new product line extension
Post on 10-Apr-2018
226 Views
Preview:
TRANSCRIPT
-
8/8/2019 NEW PRODUCT Line Extension
1/23
PRESENTRD BY GROUP NO.- 07
Abhijeet chakrabati
Himadri Sharma
Sanjeev Sharma
1
-
8/8/2019 NEW PRODUCT Line Extension
2/23
What is a product ?
Product is a bundle of attributes and the total
product are the combination of two
attributes.
o Tangible attributes: materials, size, weight,
design, packaging, performance, comfort etc.
o Intangibles: brand image, styling, other benefits
(installation, delivery, credit, warranty, after-sale
service, return policy)
2
-
8/8/2019 NEW PRODUCT Line Extension
3/23
Types of new product
1) New to the world products are products that create entirely new markets.
2) New product lines are products that represent entries into existingmarkets that are new to the firm. E.g.- ITC come in hotel andbeverages.
E.g.- iPod
3
-
8/8/2019 NEW PRODUCT Line Extension
4/23
4
3) Line extensions are new products that allow the firm to extend its served
market by offering different benefits. e.g.- Tata Indica
4) Cost reductions are versions of existing products that provide comparable
performance at lower cost. E.g.- Dell vostro, nokias low cost mobile,Tata nano.
-
8/8/2019 NEW PRODUCT Line Extension
5/23
5) Improvements to existing products are usually designed as replacements for
existing product offerings. E.g.- Window7, LCD is replaced by LED with 3D screen.
6) Repositioning are modest technical improvements that allow a product to offer
new applications and serve new needs. E.g.- Fiat cars
5
Old model New model
-
8/8/2019 NEW PRODUCT Line Extension
6/23
Considerations in Adding or Dropping a Variant
Adding Dropping
Customer based:
New customer attracted Old customerlost
Old customer cannibalization Customer switching
Confusion and dilution of brand equity Signal of weakness
Operation based:Loss of economies of scale Impaired efficiency
Problems in gaining additional distribution Maintaining distribution
Additional Servicing needs Servicing old versions
The development of new product typically occurs in stages. At each stage, the
product is evaluated to determine whether it makes sense to produce to the next
stage
6
-
8/8/2019 NEW PRODUCT Line Extension
7/23
Product Modification
It can be done through some process like continuousquality improvement, redesigned, and updated styling.
Product modification can be of three types
Clearly better e.g.- an upgrade.
Different e.g.- ingredient change that is likely to
appeal more to
some customer.
Inferior e.g.- substitution of a less expensive
ingredients.
7
-
8/8/2019 NEW PRODUCT Line Extension
8/23
Assessing the Impact of Product Redesign on Customer
Current
Customer
Reaction Response
after trial
Impact on
sale/profit
1) Loyal A. Try Prefer Gain
Like Neutral
Not like Loss
B. Not Try Loss
2) Occasional A. Try Prefer Gain
Like Neutral
Not like Loss
B. Not Try Loss
3) Non
Customers
A. Try Prefer Gain
Like Neutral
Not like Loss
B. Not Try Loss 8
-
8/8/2019 NEW PRODUCT Line Extension
9/23
Line Extensions
Introducing additional product variant that use the existing brand name, also
known as line extension, is a popular way to capitalize on the original brands
equity.
e.g.- Surf, Surf Excel, Surf Excel Blue.
Pros and cons ofline extension
Pros
o Can appeal to multiple segment by giving slightly different wants andpreferences (e.g.- For car modellike ac or non ac etc,
multiple fares and conditions for airline seats) .
o cons-
It can confuse the customer.
