benefit- -answers the question “ what is the buyer really buying?” - heart of the product and main reason of product’s existence. Basic Product- - This level contains only those attributes or features that are absolutely necessary for the product to work. i.e., no unique features. Levels/Dimensions of Product (Customer-Value H ierarchy) PowerPoint Presentation: Expected Product Augmented Product- - A Marketer provides extra attributes or benefits far exceeding the expectations of the customer. - Product differentiation and competition happens at the augmented product level. - Each augmentation adds to the cost of the product. - Augmented benefits soon become the expected benefits. Potential Product- - all possible developments/ all possible transformations a product can go through in the future. Ginger Hotels: Ginger Hotels is a chain of hotels in India in the “ Smart Basics ” category. The concept of the hotel targets the modern, experienced traveler who does not relate low tariffs with poor standards. The hotels employ skeletal staff and most of the regular hotel services are outsourced. The hotel economize on cost by allowing the guests self-check in facility. The hotels are located either at smaller business centers or tourist destinations that attract visitors round the year. In a short time, the hotel chain has achieved an occupancy rate of 85%. Ginger Hotels Classification of Product/Types of Product: Marketers have classified the products on the basis of Durability &Tangibility, and Use . (1) (2) Classification of Product/Types of Product (1) Durabilty and Tangibility: 1. Non-Durable goods- are tangible goods normally consumed in one or few uses. Examples - Soft-drinks, Soap, Shampoo, Tooth-paste, Chips, Hair-oil, etc. Appropriate marketing strategy- - To make them available in many locations. - Advertise heavily to induce trial and build preference. 2. Durable goods- are tangible goods that normally survive many uses. Examples- Refrigerators , Television, Car, Air- conditioner, etc. Appropriate marketing strategy- - More seller guarantees. - Informed Sales force. - Efficient After-sales services. (1) Durabilty and Tangibility PowerPoint Presentation: 3. Services- are intangible, inseparable, variable, and perishable. Examples- hair-cuts, hotel service, health services by doctors, services by airlines, etc. Appropriate marketing strategy- - More quality control 2. On the basis of Use : A. Consumer-goods B. Industrial-goods- Industrial goods are those purchased for further processing or for use in conducting a business. 2. On the basis of U se PowerPoint Presentation: Marketing considerations Convenience Shopping Speciality Unsought Customer buying behaviour Frequent purchase little planning and effort low customer involvement. Less frequent purchase Much planning effort Comparison of brands on price, quality and style. Strong brand preference and loyalty special purchase effort little comparison of brands low price sensitivity. Little product awareness, knowledge. Examples Toothpaste, laundry detergent, soft drinks, soaps. Furniture, cars, computers, air conditioners, and major appliances Specific brands like Mercedes car, Apple products, Harley motor Bikes, high priced photographic equipments, designer clothes, etc. Life insurance, encyclopedias PowerPoint Presentation: Promotion Mass promotion Advertising and well trained sales-force More Carefully targeted promotion. Aggressive advertising and personal selling Price Low price High price High price varies Distribution Widespread distributions, convenient locations Selective distribution Dealers don’t need convenient locations, although they must let prospective buyers know their locations. varies Industrial goods classification: Three groups of industrial products and services include 1. Materials and parts , 2. Capital items , and 3. Supplies and services . Industrial goods classification PowerPoint Presentation: 1. Materials and parts- are goods that enter the manufacturer’s product completely like raw materials and manufactured materials and parts . Raw materials consist of farm products and natural products. Manufactured materials and parts consist of component materials ( pig-iron, yarn ) and component parts (small motors, tires). PowerPoint Presentation: 2. Capital items are long lasting goods that facilitate developing or managing the finished product. They include two groups – Installations and Equipment . Installations consist of buildings and heavy equipment (generators, elevators). Equipment includes portable factory equipment and tools (hand tools) and office equipment (personal computers, desks, tables, almirahs ). PowerPoint Presentation: 3. Supplies and business services- are short term goods and services that facilitate developing and managing the finished product. Supplies- include operating supplies (lubricants, writing paper, pencil) and repair and maintenance items (paint, nails, brooms) Business services include maintenance and repair services( window cleaning, computer repair, ) and business advisory services ( legal, management consulting, advertising services). Product decisions: It consists of- 1. Individual Product decisions- Focuses on decisions about A) Product attributes, B) Branding, C) Packaging, D) Labeling, E) Product Support Services. 