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This describes the stages a new product idea goes through from beginning to the end.

It is a generic description of the way a product behaves in the market place. Every product passes through certain identifiable stages. A theoretical model which describes the stages a product goes through.

Product Development. Introduction. Growth. Maturity. Decline. Rejuvenation or termination.

It can be applied to a Product category, e.g. a watch A style e.g. digital A brand or a model

Consider the implication of a life cycle for - net cash flow - profit - marketing strategy

Sales

Cash Flow

This phase Is complex. Absorbs significant resources. May not be successful. Involves a long lead time before revenue is generated.

Evaluate a each stage and if, necessary, abort the product idea. The cost of development rises as it approaches launch. Market research including a test launch should be undertaken to reduce the risk of product failure. Most Product ideas do not reach the launch phase.

Inadequate demand. Action of competitors. Change in the external environment. Production problem. High costs. Does not fit in the firms product range. Life cycle expected to be too short.

New product launched in the market. Low level of sales. Low capacity utilisation. High unit costs teething problems occur. A cash sink hole / negative cash flow. Distributors reluctant to take an unproven product. High level of risk high failure rate. Heavy promotion to make consumer aware of the product.

This stage makes special demands on the marketing function. Objective to attract trend setters. High promotional spending to create awareness and inform people. Either skimming or penetration pricing. Limited distribution. Need to build channels of distribution. Bought by innovators / trend setters.

Expanding markets but arrival of competitors. Fast growing sales. Rise in capacity utilisation. The product takes off in terms of market acceptance. Cash flow becomes positive. Unit costs fall with economies of scale. The market grows, profits rise but attracts the entry of new competitors.

Advertising to promote brand awareness. Increase in distribution outlets intensive distribution. Go for market penetration and if possible price leadership. Target the early majority of potential buyers. Continuing high promotional spending. Improvement in product - new features, improved styling.

Rate of growth of sales begins to slow down as competitors enter the market. High level of capacity utilisation. Intense competition. Fight for market share. High profits for those with high market shares. Weaker competitors start to leave the market. Prices and profits fall. The product is sold to the late majority.

Need to defend position. Product differentiation product improvements. Rationalisation. Competitor based pricing. Promotion focuses on differentiation. Persuasive advertisement. Intensive distribution. Enter new segments. Attract new users. Repositioning Develop new uses.

Falling sales. Market saturation and / or competition. Decline in profits. Abandonment of market by some players. Decline in capacity utilisation switch capacity to alternative product.

Technological advance Changes in taste and behaviour Increased competition Economic circumstances Damaging publicity Product side effects

Maintain market share. Harvest by spending little on marketing the product. Rationalize by weeding out product variations. Price cutting to maintain cometiveness. Promotion to retain loyal customers. Distribution narrowed.

Maintain market share. Harvest by spending littlt on marketing the product. Rationalize by weeding out product variations. Price cutting to retain loyal customers. Distribution narrowed.

Increase the promotion. Focus on profitable segments. Reduce prices. Change distribution channels. Product improvements. Reposition the product.

Change one or more elements of the marketing mix to rejuvenate the product. Change price. Change promotion e g. new promotional message . Change product re-styling and product improvement. Change more efficient distribution. Develop new market segment. Find new uses for the product. Psychological re-positioning. Repositioning the product.

Sales (Rs.)

Time

Elimination of the product either a natural death or termination (brand culling). Unless the product is profitable or has growth potential or is seen as necessary to maintain sales of another product, the organisation should seriously consider eliminating the product. Weak products take a disproportional amount of the firms financial resources and can harm the firms image.

The rate of technological change is rapid. There is high degree of innovation in the market. Customer tastes are changing rapidly. The product is a fashion item. The product is badly marketed.

Sales (Rs.)

Time

The assumption is that products go through the cycle and inevitably reach the decline phase. But some classic products have a long life cycle and no apparent sign of decline. These are exceptions to the rule although the life cycle can be extended, e.g. cornflakes, cococola.

Sales (Rs.)

Tme

To forecast the future behaviour of sales. To be a tool of analysis to assist in the formulation of marketing strategies. As a manipulative device to indicate when short term measures might be used to distort the life cycle to the firms advantage. To identify deviations from the norm. To aid the analysis of the firms product portfolio.

