ASSIGNMENT ON MARKETING MANAGEMENT

SUBMITTED BY TEAM-4 M.B.A 1ST SEM {DR.A.I.T.COLLEGE}

SUBMITTED TO C.KRISHNA PRASAD

DEPARTMENT OF

MANAGEMENT STUDIES

DR.AMBEDKAR INSTITUTE OF TECHNOLOGYNEAR JNANA BHARATHI CAMPUS

BANGALORE-560056

SUBMITTED BY

TEAM – 4

NAVEEN.S.NITHYANANDNAVEEN KUMAR .P.NAZEERNETHRAPRABHU SWAMYPANKAJAPADMAJA

PRODUCT PLANNING AND DEVELOPEMENT MODULE – IV

PRODUCT

Definition Product Product Product NDPLine Mix Strategy Life cycle

Fig. 1.1

PRODUCT FEATURES

Tangibility e.g. Car

Books, Dress Material

Intangible attributes e.g. Attributes

Associated Attributes

E.g. Brand, Package Warranty, Brand Image

Exchange Value Mutually Agreed Price

Consumer Satisfaction.

Fig. 1.2 Product Features

Product with bundles of utilities

MODULE – IV

PRODUCT CONCEPT

Definition: It is a set of tangible physical attributes in an identifiable form.

Or

“A product is a set of tangible & intangible attributes including packaging, color, prices,

manufacturing brand, which may accept as offering want satisfaction”

According to Philip Kotler: “A product is anything than can be offered to market for

attention, acquisition, use or consumption that might satisfy a want or need. It includes

physical, services, persons, place, organization and ideas”.

According to Alderson “A product is a bundle of utilities consisting of various product

features and accompanying services”.

According to Stanton “A product is set of tangible and intangible attributes, including

packaging, color, price, manufacturer’s prestige, retailer’s prestige and manufacturers and

retailers’ service which the buyer may accept as offering satisfaction or wants or needs”.

Product Hierarchy or Level

The Marketer should understand the need of product levels before the produce is offered in

the market, since each level adds more customer value.

Level 1 Core Product

The core product is the fundamental services or benefits that the customer is really

interested in buying.

Ex. 1) A hotel guest is buying “rest & sleep”….

2) A two-wheeler purchaser looking out for “Money & Mileage”….

The marketer must act as benefit provider.

Level 2 Basic Products

The marketer should turn the core product benefit into basic product by giving or telling him

other extra attribute, which he can enjoy by taking the product.

Ex: (1) In hotel the basic product includes bed, bathroom, room service, towel, desk, dresser etc.

(2) For a bike free servicing for 1 years etc,

Level 3 Expected Products

The buyers normally expect a se of attributes when he/she purchases a product.

Ex.: (1) Hotel guest expects a clean bed, T.V., phone connection, pure water supply etc.,

(2) For a bike mileage, pick up, disk brakes, etc.

In fact almost majority of the hotels meet all these expectations. But the market has to tell

the facility being provided is best not reasonable to others.

Level – 4 Augmented Products

Augmented Product is one where the customers wish beyond the expectation towards a

particular product. The marketer prepares an augmented product to meet such expectation

(beyond).

For ex. A hotel can augment the product by including fresh flowers, rapid check in, express

check out, fine dining and good room service.

Today’s competitive environment is must concerned about the product augmentation level.

In the developed countries, the competition enables the marketer to understand the buyer’s

total consumption system. In fact the product augmentation is quite costly affair since, each

augmentation costs the company money.

For Ex.: Hotel guests may expect today remote control and other amenities in their room.

This means that competitors will search for newer attributes and add to further offer. Hence,

2 points are to be considered.

(1) Whether customer is ready to pay for the extra benefit.

(2) How soon the benefits will turn to profit.

Fig. 1.3 The Product Concept

Credit facility

Design

SAFETY PACKAGE

UTILITY QUALITY

BRAND IMAGE

PRODUCT OR

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AFTER SALES - SERVICES

NEW PRODUCT DEVELOPMENT

The new product planning process is usually broken in the manageable stages for effective

planning and control. There are eight stages where each stage has been labeled differently

with respect to the company’s new product proposal. These six stages are explained below.

1) Stage – I (Idea Generation)

Idea Generation: The first and foremost aspect of new product planning stage is to generate

new ideas. It is the responsibility of the top management to decide upon major company

problems pertaining to

(a) Expansion of markets.

(b) Technological utilization.

(c) Earn higher profit margins, etc.

Which call for a program of planned idea generation?

Fig. 1.4 Stages of new Product Development

It is approved that customers generate the highest percentage of ideas for industrial product.

For new ideas, companies mainly rely on internal sources. Especially, they seek ideas from

every employee to contribute to the success of the best product and services.