2. Product-Line decisions , 3. Product-Mix decisions . Product decisions 1.Individual Product Decisions: 1.Individual Product Decisions A) Product attributes - like quality, features, and style & design.: Product Quality Product Features Product Style and Design A) Product attributes - like quality, features, and style & design. Tata Nano Car: Tata Motors Ltd., India’s largest automobile company, created history when it launched the T ata N ano . Called the people’s car for the value that its standard version offers for a small price of Rs.100000. It is a small, affordable, rear- engined , for the Indian middle class family- inspired mainly by a family of four riding a scooter- the man driving the scooter, and the wife sitting side saddle holding a little kid and another kid standing in the front. Thus came the product concept (or the core product) “can we offer an affordable and safe transport for a family of four?” Tata Nano Car PowerPoint Presentation: The issue to be discussed will be how Tata Motors arrived at the tangible product which would offer a safe transport vehicle for a family of four. A lot of alternatives were explored. So they planned to configure a small car- a four wheeler and not a three wheeler- a proper full-fledged car. The next question was- What should be the features of this car? What should be the quality standards of the car? The Tata motors web site had nearly one million hits on January 10, 2008, the day the Tata Nano was unveiled. The Tata Nano website saw 4 million hits in 30 hours, making this site one of the busiest sites in the world. Bisleri- Case Study: India is a country that constantly faces the problem of potable drinking water. In a hot and tropical country like India, the market for pure drinking water is huge. The market for bottled drinking water is growing at 40% every year. This market is shared by just a few major brands operating at the national level like Coke’s Kinley , Pepsi’s Aquafina , Tata’s Himalayan, and Parle’s Bisleri and Bailey and there are numerous other brands that operate at regional level. With 60% market share, Bisleri is the market leader. Mineral water under the name “ Bisleri ” was first introduced in Mumbai in 1965 by Bisleri Ltd., a company of Italian origin. The company first introduced the idea of selling bottled water in India. Bisleri - C ase S tudy PowerPoint Presentation: Parle bought over Bisleri ( India) Ltd. in 1969. Bisleri is now a household name and has become synonymous with the generic name for bottled drinking water. Challenges-?: 1. To make people accept the idea of purchasing bottled drinking water. 2. To make the brand appealing to the masses. 3. Stiff competition from new entrants like Aquafina , Kinley , etc. Challenges-? Solutions: The initial brand- building exercise concentrated on bisleri as healthy and pure water with adequate minerals. Punchline adopted was “ Bisleri is veri veri extraordinari ”. PET bottles was introduced. Offered incentives to the traders so that they could stock the brand and “push” it in the market. Introduction of 500 ml bottle at Rs.5. Company changed its positioning strategy to “play safe” reinforcing the belief of people that they buy bottled drinking water because it is safe to drink rather than its mineral contents. They targeted the commercial segments or the bulk segment that did not have adequate supply of drinking water. They introduced 12- liter container followed by 20 liter can. This also brought down the prices from Rs. 10 per liter to Rs. 3 per liter. Solutions A winner: In 1995, Bisleri was available only in 50,000 outlets. Today, more than 200000 outlets stock and sells bisleri . A winner B) Branding: A Brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. B) Branding Importance of Branding: For Buyers- 1. Identification of Products 2. Product-Quality and Consistency 3. Status symbol 4. Uniform prices 5. Ease in shopping For Sellers- 1. Provides legal protection for unique product features that otherwise might be copied by the competitors. 