Product portfolio refers to the mix of products produced by a single firm. It is undesirable to have too many products at one stage new products involve heavy investment and mature products might only have a short life left to them. A balanced portfolio is one in which a firm has a variety of products in different stages of the life cycle.

The shape and duration of the cycle varies. Strategic decisions can change the life cycle. It is difficult to recognise exactly where a product is in its life cycle. Decline is not inevitable. Assumes no reversion to earlier consumer preferences. It can become a self fulfilling prophecy.

NPD is the process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the growth or survival of the organisation.

No of products still in development

N o Of Pr od uc ts

(left axis)

Expenditure on developing Products (right Axis)

C o st O f N P D (I n R s)

Time

A product that opens up an entirely new market. A product that adopts or replaces an existing product. A product that significantly broadens the market for an existing product. An old product introduced in a new market. An old product packaged in a different way. An old product marketed in a different way.

To To To To To To To To To To

add to product portfolio. create stars and cash cow for the future. replace declining products. take advantage of new technology. maintain / increase market share. defeat rivals. keep up with the rivals. maintain competitive advantage. fill a gap in the market. bring in new customers.

Increase / defend market share by offering more choice or updating older products. Appeal to new segments. Diversify into new markets. Improve relations with distributors. Maintain the firms reputation as a leading edge company. Even out peaks and troughs in demand. Make better use of the organisation resources.

New to the world products innovative products. New product lines to allow the firm to enter an existing market. Addictions to product lines to supplement the firms existing product line. Improvements and revisions of existing products. Reposition products existing products targeted at new markets. Cost reductions new products that provide similar performance at lower cost.

New to the world Hi - definition TV, Ipod, Flat screen TV. New product lines Amul Ice creams. Addition to the product lines Product improvement and replacement New year model.

This is the strategic stage. The firm assesses - Its current product portfolio. - Opportunities and threats. The firm the determines the type of product which would best fit in with the corporate strategy.

Idea generation. Idea screening. Concept development and testing. Marketing strategy development. Business analysis. Product development. Test marketing. Commercialization.

R&D department. Production department. Sales team. Employees. Customers. Competitors. External sources. Market research.

Screening of products to spot good ideas and drop poor ones as soon as possible. Ideas are checked for technical feasibility, financial viability and marketability. The business analyses the product to evaluate its demand, marketability and profit. Given ideas ratings according to marketing production and strategic factors.

Is there a sufficient demand? Will it be profitable? What is the likely pay back period? Does it fit the firms image? Does it fit the firms product portfolio? What is the likely life cycle of the product? What is the state of the market and competition? Does the firm possess the capability to successfully produce and market the product? How easy will it be to manufacture?

Same product Same market Low

Extended Increment Totally Product al Change New Range Product Low Medium Medium

Better market coverage Related market


Totally new market

Low

Low

Medium

Medium

Medium

Medium

Medium

High

Medium

Medium

High

High

Product concept- A retail version of the new product idea stated in meaningful consumer terms. Turning ideas into tangible products that consumers perceive as being valuable. Concept testing- Testing new products concepts with a group of consumers to find out if the concepts have strong consumer appeal.

Designing an initial marketing strategy for a new product based on the product concept. Formal market research is carried out to assess the products market potential.

A review of the sales, costs and profit projections for a new product to find out whether these factors satisfy the firms objective. Estimate potential sales, income, break even point, profit and return on investment from new ideas. Projecting probable costs and sales, will profits reach the firms target.

R&D turns the idea into product. Engineering and product issues are resolved. Concerned with design, materials, production processes, quality and safety. Developing the product concept into a physical product to ensure that the product idea can be turned into a workable product. Translating the idea into reality through prototypes or simulations. Involves the development of a prototype.

Formal Design- Concerned with the aesthetics; does the product look good. Functional Design- Concerned with performance; does it work, is it reliable etc. Economy of manufacture- Does the design allow it to be made efficiently and at a cost which allows for profit.

