Product Decisions

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Information about Product Decisions
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mba

Published on March 7, 2014

Author: kumarprashantgupta

Source: slideshare.net

PRODUCT DECISIONS Prof. Prashant Kumar Gupta Jain College Of MBA and MCA

PRODUCT CONCEPT Potential Product Augmented Product Expected Product Basic Product Core Benefit

CORE BENEFIT: Service or benefit the consumer is actually buying Eg: Sleep and rest in case of a hotel guest  BASIC PRODUCT: Service or benefit is given more tangibility Eg: Hotel room includes bed, towel, desk, etc.  EXPECTED PRODUCT: Attributes and conditions buyers usually expect Eg: Clean room, fresh towels, etc.  AUGMENTED PRODUCT: Product that exceeds expectations Differentiation takes place at this level  POTENTIAL PRODUCT: All possible augmentation result into potential product 

PRODUCT AUGMENTATION Some points should be noted:  Augmentation adds to cost  Augmentation soon becomes expectation

PRODUCT CLASSIFICATION  DURABILITY & TANGIBILITY Non-Durable Goods  Durable Goods  Services   CONSUMER GOODS CLASSIFICATION Convenience Goods  Shopping Goods  Specialty Goods  Unsought Goods   INDUSTRIAL GOODS CLASSIFICATION    Material & Parts Capital Items Supplies

PRODUCT DIFFERENTIATION  FORM   FEATURES   Probability that product will not malfunction REPAIRABILITY   Measure of products life under normal conditions RELIABILITY   Low, average, high or superior performance DURABILITY   Acts as a supplement PERFORMANCE   Shape, size, physical structure Ease of fixing the product STYLE  Look and feel that the buyer gets

PRODUCT HIERARCHY It stretches from basic needs to particular items that satisfy them.  There are six levels which can be understood with the example of insurance.  1. 2. 3. 4. 5. 6. Need Family Product Family Product Class: Product Line Product Type Item Security Savings & Income Financial Instrument Life Insurance Term Life insurance ICICI Prudential

PRODUCT LIFE CYCLE

MARKETING STRATEGIES :INTRODUCTION Sales Low sales Costs High cost per customer Profits Negative Marketing Objectives Create product awareness and trial Product Offer a basic product Price Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers

MARKETING STRATEGIES :GROWTH Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Maximize market share Product Offer product extensions, service, warranty Price Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market

MARKETING STRATEGIES :MATURITY Sales Peak sales Costs Low cost per customer Profits High profits Marketing Objectives Maximize profit while defending market share Product Diversify brand and models Price Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits

MARKETING STRATEGIES :DECLINE Sales Declining sales Costs Low cost per customer Profits Declining profits Marketing Objectives Reduce expenditure and milk the brand Product Phase out weak items Price Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers

NEW PRODUCT DEVELOPMENT Idea Generation Product Development Test Marketing Idea Screening Business Analysis Commercialisation Concept Development & Testing Marketing Strategy Development

NEW PRODUCT DEVELOPMENT :IDEA GENERATION It is a systematic search for new product ideas  Sources of idea generation may be internal or external   Internal Idea Sources Find ideas through R&D  Ask employees through programs   External Idea Source Ideas from customers directly or indirectly  Distributors and retailers 

NEW PRODUCT DEVELOPMENT :IDEA SCREENING  Purpose is to reduce number of ideas generated  Identify good ideas and drop bad ones  Review done by a committee

NEW PRODUCT DEVELOPMENT :CONCEPT DEVELOPMENT & TESTING Idea must be converted to product  First make a product and then test it for its appeal  Differentiate between idea, product and image     Idea is a possible product Product is idea tangiblised Image is customers’ perception

NEW PRODUCT DEVELOPMENT :MARKETING STRATEGY AND DEVELOPMENT  Has three parts Define target market  Planned positioning  Sales, market share and profit goals 

NEW PRODUCT DEVELOPMENT :BUSINESS ANALYSIS  Review of sales projection  Review of cost and profit projection  Check whether company’s objectives are satisfied  Decide future strategy

NEW PRODUCT DEVELOPMENT :PRODUCT DEVELOPMENT  Converting concept into a real product  Requires huge investment  First develop and test a few physical products  Check on various parameters

NEW PRODUCT DEVELOPMENT :TEST MARKETING  Testing product in more real market settings  Entire marketing program is testedbranding, positioning, distribution, price, packaging, etc. Three types:1. Standard Test 2. Controlled Test 3. Simulated Market Test

NEW PRODUCT DEVELOPMENT :COMMERCIALISATION  Introducing  High product to market costs  Build or rent manufacturing facility  Timing of commercialisation is important  Where to launch?

PRODUCT DIFFUSION  Process by which a new idea or new product is accepted  Rate of diffusion is the speed that the new idea spreads from one person to the next  Adoption concerns the psychological processes an individual goes through to embrace a new idea  Is a process by which  An innovation  Is communicated through certain channels  Over time  Among the members of a social system

the group of individuals that together complete a specific goal (adoption) time the process of the new idea traveling from one person to another or from one channel to the individual social system Any item, thought, or process that is viewed to be new by the consumer communication innovation DIFFUSION PROCESS how long it takes for the group to adopt an innovation as well as the rate of adoption for individual

ADOPTION PROCESS

ADOPTION PROCESS Innovators Adopt new ideas, risk takers RANKING MUNDIAL DE USUÁRIOS DE INTERNET Early Adopters 1º 2º 3º 4º Enthusiastic, like taking risks 5º 6º Early Majority Cautious but like to change Late Majority Less affluent, less Laggards Resist change, conservative, educated, usually old like tradition, old or low in socio economic status

ADOPTION PROCESS Interest Evaluation Trial Adoption or Rejection Consumer in first expose to the product innovation. Lacks in information about the product May only know the name of product and its basic features.

ADOPTION PROCESS Awareness Evaluation Trial Adoption or Rejection Consumer is interested in product and search for additional information. He wants to know what is it, how it works and what its potentialities are.

ADOPTION PROCESS Awareness Interest Trial Adoption or Rejection Consumer decides whether or not to believe this product or service. Will it satisfy his needs and requirements. Individual makes a mental trial of the idea

ADOPTION PROCESS Awareness Interest Evaluation Adoption or Rejection  Consumer uses the product on a limited basis.  During this stage the individual determines the usefulness of the innovation and may search for further information about it.  The trial stage is characterized by smallscale experimental use, when it’s possible.

ADOPTION PROCESS Awareness Interest Evaluation Trial If trail in favorable consumer decides to use the product If unfavorable the consumer decides to reject it.

MERCHANDISING PLANNING Process by which a retailer offers the right quantity of the right merchandise in the right place at the right time and meets the company’s financial goals. Sense market trends  Analyze sales data  Make appropriate adjustments 

HOME WORK Explain the three tests in test marketing.  Discuss packaging as a marketing tool, requirement of good.  Why is there a requirement of good packaging?  What is the role of labeling in packaging? 

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