2. Helps to segment the markets. 3. Product differentiation 4. Promotion and advertising- Brand-name becomes the basis on which a whole story can be built about a product’s special qualities. 5. Customer loyalty Importance of Branding Limitations of branding-?: Limitations of branding-? Brand-Equity : Brand-equity is the differential effect that knowing the brand name has on customer response to the product and its marketing. A Brand may have a positive or negative brand equity. Brand strength can be measured along four consumer perception dimensions- - Differentiation - Relevance - Knowledge - Esteem Brands with high positive brand equity rate high on all of these dimensions. Brand Valuation- is the process of estimating the total financial value of a brand. According to one estimate, the brand value of Google is a whopping $86 billion, with GE and Microsoft close behind at $71 billion and Coca- Cola at $58 billion. Importance- ? Brand-Equity Branding Decisions: The first branding decision is whether to develop a brand name for a product or not. Four general strategies are often used. 1. Individual names 2. Blanket family names 3. Separate family names for all products 4. Corporate name combined with individual product names Branding Decisions PowerPoint Presentation: 1 . Individual names- Companies use individual brands In different product categories or use different brand names for different quality lines within the same product class. Advantage of individual brand names- Company does not tie its reputation with its product. Examples- Procter & Gamble(India) has several individual brands in different product categories such as Vicks( Health care ), Ariel and tide ( fabric care ), Pantene, Head& Shoulders, Rejoice ( Hair-care ), and Pampers ( Baby care ). HUL Ltd. has Pears, Lifebuoy, Lux , Rexona , Dove etc. (soaps), Surf-Excel, Rin , Wheel (Detergents), Sunsilk , Clinic all clear, (Shampoos), Close-up, Pepsodent ( tooth-paste). KingFisher Airlines , after acquiring Air-Deccan, a low cost airline, modified the brand name to Simplify Deccan , and retained it as a separate brand. PowerPoint Presentation: 2. Blanket Family Names- Examples- Tata - Its products in diverse product categories such as tea, salt, coffee, automobiles, and steel are given blanket family names. Usha - fans, sewing machines, industrial pumps, drinking water coolers, kitchen appliances, inverters, etc. Advantages- -Advertisement costs. -Sales of the new product is likely to be good if the manufacturer’s name is good. PowerPoint Presentation: 3. Separate family names for all products- Different family names are used for separate product line. i.e., each family name is limited to a particular product line. Examples- Aditya Birla Group in India follows this policy to a great extent. It uses separate family names for its various products. Hindalco for Aluminium , Ultra-Tech for Cement, Grasim and Graviera for Suitings . Reliance uses Vimal for sarees and suitings , legacy for readymades , and harmony for curtains, etc. PowerPoint Presentation: 4. Company name combined with individual product names- Examples- Kellogg combines corporate and individual names in Kellogg’s rice Krispies , Kellogg’s raisin bran, Kellogg’s corn flakes. Sony , Tata , etc. Challenges faced by the marketers for building strong brands: Challenges faced by the marketers for building strong brands 1. Brand positioning: Positioning refers to the act of designing the company’s offering and image in such a way that it occupies a distinctive place in the minds of the target customers. Marketers can position brands at any of three levels. 1. Product Attributes 2. Desirable benefit 3. Beliefs and Values EXAMPLE- PROCTER & GAMBLE 1. Product attributes- It is the lowest level and the least desirable level for brand positioning. DEMERITS Companies can easily copy attributes. More importantly, customers are not interested in attributes as such; they are interested in what the attributes will do for them. 1. Brand positioning PowerPoint Presentation: 2. Desirable benefit- Brands can go beyond technical product attributes and focus on the resulting benefits from the product attributes. 