Fit for purpose Reliable Pleasing appearance Easy to use Convenient for user Efficient in use Easy to maintain

Safe to use Safe to manufacture Financially viable Legal Environmentally friendly Consistent with the market

Launching a product in a small geographical area A field experiment in a realistic market setting Releasing the product into a small but representative market where consumer reactions can be assessed and the marketing mix can be checked and adjusted Aims -To forecast likely results of a national launch -To test the operational effectiveness of the marketing plan -To identify possible problems -To assess customer reaction

The test market may not be a true indicator Environment might change between the test and the national launch Competition may disrupt the test marketing by engaging in exceptional marketing activity. Test marketing alerts competitors. Largely but not entirely replacd by simulated test marketing.

Introducing a new product into the market. Timing is critical for success. There will be heavy promotional expenditure at the launch. Choice of skim or penetration pricing. The product has to be targeted and positioned well.

Three ways to introduce new products under the auspices of existing products. Line extension Using an existing brand name on products within the same category. Brand Extension Using an existing brand name on products in a new category but within the same category. Brand extension Using an existing brand name on products in a new category but within the same broadly defined market. Brand stretching Using an existing name on a product in a different market.

The unique product benefit that a firm aggressively promotes to its target market. The term Unique Selling Proposition was coined by an existing advertising copy writer in 1940. The benefit usually reflects functional superiority, best quality, best service, lowest price, most advanced technology. If the product does not have an USP, why then any one would want to buy it?

Development of unique superior product. Differentiation from rivals. Well conceived, properly launched. Top management backing. Market attractiveness the product should be aimed at attractive markets. Resources must be in place. Speed and timely. Quality Market driven customer focus.

Neglect of market research. Inaccurate market research. Poor marketing after launch. Poor distribution. Product performance below expectation. Product too complex. Unforeseen events. Market not ready for product. Inadequate support for the product.

We often approach marketing if the firm in question concentrated on a single product. Most firms produce a large range of different products. This is done for a number of reasons - To spread the risk and not be over dependent on a single product. - To cope with the dynamic market place. - To suit different tye of customers.

This is the total sum of all products and variants offered by an organisation. The set of all product lines and items that a particular seller offers for sale to buyers. The composite group of products that a company makes available to the market. The product item is an individual product or a brand.

Dabur ChyawanprashDabur ChyawanshaktiGlucose DDabur Lal tailDabur Janma Ghunti-

Hajmola Hajmola Candy Pudin Hara (Liquid and Pearls) Pudin Hara G Dabur Hingoli -

Bhringraj Ayurvedic Tail Super Thanda Tail Badam Tail Active Blood Purifier Shilajit Gold Nature Care Sat Isabgol Shilajit Shankha Pushpi Sarbyna Strong -

Amla Hair Oil Amla Lite Hair Oil Vatika Hair Oil Anmol Sarson Amla Gulaba ri Vatika Fairness Face Pack Vatika Saffron Glow Soap with Sandal -

- Vatika Henna Conditioning Shampoo - Vatika Anti-Dandruff Shampoo - Vatika Root Strengthening Shampoo

Dabur Red Toothpaste Babool Toothpaste Meswak Toothpaste Promise Toothpaste Dabur Lal Dant Manjan Dabur Binaca Toothbrush

A group of closely related product items. They are related in terms of - Function. - Benefit. - Production. - The way they are marketed. A group of products (manufactured and distributed by an organisation) which are similar in the way they are produced or marketed,

Health Care. Home Care Personal Care Ayurvedic Specialties. Food. Guar Gum. International Range

The Product line width is the number of distinct product lines offered by an organisation. Example Dabur has oral care, personal care etc and all these products in the oral care Red Toothpaste, Binaca, Lal Dant Manjan, Babool Toothpaste, Meswak Toothpaste, Promise Toothpaste. If we regard each brand as a line, the number of variations of the oral care is the depth of the line and the number of separate brands is the width.

The product mix is the total of all product items including variations within a line. Daburs mix is the sum total of all variations of oral care plus all variations of the personal care, home care etc. Product line retrenchment means reducing the width of a product mix by decreasing the diversity of products offered.

This is another term for product mix all the lines and all the items (variations) that the company offers. Portfolio planning is the process of managing the mix of products. To accomplish this it is necessary to analyse the collection. The most famous tool of analysis is the Boston Matrix.

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