product & brand management 1

7/31/2019 Product & Brand Management 1

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Product Planning and

Development



Objective

To gain an understanding of:• The meaning of a total “product” and “new”

product

• Classification of business and consumer products

and its relevance to marketing planning• Product innovation

• The product-development process

• When to add new products to a product line

• The adoption and diffusion process for products

• Organizational structures for product planningand development



Seller’s services

Productquality Physical

characteristicsof goods

Price

Brand

Design

PackagingProductwarranty

Seller’s reputation

Colour

The Total Product



Consumer Goods ClassesConsumer products can be classified by the

buying behaviour of the consumers:

• Convenience goods are bought with littletime and effort, such as milk, bread, a

chocolate bar.• Shopping goods are those where extensivecomparison is the norm-- cars, furniture,clothes.

• Specialty goods are those for whichconsumers have a strong brand preference.BMW, Armani.

• Unsought goods are those now unknown to

the consumer or, if known, undesired.



Classifying Business Products

• raw materials: unprocessed, become part ofother manufactured products

• manufactured parts and materials: processed

products that become part of other products• installations: major buildings and equipment

• accessory equipment: used in operations,include computers, desks, tools

• operating supplies: low value, used by mostfirms, convenience products for businesses



Innovation is Required

• Products go through life cycles-- you need newones coming on stream.

• Profits highest when products new.

• Consumers more selective: they look carefullyat each purchase. Also a little jaded.

• High failure rates in the 75% range.

• Leads to new products:

• Innovative= truly unique• Improved, with valuable new benefits

• Imitative, another “me too” product.



• Ford’s Edsel automobile.

• Dupont’s Corfam synthetic leather. • Polaroid’s Polavision.

• Time’s TV-Cable Week magazine.

• IBM’s PCjr. • New Coke.

Few World-Class Product Failures



New Product Development

• companies must be constantly modifyingexisting products and developing newones; the marketplace demands it

• how new is new? most new products aremodifications of or extensions to existingones

• the introduction of a new product is astrategic decision which should be guidedby the company’s goals and a new productintroduction strategy



Identifythe strategic

role of newproducts,

then...

1.Idea

generation

2.Screeningof ideas

3.Businessanalysis

4.Prototype

development

5.MarketTests

6.Commer-cialization

The New Product Development Process



The New Product Development Process

• A new product is best developedthrough a series of six stages:

• The first two stages provide a focus

for generating new-product ideas anda basis for evaluating them.

• The next three stages deal with ideasand are the least expensive.

• In their haste, some companies skipstages — the most common omissionbeing market tests.

9-7



Criteria for New Products

• there must be adequate market demand: thisis necessary but not sufficient for success

• must satisfy key financial criteria

• must be compatible with environmentalstandards

• must fit with the company’s marketingstructure

• should also be compatible with productioncapabilities, satisfy legal requirements, and fitwith corporate goals and objectives



Development of New Product Strategy

CompanyGoals

Product Strategy Examples

Defend market

share

Introduce addition to

existing produceline/ revise existing

product

Pizza Hut’s “Big

New Yorker” and“Stuffed Crust”

pies

Strengthen

reputation asan innovator

Introduce a really

new product - not just an extension of

an existing product

Digital cameras

introduced bySony, Canon,

and other firms



Adoption-Diffusion Process

• different new products are adopted byconsumers at different rates

• the individual consumer goes through certain

stages before adopting a new product• marketers must be interested in first creating

awareness, then interest, then trial, before theconsumer is considered an adopter

• some people are genuine innovators, whileothers wait and try later; some never adopt



Adopter Categories

• Researchers have identified five categoriesof individual adopters for new products:

• Innovators— 3% of the market.

• Early adopters—

13% of the market.• Early majority— 34% of the market.

• Late majority— 34% of the market.

• Laggards—

16% of the market.• In addition, some individuals—

nonadopters— never accept the innovation.



Evaluation of new safer baseball for youngsters:

1. Relative advantage—superior to currentballs in terms of safety but not tradition.

2. Compatibility—coincides with culturalvalues and experiences of parents but not ofcoaches.

3. Complexity—no problem understanding.

4. Trialability—ball can be easily tested.5. Observability—can see a youngster who’s

hit with the new ball dust off and trot to firstbase.

Five Characteristics Affecting

Adoption Rate: Example



New Product Organization

Companies take a variety of approachesto organizing the new product function:

• product-planning committees

• new-product departments• cross-functional new venture teams

• product managers

• many larger firms are replacing theproduct manager with category managers

product & brand management 1

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