3. Beliefs and Values- Brands such as Cadbury, Apple rely more on creating surprise, passion, and excitement surrounding a brand. They believe in creating a deeper and emotional connect with their customers. Cadbury- The King of the Indian Chocolate Market: The core purpose with which Cadbury operates is “ creating brands people love ”. Cadbury is a leading global confectionery company with headquarters in the United Kingdom. It has operations in over 60 countries, and manufactures and sells chocolates, gum, and candy brands. Cadbury began its operations in India in 1948 by importing chocolates. Cadbury India offers four product categories- chocolate confectionary, milk-food drinks, candy, and gum. Several brands like Cadbury dairy milk, 5 star, perk, Eclairs , and celebrations. It enjoys a market share of over 70% of the chocolate confectionary market in India. Cadbury- The King of the Indian Chocolate Market PowerPoint Presentation: Most adult consumers in the Indian subcontinent hold the notion that chocolates are for kids. -launched a very popular “ Real Taste of Life ” campaign which shifted the focus from “just for kids” to “the kid in all of us”. - launched “ khane walon ko khane ka bahana chahiye ” campaign to appeal to wider consumer segments. The per capita consumption of chocolates is very low, moreover, Indian consumers traditionally prefer “ Mithai ”. - launched “ Kucch meetha ho jaaye ” and “ Pappu pass ho gaya ” campaigns ”. “ SHUBH AARABH” - came up with Cadbury celebrations pack. PowerPoint Presentation: The concept and idea of these campaigns were picked up by the consumers, and, today, Dairy milk chocolates are extensively used to express joy or to celebrate in place of the traditional mithai . Dairy Milk emerged as the No.-1 “Most trusted brand” for brand equity’s most trusted brands survey (2005). 2. Brand Name Selection: Desirable Qualities for a good Brand-Name It should suggest something about the product’s benefits and qualities. It should be easy to pronounce, recognize, and remember. The brand name should be distinctive. It should be extendable. It should be capable of registration and legal protection. 2. Brand Name Selection 3. Brand Sponsorship: Manufacturer’s Brand (National Brand) Examples- Sony TV, Kellogg cornflakes, Videocon Refrigerators, Samsung TV, Voltas AC etc, Apple Mac book, etc. Store brands/ Private brands/ Distributor brands- In-house brand of the retailer. Examples - Future Group has eight private brands. Such as Tasty Treat in Processed food, premium harvest in commodities, fresh and pure in dairy, john miller in men’s grooming, etc. Spencer’s Smart choice instant noodles. 3. Brand Sponsorship PowerPoint Presentation: Licensed brands Examples- Arvind Brands has some licensed brands like bridge to luxury, USA 1949, Energie , etc. Murjani Group has licensed some of the designer international brands like Tommy Hilfiger, Calvin Klein, FCUK, Jimmy Choo , Gucci, etc. Vodafone zoozoo merchandise has been launched by Shopper’s stop in specified categories like t-shirts, kidswear , mugs, bed and bath accessories. Celebrities and well- known individuals are also licensing their names, signature, photograph, and other unique properties to various consumer product manufacturers. Co-branding- When two established brand names of different companies are used on the same product. Examples- Jet Citi Travel Card. Citi Big Bazaar Credit Card. Advantages- 4. Brand development: A company has four options when it comes to developing brands. 1. LINE EXTENSION 2. BRAND EXTENSION 3. MULTI BRANDS 4. NEW BRANDS Product category Existing New Existing Brand name New 4. Brand development Line extension Brand extension Multibrands New brands PowerPoint Presentation: Line Extensions- Line extensions occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category. Mostly the result of pressures from the consumers to provide more variety. To use excess capacity. To command more shelf space from resellers. Examples- Bata has expanded its footwear line to include regular shoes, premium shoes, sports shoes, sandals, etc. Colgate regular, Colgate salt, Colgate gel, Colgate Total. Risks- PowerPoint Presentation: 2. Brand extensions- A brand extension extends a current/ existing brand names to products in a new product category. Examples- Nike’s brand core product is shoes. But it is now extended to Sunglasses, Soccer-balls, Basketballs, and Golf equipments. Kimberley-Clark extended its market-leading Huggies brand from disposable diapers to lotions, diaper rash ointments, disposable washcloths, etc. Advantages- Risks- Ponds Tooth paste; Nirma Tooth paste, Bournvita Buiscuits , etc. PowerPoint Presentation: Multibrands - Introducing additional/new brands in the same product category. Examples- HUL Ltd., Procter & Gamble, Godrej Consumer Products markets many brands in each of their product categories. Advantages - Different features appeal to different buying motives. Lock up more reseller shelf space. Drawbacks - Each brand might obtain only a small market share, and none may be very profitable. New brands- A company