9
-
8/8/2019 NEW PRODUCT Line Extension
10/23
PRODUCT STAGES
1)Idea Generation
2)Concept Development
3)Feasibility Screening
4)Concept Testing
5)Product Development
6)Product Testing
7)Market Testing
8)Go No go Decision
10
-
8/8/2019 NEW PRODUCT Line Extension
11/23
1) Idea Generation
Idea for product modifications and extensions comes from many sources, bothproactive and reactive:
o Through customer analysis in particular usage/needs analyses and survey
of attitudes and attribute importance, including both unstructured ( e.g.-
focus groups) and structured ( e.g.- conjoint analysis) approaches.
o 2) Competitor analysis, specifically studying what competitors sell or working
on.
o 3) Active search, particularly of new product and process in other areas with
an eye toward incorporating them in the company own product.
o 4) Category analysis, examining changing social trend and technologies.
o 5) Ex or noncustomers who reject current product
11
-
8/8/2019 NEW PRODUCT Line Extension
12/23
2) Concept Development
12
-
8/8/2019 NEW PRODUCT Line Extension
13/23
4) Concept Testing
Concept testing present the consumer with a proposed product and
measure attitudes and intention at this early stage of development
The main purpose of concept test are :
a) Choose the most promising from a set of alternatives.
b) Get the initial notion of the commercial prospects of a concept.c) Find out who is most interested in the concept.
d) Indicate what direction further development work should take.
The data collection procedures fall into three major categories:
o Survey Getting large samples for projection purposes. Through survey
basically gather four types of reaction.a) Attitude ( Is the product good/bad?.
b) Uniqueness/differentiation (How unique is this product?).
c) Relevance (How relevant is the product to you?).
d) Intention (Will you bye the product?)
13
-
8/8/2019 NEW PRODUCT Line Extension
14/23
o Focus group
The strength of focus groups is their diagnostic power in that
they can be used to
get detailed discussions of various aspects of the concept.
Focus group:
o Demonstrations
A popular way to present a concept is to gather a group of
consumers, present them with a story about the new productand record their reactions.
14
-
8/8/2019 NEW PRODUCT Line Extension
15/23
5) Product Development
Product development converts the concept into aworking product or a physical form by developing the
product architecture; design function, value, and
appearance of the product; create and develop
product specifications; and consider manufacturingand operational costs and operational constraints or
tradeoffs (POLITICS)
15
-
8/8/2019 NEW PRODUCT Line Extension
16/23
-
8/8/2019 NEW PRODUCT Line Extension
17/23
-
8/8/2019 NEW PRODUCT Line Extension
18/23
7) Market Tests
The purpose of such test is to
1)Predict sales and profits from a major productlaunch.
2)Practice so that marketing, distribution, and
production skills are developed before entering full
scale operations.
In marketing testing several decisions must be made.
o Where to test
o What to doo How long
o Cost
18
-
8/8/2019 NEW PRODUCT Line Extension
19/23
8) Go No go Decision
After doing lots of exercise on the new productdevelopment one should able to understand/make
decision whether go or not go for the new product
launch.
19
-
8/8/2019 NEW PRODUCT Line Extension
20/23
Success Rate Entirely New Products
3000 raw
ideas
.03%
300 submitted
ideas
.3%
125 beginning
projects
.8%
9 large
developments
11%
4 major
developments
25%
1.7 launches
60%
1 commercial
success
Stevens and Burley,
RTM May-June 199720
-
8/8/2019 NEW PRODUCT Line Extension
21/23
Why develop NDP
o To add to product portfolio
o To create stars and cash cows for the future
o To replace declining product
o To take advantage of new technology
o To defeat rivals
o To maintain/increase market share
o To keep up with rivals
o To maintain competitive advantage
o To full gap in the market
21
-
8/8/2019 NEW PRODUCT Line Extension
22/23
New product can be used
o Increase/defend market share by offering more choice orupdating older products
oAppeal to new segments
o Diversify into new markets
o Improve relationship with distributors
o Maintain the firms reputation a leading edge company
o Even out peaks and troughs in demand
o Make better use of the organization's resources
22
-
8/8/2019 NEW PRODUCT Line Extension
23/23
23
top related