Companies identify customer’s needs through survey, projective test, focused group

discussion, suggestions, complain letters from customers.

For Ex.: The employers of Toyota Submit two million ideas over 85% are implemented.

2) Screening Ideas: At this stage, new product ideas are evaluated to determine which over

warrant further study; typically a management team relies on its experience and judgment,

rather than on market or competitive data, to screen the pool of ideas.

IDEA GENERATION

1

SCREENING OF IDEAS

2

BUSINESS ANALYSIS

3

PROTOTYPE DEVEOP

MENT4

MARKET TEST

5

COMMERCIALIZATION

6

3) Business Analysis: A surviving idea is expanded in to a concrete business proposal.

During the stage of business analysis management:

(a) Identifies product features.

(b) Estimates market demand, competition and products profitability.

(c) Establish a progress to develop the product.

(d) Assigns the responsibility for further study of the product’s feasibility.

4) Prototype development: If the results of the business analysis are favorable, then a

prototype (or trial model) of the product is developed. In the case of services, the facilities

and procedures necessary to produce and deliver the new product are designed and tested

Ex.: That is a necessary type in developing a new roller – coaster rider for an amusement

park.

In case of goods, a small quantity of the trial models in manufactured to designate

specification. Technical evaluations are carried out to determine whether it is to product the

product. A firm may construct a prototype and subject it to lab test in order to judge whether

the proposed product will endure normal – even abnormal usage.

Ex.: Apple Computers puts new models through various durability tests that range from

pouring soft drink on to computer to subjecting the screen to over 100 pounds of pressure.

5) Market test: Unlike the internal test conducted during prototype development, market

test involved actual consumers. A new tangible product may be given to a sample of people

for use in their household (in the case of a consumer good) or their organizations (a business

good). Following the trial, users are asked to evaluate the product. This stage in new product

development often entails test marketing, in which the product is placed on sales in a limited

geographical area. Market test finding, including total sales and repeat purchases by the

same customers are monitored by the company that developed the product (and perhaps by

competitors as well). Some companies seek to interrogate shoppers as they examine a

product.

6) Commercialization: In this stage, full-scale production and marketing programs are

planned and then implemented up to this point in development

Management has virtually complete control over the product.

The external competitive environment becomes a major determinant of its destiny.

NEW PRODUCT DEVELOPMENT

Acquisition Basic Forms Steps in N.P.D.

Patent Acquisition: Buys

rights to new product from

their patent holders

License Acquisition for

manufacturing various

products.

Internal new product

development by buying its own

research and development

product

Contact new product

development

-Hiring independent

researchers or new product

developing agencies to develop

specific product for the firm.

1 Idea generation

2 Idea Screening

3 Concept development &

testing

4 Marketing strategy,

development

5 Business analysis

6 Product development

7 Test marketing

8 Commercialization

PRODUCT LIFE CYCLE

Introduction Growth Stage Maturity Stage Saturation Stage Decline Stage

Sales are In..

Profit is less

Massive Ads and promotion activity

Weakness many promptly removed

Rising sales at increase rate

Profit increase

Continuous Ads & Sales promotion

Company top priority is to increase sales volume

Rising sales at decreasing rate

Reduce profit

Competition through ads & sales promotion

Company’s priority is over all market effectiveness

Stables sales volume

Profit margin may fall

Maintain market shares

Price is primary weapon

Stop production & diversity

Stop giving ads and sales promotion

Watch word of management “Innovate or Die”

Product becomes obsolete

1) Introduction Stage: It is also referred to as Infant stage; the product is quite new and

enters market for the first time. The investment of money is greater during this stage.

At this stage, the product is introduced into market and made available to the

customers with slow rise in sales. The profit margin is quite low, since there is heavy

investment on promotional activities. Such as advertising, sales promotion, etc. in

order to stimulate the demand for ex. Colgate herbal tooth paste.

2) Grow Stage: This is a second stage of PLC. In this stage, the consumers/business

men accept the product, which in turn gains initial acceptance in the market place.

The sales of the product gradually increases, in turn profit also increases the

competitors threat is always there during this stage of PLC. Since there will be

substitute product in large number.

3) The old buyers may continue with their purchase and new buyers appear. The

success of the firm in this stage depends upon the efficient production of quality and

network of product.

For ex. Kinley Mineral Water from Coke.

3) Maturity stage:

At this stage, the competition will spread over the market sales continue to increase for a

while, but at a decrease rate. The marketer will incur additional cost for product

modifications and improve in marketing mix programme. Eventually the advertising cost

comes down, since there is a more awareness about the product over all marketing

effectiveness becomes key factor in this stage of PLC.