may create a new brand name when it enters a new product category for which none of the company’s current brand names are appropriate. Packaging: Packaging involves designing and producing the container or wrapper for a product. Levels of packaging Primary package Secondary package Shipping package/Transport package Packaging PowerPoint Presentation: Functions of Packaging- Protection of the product. Appeal to the consumer- packaging material, package designs and shape, package size. Perform functionally/ aid product consumption. Convenience. Prevents adulteration. Publicity to the product. Examples: Kitchens of India ITC Ltd. uses the retort process, which has been used by the US in its Apollo Space missions and is also widely used in packaged foods in Japan and Europe. The sterilization process used ensures the stability of food in special retort pouches on the shelf at room temperature. Mehsana District Cooperative Milk Producers’ Union Ltd, popularly known as the Doodhsagar Dairy will introduce a packaged milk which can last for three months even if it is stored at room temperature. Branded as ‘ Sagar Moti ’, the milk will be packaged in five-layered pouches that will keep the milk fresh for three months even if it is stored at room temperature. Since it would be packaged after subjecting milk to ultra-high temperature conditions, it would be free of any bacterial activity until opened. The price of the UHT milk will be higher by about Rs 4 per litre to cover the cost of the pouch. But it will be safer and cheaper to transport, deliver and store it as refrigeration costs will be eliminated, Examples Labeling: Labels range from simple tags attached to products to complex graphics that are part of the package. Legal concerns about packaging and labels. Labeling PowerPoint Presentation: Functions of labeling Identification of the product. Describes several things about the product. Promote the product. Product Support Services/Customer Support Services/ After Sales Services: Product Support Services/Customer Support Services/ After Sales Services Marketing news: Videocon Industries will have to take the washing machine brand ‘Pebble’ off the shelves as the Bombay High Court has ruled that the product is a clear imitation of Whirlpool’s ‘Ace’ washing machine and has restrained Videocon from its marketing. The court found that Pebble was similar to Ace, a design registered by Whirlpool in 2009. While Whirlpool India had launched Ace in 2010, Videocon got its Pebble brand of semi-automatic washing machine into the market in 2012, with a substantially similar design of semi-circular wash area and square spin area at a comparatively lower price. Passing-off in intellectual property rights (IPR) law means making a false representation that is likely to induce a person to believe that the goods or services are those of another brand. Marketing news PowerPoint Presentation: Trane, a heating, ventilation and air-conditioning systems brand from Ingersoll Rand, launched a range of interactive air-conditioners and electronic locks for the residential sector. The portfolio consists of ACs with three to five star ratings and in capacities ranging from 1, 1.5 and 2 tonnes . It also launched a range of Trane locks. The new generation technology allows two-way communication among multiple devices and a single controller. The remote controller will allow the consumer to control the Trane interactive AC and the lock together, without having to be in their direct line of sight. Besides, it can control these devices from any part of the house. Product line decisions: A Product-line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outlets. Product line decisions PowerPoint Presentation: Line Stretching- When a company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways. Down-Market Stretch - Introduction of a lower-priced line. Reasons - Strong growth potential Potential Competition Stagnation in middle segment Examples HUL Ltd. with Surf-Excel. Prestige cookers Parker pens Pierre Cardin pens PowerPoint Presentation: Up-Market Stretch - companies may wish to enter the high-end of the market. Examples- Philips Two-way stretch- Examples- LG, Haier , Marriott Hotels. Product-Mix Decisions: An organisation with several product lines has a product mix. A product-mix ( product portfolio) consists of all the product lines and items that a particular seller offers for sale. A company’s product mix has four important dimensions- width, length, depth, and consistency. Product-Mix Decisions PowerPoint Presentation: product width- refers to how many different product lines the company carries. Product length- total number of items in the product mix. Product depth- how many variants are offered of each product in the line. Product consistency- how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Product-mix and Product-line length for HUL Ltd.: Product-mix and Product-line length for HUL Ltd. Personal wash- Lux , Lifebuoy, Liril , Hamam , Breeze, Dove, Pears, Rexona Laundry- Surf-excel, Rin , Wheel Skin care- Fair and lovely, Ponds, Vaseline Hair care- Sunsilk naturals, Clinic all clear Oral care- Pepsodent , Close-up Deodrants - Axe, Rexona Color cosmetics- Lakme Ayurvedic personal and health care- Ayushee Tea- Brooke bond, Lipton Coffee- Brooke bond, Bru Ice-cream- Kwality walls New Product Development and Product Life-Cycle Strategies: New Product Development and Product Life-Cycle Strategies New Product Development: The development of original products, product improvements, product modifications, and new brands through the firm’s own product-development efforts. New Product Development Apple: Apple’s very first personal computers, introduced in the late 1970’s, stood apart because of their user- friendly look and feel. The company’s Macintosh computer, unveiled in 1984, and its lazerwriter printers blazed new trails in desktop computing and publishing, making Apple an early industry leader in both innovation and market share. Introduction of iMac personal computer. Within a year, it had sold more than a million units. Mac OSX, a ground-breaking new apple operating system. i -Pod, i -Tunes, Apple’s iPod captures more than 70% of the music player market and Apple’s iTunes Store is currently the number two music store- online or offline- in the world. i -Phone, MacBook pro notebooks, MacBook Air notebooks. Apple Importance of New Product Development: Importance of New Product Development Why New Products fail?: According to one estimate, 90% of all new products in America fail. Each year, companies in America lose an estimated $20 billion to $30 billion on failed food products alone. Kinetic Merlin It was a three-in-one set consisting of a colour television, a stereo with detachable speakers and a home computer. Kinetic Merlin was launched in Pune in October 1991. It boasted state-of-the art German technology, and features like remote keys which on one side could operate the television and on the other side could operate the home computer. It expected the Indian consumers to immediately adopt such an innovative idea. But, in reality, consumers did not show much craze to buy this. The company decided to withdraw the Merlin after one year of its launch. Why New Products fail? New Product Development Process: Stage1 Idea generation Stage2 Idea screening Stage3 Concept development and testing Stage4 Business analysis Stage5 Product development Stage6 Test marketing Stage7 Commercialisation New Product Development Process Stage1 Idea Generation: Idea generation is the systematic search for new-product ideas. The purpose of idea generation is to create a large number of ideas. IBM recently held an “Innovation Jam” in which it invited IBM and customers, employees worldwide to submit ideas for new products and services. The brainstorming session generated some 46,000 ideas in over three days. However, IBM had boiled down these huge number of ideas to only 10 products, businesses and services. Two major sources are - Internal idea sources - External idea sources Stage1 Idea Generation PowerPoint Presentation: Internal idea sources- formal R&D, employees ranging from executives to scientists, engineers, manufacturing staff, sales people and the top management. Cisco has set up an internal wiki called Idea Zone or I-Zone, through which any Cisco employee can propose an idea for a new product or comment on or modify someone else’s proposed idea. Since its inception, I-Zone has generated more than 400 business ideas. So far twelve izones ideas have reached the project stage. Tata Nano product idea . PowerPoint Presentation: External Idea Sources- Distributors, Suppliers, Competitors, Customers, marketing research firms, University, commercial laboratories, independent inventors. Examples- Wimco , the only firm from the organised sector in the safety match industry, and also a key player in it, introduced carbonised match sticks, when customers complained about fire hazards in using match boxes. Wimco also developed match boxes that would not get soggy in winter and during monsoons. Dell has set up an interactive web site forum called IdeaStorm that asks consumers for insights on how to improve its product offering. Users post suggestions, the community votes, and the most popular ideas rise to the