For ex. Johnson and Johnson’s many products are in maturity stage, Compton Greaves fan.

4) Decline/obsolescence period

This is the best stage of PLC. The buyer 100 kg for newer and better product, which in turn

affect the sales. There are many factors technological changes, consumer lifestyle,

competition, etc. During this stage, the product cannot hold its position in the market.

Pricing seems to be the competitive weapon.

This stage of PLC ceases the need for new product and modification of other products. In

case the product becomes outdated with relevance to fashion then the firm will drop the

product from the existing line.

Product in declining stage

a) Product Category: Many products have a largest life cycle since they stay in the

maturity stage for a very long period. Ex.: Cigars & Newspapers.

b) Product Form: The product like typewriter have passed through four stages of PLC in

contrast with their successors.

c) Branded products: These have either short or long life in PLC. Several brands die

early while others stay for very long period for ex. P&G believes that a strong brand

name is essential for survival and success in business.

4) Saturation Stage: Saturation point occurs in the market when the potential customer or

buyers are using the product and the company has only replacement sale.

Significance: To maintain market share, prices becomes primary weapon, price may fall

rapidly and profit margin may become small

PRODUCT MIX

Definition Width Length Depth Consistency

A set of all products and items offers for sale by company in to market.

Ex: TATA Oil, cosmetic, transport, tea, textiles

A product mix refers to how many different products line the company carries.

EX:P&G’s products hair care products, health care products etc.

A product mix refers to how many variants are offered of each product in the line.

A product mix refers to how closely relate in various product line.

Product Line: A broad group of products intended for essentially similar users and

possessing similar physical characteristics. Constitutes a “product line”. Ex.: Shirts, jackets,

pant.

PRODUCT MIX STRATEGY

Expansion P.M. Contraction P.M. Alteration P.M.Trading Up &

Down

Product Differentiation

and Market segmentation

Increase the number of product line

Increase new product in a product line of co.

Ex.: Raymond’s Blazers, Ties, Shirts, etc.

Eliminating an entire product line

Eliminating a product from product line

Ex.: Alwyn, Hero Honda

Design (Qty, Quality and Composition)

Usage

Operation

Purpose:

To yield more profit and less risk then developing a completely new product

Trading up adding higher price prestige product to lower product Increasing sales of lower product Trading Down:

- Adding a lower product in higher price prestige capture every segment of market.

Product differentiation

- Promoting awareness between one company to those of competitor

Market segmentation Sellers

recognize market is made up of many homogenous segment

Attempts to penetrate limited market in depth

Product Mix Strategy:

1. Expansion of Product Mix

2. Contraction of Product Mix

3. Alteration of Product Mix

4. Trading up and Trading down

5. Product differentiation & Marketing Segmentation

A set of all products and items offers for sale by company in to market.

1. Expansion of Product Mix:

A firm may choose to expand its product mix by increasing the number of product line or

depth with in the product line such as new line may be related or unrelated to products.

Ex.: Raymond’s Blazers, Shirts, Ties, etc.

2. Contraction of Product mix

Another product mixes strategy in to thin our product mix either by eliminating entire

product line or mi eliminating a product forms the product line.

Ex.: Entire product line Alwyn. Hero Honda Street

3) Alteration of Product Mix:

Another product mix strategy is that of alternating or improving the design. Usage and

operation of established product which yields more profit and less risky than producing or

developing new product.

4) Trading Up & Trading Down

a) Trading Up

- Adding a higher price prestige product to lower price product hoping to increase sales of

lower price product.

Ex.: Mysore Sandal Gold, Lux, etc.

b) Trading Down

Adding a lower price product to higher price prestige product line to capture every segment

of market.

Ex.: Wheel detergent cake & powder.

5) Product Differentiation and Market Segmentation

These are two related product strategies. Firms, who win to engage a non-price competition

in market, where imperfect, employ these or monopolistic competition exists.

PRODUCT DIFFERENTIATION

It involved promoting awareness between one-company products to those of competitors.

This strategy is used to come out of price competition.

If it works the company can compete saying its product is different from or better than

competitor’s product.

Some company will differentiate the design of product or the only difference may be in the

brand or packaging.

Company selling reasonably standardized product like soap, cigarettes, toothpaste, etc uses

this strategy.

Market Segmentation

It is a strategy where a seller recognizes that his market is made up of many homogeneous

segments. Each of these segments has different sets of wants, motivation and other

characteristics. The market is seen as a series of demand curve instead of single demand

curve.

The seller then attempts to develop different products, each one can suit for one or more of

these market segments and attempt to penetrate limited market in depth

BRANDING

Some brand names are so good that they contribute to the success of product, but it takes

more than clever brand name to ensure success in market place.