top. Only two months after the launch, the site had received some 3850 ideas and 2,36,000 votes. Stage2 Idea -Screening: The purpose of idea screening is to reduce the number of ideas by spotting the good ideas and dropping the poor ones. One marketing expert proposes R-W-W (“real, win, worth it”) new-product screening framework that asks three questions. First, is it real? Second, Can we win? Finally, is it worth doing? Stage2 Idea -Screening Concept Development and Testing: An attractive idea must be developed into a product concept. key terms- product idea, product concept. Product idea- is an idea for a possible product that the company can see itself offering to the market. Product Concept- is a detailed version of the idea stated in meaningful consumer terms. Concept Development and Testing PowerPoint Presentation: Concept development EXAMPLE- Suppose a car manufacturer wants to introduce an affordable, mass market hybrid-powered car models. A marketer might create the following product concepts for the electric car. Concept1 An affordably priced midsize car designed as a second family car to be used around town. Concept2 A mid-priced sporty compact appealing to young singles and couples. Concept3 A “green” car appealing to environmentally conscious people who want practical, low-polluting transportation. PowerPoint Presentation: Concept testing- testing new-product concepts with a group of target consumers to find out if the concepts have stronger consumer appeal. The concept may be presented to consumers symbolically or physically. After being exposed to the concept, consumers then may be asked to react to it by answering questions like -do you understand the concept of a battery powered electric car? - do you believe the claims about the car’s performance? - what improvements in the car’s features would you suggest? - what would be the reasonable price to be charged for the car? - would you buy such a car ( definitely, probably, probably not, definitely not)? PowerPoint Presentation: Objectives To evaluate the relative merits of several new product proposals. To determine whether the product idea is to be abandoned or modified. To determine the size of the potential market. To guide the management to adopt suitable marketing policies in advance. Stage-4 Business Analysis/ Feasibility Analysis: The company projects cost, profit, return on investment and cash flow if the product is placed on the market. Projections of potential sales at various prices need to be made, as well as detailed cost projections for different volumes of production. Stage-4 Business Analysis/ Feasibility Analysis Stage5 Product Development: Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable market offering. R&D or engineering develops the product concept into product development The R&D department may develop one or more physical versions of the product concept. Products undergo rigorous tests to make sure that they perform safely and effectively. Examples of Product testing- Gillette Shaving products Louis Vuitton handbags Stage5 Product Development Stage-6 Test-Marketing: This is the stage at which the product and marketing program are introduced into realistic market settings. Objective- It lets the company test the product and its entire marketing program- targeting and positioning strategy, advertising, distribution, pricing, branding and packaging. To forecast the sales volume. Stage-6 Test-Marketing PowerPoint Presentation: Advantages- ? Limitations- Test marketing is a costly affair. It is time consuming method that may allow competitors to gain advantages. PowerPoint Presentation: Liril soap Introduced by Hindustan Unilever Ltd was originally tested in Hyderabad and Lucknow . The product was distributed in all normal outlets in both the towns and supported by advertising to inform the customers. Results of the test enabled the company to make several improvements, which were successfully incorporated before the product was extended nationally. PowerPoint Presentation: Dabur India expanded the Gulabari brand and introduce several skin care products under it where the essence of rose could fit in. These products would include all types of skincare products ranging from facewash and soaps to creams. These products were test marketed in West Bengal before rolling them out nationally. Reason of choosing West Bengal for test marketing Gulabari products was that Eastern India contributes close to 25 per cent to Gulabari's overall turnover in India. PowerPoint Presentation: Marico rolled back Saffola Rice and Hair & Care, modified it post the test market feedback and launched it again. Commercialisation: This refers to the decision to market the new product at the full scale of operation, which involves a significant commitment of resources and managerial effort. Commercialisation Product life cycle: Product life cycle Introduction stage : Characteristics- Sales- Low sales Costs- High cost per customer Profits- Negative Customers- Innovators Competitors- Few Marketing Strategies- Product- Basic product Price- Skimming the cream or Penetration pricing Distribution- Selective distribution Advertising- heavy advertising to create awareness among early adopters and dealers Sales promotion- heavy sales promotion to induce trial; to secure distribution in retail outlets. Introduction stage Growth stage: Characteristics Sales- Rapidly rising sales Costs- Average cost per customer Profits- Rising profits Customers- Early adopters Competitors- Growing number Example - Very few products were available in the ready to wear apparel segment in India previously (Park avenue) since most people preferred to get their clothes stitched from tailors. However, as ready to wear products attained the growth phase, several brands like lee, arrow. Louis phillipe , van huesen allen solly were launched by the manufacturers. Marketing strategies Product- More product varieties, Improved product quality Price- Price to penetrate market Distribution- Intensive distribution Advertising- Advertising to create awareness in the mass market and to meet the competition Sales promotion- Reduce to take advantage of heavy consumer demand Growth stage Maturity stage: Characteristics Sales- Peak sales Costs- Low cost per customer Profits- High profits but profits will fall down eventually Customers- Majority Competitors- Stable number beginning to decline Marketing strategies Product- Diversify brand and models; encourage new uses of the product; new markets, Convert non-users Price- Price to match or beat competitors Distribution- More intensive distribution Advertising- Aggressive advertising by stressing brand differences and benefits Sales promotion- Increase to encourage brand switching Maturity stage Examples: Moov Bournvita, Complan, Horlicks Introduction of Small sachets to attract non-users Examples Decline stage: Characteristics Sales- Declining sales Costs- Low cost per customer Profits- Declining profits Customers- Laggards Competitors- few Marketing strategies Product- Price- Cut price Distribution-Selective Advertising- Reduce to level needed to retain hard-core loyals Sales promotion- Reduce to minimal level Decline stage PowerPoint Presentation: A marketer may adopt one of the following options- 1. The company can decide to follow a strategy to maintain its position in the market and most likely in the territories where it is doing well. In Indian market, Modi Xerox, Global and Network dropped the fax machines but Panasonic didn’t. It continued to sell in India and achieved success due to the eventual dropping of other key players. 2. Harvesting the brand value 3. Drop the product 4. Revitalise or reposition the brand PowerPoint Presentation: Examples- Consumer products giant Hindustan Unilever relaunched its 107-year-old soap brand Lifebuoy in a bid to bolster falling sales. Sales volumes had dropped 15-20 per cent in 2001, amid a sluggish market as well as consumer perception of Lifebuoy as an "old-fashioned" soap. Lifebuoy is no longer a carbolic soap but is now "a milled toilet soap with a new health fragrance". PowerPoint Presentation: The brand was re-engineered to achieve dramatic growth. As consumers evolved there was an increasing need to make Lifebuoy more relevant. It’s a radical move, given that the soap’s carbolic nature has been Lifebuoy’s claim to fame for more than a century. Company is hoping that Lifebuoy which was declining by 15-20 per cent will get back to double digit growth. PowerPoint Presentation: With consumers opting for softer looking soaps which lathered better (which the discount soaps offered), the hard and chunky Lifebuoy, which made up 95 per cent of the carbolic soap category, lost its buoyancy. Market shares (value) started sliding from 15.4 per cent in January-December 1997, to 12.5 per cent by December 2001. PowerPoint Presentation: Bajaj Auto discontinued its scooter line. Bajaj scooters were once ubiquitous symbols of Indian social status. Most reports pointed to improved economic conditions and new Indian prosperity as the reason for Bajaj’s scooter decline, with a corresponding shift in taste from utilitarian scooters to motorcycles and automobiles. Bajaj set its sights on Honda Hero and retaking its position as the leading sales manufacturer of motorbikes in India.