Various characteristic determining the desirability of a brand name for their goods or a

service it is different to find a brand name that rates well on every attribute. Still, a brand

name should have as many of the following.

Suggest something about the product line. Particularly its benefit and use: Name-connoting

benefits include LIC, Good Knight, etc.

It should be easy to pronounce, spell and remember: Simple, short, one-syllable name such a

surf tide is helpful. However, some consumers do not easily pronounce even very short

names such as odonil.

Be distinctive: Brand with names like Taj Hotels, being their brand names with names

connoting strength and then add a description of the business for Taj hotel (It connotes the

splendor of Mughal empire)

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Be adaptable to additions to the product line: A family name such as Lipton or ford may

serve the purpose better than a highly distinctive name suggesting product benefit. When

fast-food restaurants add breakfast to their menus, MC Donald’s name fir better than Burger

King or Pizza Hut.

Be capable of registration and legal protection.

BRANDING’S MAINS TASK

1. Selecting brand name and logo

2. Differentiation through attribute with unique image

3. Positioning through targeting customers

4. Distribution and promotion

5. Keeping brand live and active

6. Brand proliferation through add more brand to a line

SELECTION

1. Names communicate with functions or attributes of product. Ex.: Good Knight offers

good sleep.

2. Bane communicating the speciality of the product Ex.: Taj Hotels – Reflecting the

Moghul Splendor

3. Use of Acronyms. Ex.: BATA, Cadbury, Sony, Etc

TYPES

1) Individual Brand Name

Each product of the company’s given an independent brand name.

Ex.: HLL individual brands

Dove, lux, pears

Surf, rin, wheel

Close up and Pepsodent

2. Family Brand Name

Different product of the company is marketed under one brand name. It is also called

umbrella brand name.

Ex.: Amul – milk power, bread, butter

3. Company’s Name Ex.: Bajaj, BPL, Videocon

4. Middlemen’s / Store / Private Label

Manufacturers leave their products for branding by the distributors/retailers

Ex.: Food world, stop-shoppers stop

BRAND EXTENSION

Purpose

1. Helps the new item to acquire instant brand recognition

2. Saves cost, less than launching new brand

3. Helps strengthening of the existing brand by addition of new brands.

4. Helps build the brand in to a super brand in the mind of the customer by creating high

profiles.

Types

1. Extended to other items in same product line.

Ex. Sunrise coffee extended to Sunrise premium and Sunrise Extra Coffee

2. Extended to items in a related product line.

Ex. Maggi – Maggi Ketch up, Maggi Soup

3. Extended to items in an unrelated product line.

Ex. Kingfisher, TATAs

Requirement for success

1. Consistency

2. Brand area of Expertise

3. Benefit transfer to customers.

PACKAGING AND LABELING

Even after a product is developed and branded strategies must still be devised for other

product – related aspects of the marketing mix. One such product feature and a critical one

for some product are packaging.

PURPOSE AND IMPORTANCE OF PACKAGING

Packaging consists of all the activity of designing and producing the container or wrapper

for a product.

Protect the product on its way to the customers.

A package protects a product during shipment furthermore; it can prevent tampering with

products, notably medications and food products, in the warehouse or the retail store. The

design and size of a package can also help deter shoplifting that’s why small items, such as

compact disc. Come in larger than needed packages

Protect the product after it is purchased

Compared with bulk (that is unpacked) items, packaged goods generally are more

convenient, cleaner and less susceptible to losses from evaporation, spilling and spoilage.

Also “Child Proof” closures thwart children from opening container of medication and

harmful products.

Help gain acceptance of the product from Middleman: A product must be packaged to meet

the needs of wholesaling and retailing middleman. For instance a package size and shape

must be suitable for displaying and stacking the product in store. An odd – shaped neither

package neither might nor attract shopper’s attention.

Help persuade consumers to buy the product:

Packaging can assist in getting a product notices by customer. “The average shopper spends

20 minutes in store viewing 20 products a second”. At the point of purchase – such as super

market … - the package can serve as a “Silent Sales Person”.

LABELING

A label is the part of a product that carries information about the product and the seller. A

label may be of a package or it may be a tag attached to the product.

TYPES OF LABELS

A brand label is simply the brand alone applied to the product or package. Some oranges

stamped, and some clothes carry brand label.

A descriptive label gives objective information about the product’s use, construction,

care, performance and other pertinent features. On a descriptive label for a can of corn,

there will be statements concerning the type of corn, specification for product size,

product code number, etc.

A Grade label: Identifies the product judged quality with a letter, number or word and

sometimes also graded A, B……

Brand Labeling is an acceptable form of labeling but it does not give sufficient

information to a buyer.